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TMI Blog2014 (1) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... executed on 23.03.2004 (4 deeds) alone would have the benefit of Section 54EC of the Income Tax Act, 1961 and not any other sale deed - For the purpose of re-computing the relief to the assessee to grant the relief in respect of the sale deeds executed on 23.03.2004 – the issue was remanded back to the Assessing Officer to re-work the liability of the assessee – Partly allowed in favour of assessee. - Tax Case (Appeal) Nos.697 and 698 of 2013 - - - Dated:- 26-11-2013 - Chitra Venkataraman And T. S. Sivagnanam,JJ. For the Appellant : Mr. S. Sridharan For the Respondent : Mrs. Hema Muralikrishnan JUDGMENT (The Judgment of the Court was made by Chitra Venkataraman, J.) Raising the following questions of law, 1. Whether in the facts and circumstance of the case, the Appellate Tribunal was right in coming to the conclusion that even though the vacant possession of the property was handed over only on 25.03.2004 the capital gains will arise for the assessment year 2003-2004 and not for the assessment year 2004-2005? 2. Whether in the facts and circumstances of the case the Appellate Tribunal was right in coming to the conclusion that the part of the sale conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed 8 28.04.2003 Sale deed 9 14.05.2003 Sale deed 10 14.05.2003 Sale deed 11 14.05.2003 Sale deed 12 23.03.2004 Sale deed 13 23.03.2004 Sale deed 14 23.03.2004 Sale deed 15 23.03.2004 Sale deed 16 25.03.2004 Possession handed over" It is stated by the assessee that possession was handed over to the agreement holder on 25.03.2004 and the construction was completed in October 2005 and the completion certificate by CMDA was given on 12.06.2006. It is further seen from the order of remand on the capital gains arising on the transfer of his immovable property, the assessee claimed deduction under Section 54EC of the Income Tax Act, 1961 investing the entire sale consideration of Rs.75,78,750/-. As regards capital gain of Rs.64,84,545/- arising out of the sale transaction, the assessee claimed deduction under Section 54EC of the Income Tax Act, 1961 by investing the entire sale consideration of Rs.73,00,000/- in the notified bonds, the details of which are as follows: 1. NABARD CAPITAL GAINS BONDS: 13.05.2004 Rs. 90,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. The position is same as regards the assessment year 2003-2004. 3. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals) for the assessment years 2003-04 and 2004-05. On a consideration of the facts and the terms of the agreement, the Commissioner of Income Tax (Appeals) called for a remand report from the Assessing Officer in the context of the affidavit filed by the builder, viz., the agreement holder dated 08.05.2008 and the completion certificate dated 12.06.2006 issued by the Chennai Metropolitan Development Authority. The remand report pointed out clause (9) of the agreement and the receipt of the consideration on 21.12.2002 and defended his assessment made for the assessment years. The First Appellate Authority, however, rejected the report and held that the capital gains accrued only in the year ending 31.03.2004 relating to the assessment year 2004-2005 and not for the assessment year 2003-2004 on account of clause (8), which represented payment of interest on belated payment. In the circumstances, the First Appellate Authority allowed the appeals and directed the Income Tax Officer to accept the income tax return for acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession was handed over by the assessee on 25.03.2004. The assessee deposited the entire consideration within six months thereon. Consequently, the question of denying the benefit of 54EC is not correct. He further pointed out that the builder could complete the construction only after taking full possession of the property and that the completion certificate issued by the Chennai Metropolitan Development Authority dated 12.06.2006 pointed out that the construction got completed only in the year 2005. Thus, learned counsel for the assessee pointed out that mere payment of the consideration on 21.12.2002 would not lead to the completion of the transfer. The sale was completed only when the sale deeds were executed and possession handed over thereon. Thus, the Income Tax Appellate Tribunal committed serious error in invoking Sub clause (v) of Section 2(47) of the Income Tax Act, 1961 in this case. 9. In this connection, learned counsel for the assessee placed reliance on the decision of the Supreme Court reported in [2012] 340 ITR 1 [Suraj Lamp and Industries Pvt.Ltd., vs. State of Haryana and another] to contend that the limitation on the investment has to be worked out from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to see the respective sale agreement executed by the assessee, which is referred to by the Income Tax Appellate Tribunal. A reading of clause (4) of the sale agreement executed in favour of the 16 purchasers recite as follows: "4. VENDOR has handed over to said representative all available original deeds/papers of title to B-PROPERTY, and physical/vacant possession of property would be handed over to said representative as agreed, on payment of sale consideration, when this DEED is presented/admitted for registration". From this clause, it is difficult for any one to draw an inference as to that part of the undivided share in the property purchased by the respective purchasers being given possession thereof. In considering the subject matter of sale, the date of sale and the total consideration for the sale, one cannot lose sight of the agreement that the assessee had, had with the Company-the agreement holder entered into on 07.12.1999. The company was given various responsibilities in the matter of finalising the sale and as already pointed out in clause (9) it was specifically stated that the company would have the vacant possession of the property only on receipt of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the last date of the sale deed as indicating the completion of the sale, Section 54EC of the Income Tax Act, 1961 would be of benefit to the assessee. 17. Learned Standing Counsel for the Revenue placed reliance on the decision of this Court reported in [2010] 323 ITR 40(Mad) [cited supra]. This decision dealt with the case of part performance. There, the assessee after receipt of full consideration, handed over possession to the developer and this Court held that the subsequent act of the assessee in executing the power of attorney and the sale deeds executed by the power holder on the basis of such power of attorney would not in any way alter the status of the parties to the agreement for the applicability of the doctrine of part performance. 18. In yet other decision relied on by the Revenue reported in (2007) 294 ITR 196 (AAR) in the case of [Jasbir Singh Sarkaria, In re] the Authority for Advance Rulings (Income Tax) held that when the developer is given possession enabling to exercise general control over the property so as to make use of it for the intended purpose, that would be sufficient to attract Section 2(47)(v) of the Income Tax Act, 1961. 19. Both the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of Section 54EC of the Income Tax Act, 1961 and not any other sale deed. 22. The Tabular column given by the assessee as contained in para No.5 of the assessment order thus, gives us the dates on which the deposits were made. However, for the purpose of re-computing the relief to the assessee to grant the relief in respect of the sale deeds executed on 23.03.2004, the matter demands a remand back to the Assessing Officer to re-work the liability of the assessee. 23. Accordingly, while disposing of these Tax Case (Appeals) , we direct the Assessing Officer to re-work the liability in respect of the assessment years 2003-2004 and 2004-2005. We make it clear that the assessee would not be entitled to the relief for the assessment year 2003-04 and as far as the assessment year 2004-2005 is concerned, in the light of the four sale deeds executed on 23.03.2004 alone, the assessee is entitled to exemption under Section 54EC of the Income Tax Act, 1961. 24. As far as the view of the Income Tax Appellate Tribunal, based on the individual sale deed is concerned, we do not find any justification to accept the said reasoning in the context of clause (9) of the agreement that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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