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2016 (2) TMI 881 - AT - Income TaxLiability to pay tax on long term capital gains - cancellation document - Transfer - Held that - If there was any cancellation document which has taken place, the original document would have been with the assessee, as the assessee would have been the sole beneficiary of said document . In our view, the alleged cancellation agreement between the assessee and the purchaser, if accepted, is a title document qua the assessee that will nullify the effect of the original sale deed as per the assessee (though this contention of nullifying the effect of registered document is highly disputable and debatable in view of provisions of Transfer of Property Act). But since the cancellation document as is alleged is the title document in favour of the assessee, therefore, the original document should have been in possession of the assessee, but the assessee has failed to produce the original document during the assessment proceedings, in our view, it goes against the assessee. Therefore, we have no hesitation to hold that the complete transfer in accordance with law has taken place on account of registered sale deed dated 16.04.2007 and, therefore, the assessee is liable to pay the long term capital gain on sale of the capital asset on DLC rate of the property at ₹ 11,40,453/-. Accordingly, this issue is decided against the assessee. Applicability of provisions of section 53A of the Transfer of Property Act - Held that - Provisions of section 53A of the Transfer of Property Act is not attracted as the assessee has failed to produce the written contract between the assessee and Shri Praveen Kumar Jain, pursuant thereof in part performance of the contract, the possession of the property was handed over to Shri Praveen Kumar Jain. Therefore, the issue is decided against the assessee. Entitlement to benefits under 54F - Held that - The comparison of the two registered sale documents clearly shows that the property which was earlier sold by the assessee to the purchaser, namely Praveen Kumar Jain was later on transferred by Shri Praveen Kumar Jain to the assessee by registered sale document. Both the transactions i.e. one between the assessee and Praveen Kumar Jain dated 16.04.2007 and another between Praveen Kumar Jain and assessee dated 23.02.2008 have taken place within the A.Y. 2008-09 and in both the sale transactions the DLC rate is applied was ₹ 11,40,453/-, though in the later transaction the sale consideration was mentioned as ₹ 3,00,000/- whereas in the earlier sale consideration received by the assessee was ₹ 1,05,000/-. Thus the assessee had paid ₹ 1,95,000/- more for getting back the title in respect of the same property on 23.02.2008. If we examine the issue, the in the light of above facts, in our view, there is no income which can be subjected to tax as the income which was received by selling the property was ₹ 1,05,000/- and the amount paid for purchase of the said property was ₹ 3,00,000/-. The full value consideration in the case of selling the property to Shri Praveen Kumar Jain was required to be considered as ₹ 11,40,453/- in accordance with sec. 50C. However, the same yardstick is required to be applied when it comes to sale consideration paid by the assessee. In our view, for the purpose of the cost of the new asset, the same principle, in the peculiar facts and circumstances is required to be applied. The assessee cannot be axed twice. In fact, if we see the fate of transactions, the genuineness of the transaction is loud and clear and is apparent though we have held that the transfer has taken place between the assessee and Shri Praveen Kumar Jain, but nonetheless the re-transfer/fresh sale deed was also executed by Shri Praveen Kumar Jain in favour of the assessee on 23.02.2008. Therefore, in our view, the assessee is entitled to the relief claimed under this provision. Thus, we hold that the assessee is entitled to the benefit of the amount spent by him for purchase of plot for the sale consideration of ₹ 3,00,000/- and any other addition caused which may have been incurred by him on the said purchase of the land. The same parameters should be applied for giving the benefits under 54F as had been applied under section 50C. Though section 50C(2) provides that it is for the assessee to claim before the AO that the value adopted by the stamp valuation authority exceeds the fair market value, in that eventuality the AO may refer to the Valuation Officer for the valuation of the capital asset in accordance with law. In the present case no request has been made before the AO. The perusal of the paper book and record shows that even before the AO or before us, the assessee has not filed any fair market value of the property to the estimation of the assessee. Further, the assessee has not challenged the value adopted by the stamp valuation authority either at the time of selling the property to Shri Praveen Kumar Jain or at the time of purchasing the property from Shri Praveen Kumar Jain. In our view the ground of the assessee is required to be dismissed and accordingly we dismiss the ground of the assessee.
Issues Involved:
1. Jurisdiction and validity of additions and disallowances made under section 143(3) of the Income Tax Act. 2. Assessment of Long Term Capital Gain (LTCG) under section 50C of the Income Tax Act. 3. Claim of deduction under section 54F of the Income Tax Act. 4. Charging of interest under sections 234A, 234B, and 234C of the Income Tax Act. Issue-wise Detailed Analysis: 1. Jurisdiction and Validity of Additions and Disallowances: The assessee did not press this ground during the hearing, and it was dismissed as not pressed. 2. Assessment of Long Term Capital Gain (LTCG) under Section 50C: The assessee did not declare income under the head capital gains in the return of income. The Income Tax Department received information that the assessee sold a plot for Rs. 1,05,000, valued at Rs. 11,40,453 for stamp duty purposes. The AO treated the sale consideration as Rs. 11,40,453 under section 50C and computed the capital gain accordingly. The assessee contended that the transaction was canceled and no transfer took place, but the AO and CIT(A) rejected this argument, stating the transfer took place on 16.04.2007, and thus, the provisions of section 50C were applicable. The Tribunal upheld this view, confirming that the capital asset was transferred, and the assessee was liable to pay long-term capital gain tax based on the DLC rate of Rs. 11,40,453. 3. Claim of Deduction under Section 54F: The assessee claimed that the capital gain should not be taxable in A.Y. 2008-09 as the entire sale consideration was paid in A.Y. 2007-08. However, the Tribunal held that the transfer of the capital asset occurred in A.Y. 2008-09, and thus, the capital gain was correctly taxed in that year. The assessee also claimed a deduction under section 54F, stating that the amount was invested in purchasing a new plot and constructing a residential unit. The CIT(A) rejected this claim, noting that no evidence of construction was provided, and construction activity was banned by the Rajasthan High Court. The Tribunal partly allowed the assessee's claim, directing the AO to give the benefit of Rs. 3,00,000 under section 54F for purchasing the plot but disallowed the claim of Rs. 2,50,000 for construction due to lack of evidence and legal prohibition on construction. 4. Charging of Interest under Sections 234A, 234B, and 234C: The Tribunal did not specifically address this issue in the detailed analysis, implying that the interest charged under these sections was not contested separately or was considered consequential to the main issues decided. Conclusion: The appeal was partly allowed, with the Tribunal upholding the application of section 50C for computing LTCG and granting partial relief under section 54F for the purchase of a new plot. The claim for construction expenses was disallowed due to lack of evidence and legal restrictions. The interest charged under sections 234A, 234B, and 234C was not separately addressed in detail.
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