2022 (5) TMI 1371 - AT - Income Tax

Long Term Capital Gain from sale of land - valid transfer of a capital asset or not? - Possession given or not? - assessee company submitted before the A.O. that in this case there is no transfer of the land as per the provisions of Section 54 and 55 of the Transfer of Property Act - HELD THAT - The assessee has not denied the fact that the it had entered into a registered sale deed dated 01/11/2013. Assessee has not denied receipt of the entire sale consideration - assessee claims that no possession was given. This submission of the assessee regarding possession of the land is not being given is against the recital of the registered sale deed. The registered sale deed categorically mentions that peaceful and vacant possession has been handed over to the purchaser. Recitals of the registered sale deed that the vacant and peaceful possession has been handed over to the purchaser have to be taken as the true fact. It is not a claim of the assessee that it had not disclosed all the facts about the impugned land to the buyer Mr. Mustak Saheblal Shaikh. Therefore it is not the claim of the assessee that it was a fraudulent transaction. It is also not the claim of the appellant assessee that he had no intention to enter in the transaction. From the Clauses of the Sale deed it can be inferred that both the vendors and Vendee have full knowledge of all the clauses mentioned in the Sale deed. There is no evidence filed by the AR to prove that the contents of the said registered sale deed are not true or are false. Therefore it means the possession was handed over to the Purchaser purchaser had paid entire consideration to the seller and the purchaser became the legal owner of the impugned land on 1/11/2013. Neither the purchaser nor the seller has filed any FIR against the so called villagers who opposed the buyer. The assessee is a legal owner of the property if there were any encroachments appellant assessee had not filed any evidence to prove the so-called encroachments therefore the said claim of the assessee is unsubstantiated. The purchaser Mustak Saheblal Shaikh had paid the stamp duty and registration charges. Secondly the Appellant after 15 days have purchased the impugned land from Mr. Mustak Saheblal Shaikh by entering into a registered Sale Deed the said sale deed does not mention anything about the encroachments. There is no cancellation deed. This sale deed is an independent transaction. The second registered sale deed dated 16/11/2013 mentions Mr.Mustak Saheblal Shaikh as owner of the said impugned land. Thus both the appellant and Mr. Mustak Saheblal Shaikh had admitted before the registrar while registering the sale deed that Mustak Saheblal Shaikh is the owner of the impugned land on16/11/2013. Thus in the second recital also facts have been admitted both by the assessee and Mr.Shaikh. Thus on 16/11/2013 Mustak Saheblal Shaikh was the legal owner of the impugned land as per the registered sale deed dated 16/11/2013. The assessee placed reliance on the Affidavit of Mr. Mustak Saheblal Shaikh dated 3/11/2016. This document is titled as affidavit on Rs.100/- stamp paper and it is notarised. This notarised document does not have more evidentiary value than the two registered Sale deeds. It was executed three years after the Sale deeds. It is a settled legal proposition that an affidavit is not evidence within the meaning of Section 3 of the Indian Evidence Act, 1872 .Affidavits are therefore not included within the purview of the definition of evidence as has been given in Section 3 of the Indian Evidence Act. Therefore the said document is mere self-serving statement. In the present case assessee has not claimed that the transaction is sham. In the present case we have considered all the evidences put forth by the assessee. All these things establish that there was a valid legal registered sale deed dated 01/11/2013 by which vacant and peaceful possession of the impugned land was given to the purchaser and the purchaser had paid entire consideration to the seller. Therefore it is a transfer of capital asset and hence attract capital gain tax. Therefore the Assessment Order is upheld. Thus the grounds of appeal raised by the assessee are dismissed.

Summary

Issues Involved:
1. Sustaining the addition of Rs. 51,20,661/- as Long Term Capital Gain from the sale of land.
2. Proper appreciation of the peculiar facts of the assessee's case by the Commissioner (Appeals).
3. Deletion of the addition and reduction of the assessee company's income.
4. Passing of other orders as deemed fit and proper.
5. Leave to add, modify, or amend grounds of appeal and lead evidence.

Issue-wise Detailed Analysis:

1. Sustaining the Addition of Rs. 51,20,661/- as Long Term Capital Gain from the Sale of Land:

The assessee company sold a non-agricultural plot of land situated at village Mahalung for Rs. 63,50,000/- via a registered sale deed dated 01/11/2013, and subsequently re-purchased the same land via another registered sale deed dated 16/11/2013. The Assessing Officer (A.O.) noted that the transaction was not shown in the return of income and calculated the taxable Long Term Capital Gain as Rs. 51,20,661/-. The A.O. argued that the sale deed was duly registered, the sale consideration was received, and possession was handed over to the purchaser, thereby fulfilling the conditions of Section 2(47)(i) of the Income Tax Act, 1961, making the gain taxable.

2. Proper Appreciation of the Peculiar Facts of the Assessee's Case by the Commissioner (Appeals):

The assessee contended that the transaction did not constitute a transfer as per the provisions of Section 54 and 55 of the Transfer of Property Act because vacant and peaceful possession was not delivered to the buyer. The assessee provided an affidavit from the buyer, Mr. Mustak Saheblal Shaikh, stating that the land was being used as a playground by the adjoining school, leading to the cancellation of the sale. However, the Commissioner (Appeals) upheld the A.O.'s decision, stating that the transaction was completed as per the registered sale deed, and the terms of Section 2(47)(i) of the Income Tax Act were fulfilled, making the capital gains taxable.

3. Deletion of the Addition and Reduction of the Assessee Company's Income:

Before the Tribunal, the assessee reiterated that no actual possession was given to the buyer and relied on the affidavit and the decision of the Hon'ble Punjab & Haryana High Court in Hira Lal Ram Dayal Vs CIT. However, the Tribunal held that the registered sale deed categorically mentioned that peaceful and vacant possession was handed over to the purchaser, and there was no evidence to prove otherwise. The Tribunal also noted that the second sale deed did not mention any encroachments or cancellation, and the affidavit provided was not considered as substantial evidence against the registered sale deeds.

4. Passing of Other Orders as Deemed Fit and Proper:

The Tribunal concluded that the recitals of the registered sale deed must be taken as true facts, and there was no evidence to support the claim of non-possession or encroachments. Therefore, the addition of Rs. 51,20,661/- as Long Term Capital Gain was upheld.

5. Leave to Add, Modify, or Amend Grounds of Appeal and Lead Evidence:

The Tribunal dismissed the grounds of appeal as general in nature and not requiring any adjudication.

Conclusion:

The appeal of the assessee was dismissed, and the order of the A.O. was upheld, sustaining the addition of Rs. 51,20,661/- as Long Term Capital Gain from the sale of land. The Tribunal emphasized the validity of the registered sale deeds and the lack of substantial evidence to contradict the terms stated within them.