2023 (10) TMI 1264 - AT - Income Tax

Accrual of Capital gain - sale of land or not? - real owner - transfer u/s 2(47) concluded of capital asset or not? - Assessee pleaded before the AO that it was a Watan Land hence there will be no cost of acquisition and hence no capital gain - assessee also pleaded before AO, that no possession has been handed over, only 10% of the total consideration has been received by the assessee and land has been acquired by the Government - AR submitted that Government of Maharashtra has passed an order vide which Government of Maharashtra held that land belongs to CIDCO HELD THAT - As on perusal of the Sale deed it is observed that said Sale Deed there is 7/12 extract duly signed by TALATHI i.e. revenue officer which shows the Assessee as Owner of the impugned Land. Thus, as per the said 7/12 extract the Assessee seems to be owner of the Land on 31/07/2008. CIDCO has been shown under the other rights. In these facts, CIT(A) s findings that assessee was not the owner of the land at the time of sale is factually incorrect and this fact needs further investigation. It is also a fact mentioned in the Revenue Minister s Order dated 24/11/2008 that the impugned land was Watan Land . Assessee has filed copy of Sanad granting Watan to the assessee. AO and Ld. CIT(A) has not mentioned about the Sanad granting Watan to the assessee. This aspect has not been considered by the AO and Ld. CIT(A) in the order while deciding the issue of Cost of acquisition for Long Term capital Gain. Also pleaded before us that the possession of the impugned land was never handed over to the purchaser Mr. Kukreja. AO in the Assessment Order has mentioned that Possession of the land was transferred over to Kukrejas. Subsequently the AO in the remand report submitted to the Ld. CIT(A) admitted that the possession of the impugned land was with the CIDCO. Thus, there are major factual errors in the Assessment Order and ld. CIT(A) s order. Assessment Order is set aside to the Assessing Officer for denovo adjudication after considering all the submission of the assessee and after making necessary inquiries if required. Grounds of appeal raised by the Assessee are allowed for Statistical Purpose.

Summary

Issues Involved:
The issues involved in this case are whether Capital Gain has arisen from the sale of land, the validity of the possession transfer, and the consideration of the land as "Watan Land" affecting cost of acquisition for capital gain tax purposes.

Capital Gain Assessment:
The appellant, who had not filed the Return of Income for A.Y. 2009-10, was assessed for Capital Gain tax on the sale of land at village Pangaon. The appellant argued that no possession was handed over, only 10% of the total consideration was received, and the land was acquired by the Government, thus claiming no capital gain. The appellant also contended that as it was "Watan Land," there should be no cost of acquisition. However, the AO and ld.CIT(A) held the appellant liable for Capital Gain Tax based on the total consideration mentioned in the agreement. The Tribunal observed discrepancies in the possession transfer and the ownership status of the land, leading to a remand for further investigation and consideration of all submissions.

Transfer of Possession and Ownership:
The appellant's representative argued that two conditions of the Transfer of Property Act were not satisfied, indicating no transfer as per the Income Tax Act. The appellant presented evidence showing that possession was not handed over to the purchaser, Kukreja, and that the land was in the custody of CIDCO. The AO initially claimed possession transfer to Kukrejas but later admitted CIDCO's possession. The Tribunal found factual errors in the assessment order and remanded the case for a fresh adjudication considering all aspects and providing the appellant with a hearing opportunity.

Consideration of "Watan Land":
The appellant submitted documents demonstrating that the land was "Watan Land," which affects the cost of acquisition for capital gain tax purposes. The AO and ld.CIT(A) did not consider this aspect in their orders, leading to a lack of proper assessment. The Tribunal noted the importance of this document and the need for its consideration in determining the cost of acquisition. Consequently, the Assessment Order was set aside for denovo adjudication by the Assessing Officer, allowing the appeal for statistical purposes.

This judgment highlights the critical examination of possession transfer, ownership status, and the impact of land classification on capital gain assessment, emphasizing the need for thorough consideration of all relevant evidence and legal provisions in tax assessments.