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TMI Blog2014 (11) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax (Appeal) VI Order being improper and unwarranted be deleted. 3) The learned Commissioner of Income Tax (Appeals) VI, Ahmedabad has erred and not considered properly and judiciously that (i) Long Term capital gain on sale of land at Shahwadi etc. pertains to A.Y. 2008-09, 31.03.2008 being deed of sale executed on 31.03.2008. (ii) While computing long term capital gain, benefit of substitution of cost as at 01.04.1981 is allowed on adhoc basis at Rs. 8,00,000/- as against claimed Rs. 13,72,000/- on the basis of valuation report of Government approved valuer on record. (iii) Non concrete supporting evidences deduced for adopting value as at 01.04.1981 at Rs. 8,00,000/-. (iv) Income from long term capital gain referred above duly considered in A.Y. 2008-09 by the appellant. Hence considering long term capital gain I the year amounts to duplication. (v) Claim of exemption u/s.54F is allowed partially and no valid reason given. (vi) Additional compensation received Rs. 10,00,000/- in the year does not change legal and correct situation as to arising of capital gain. (vii) Even decision relied upon by the appellant have not been considered/appreciated jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation by the AO that the assessee has devised a colorful device to avoid tax liability. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the ld.counsel for the assessee. We find that the ld.CIT(A) in para-4.4 of his order has observed and decided as under:- "4.4 I have carefully considered the facts of the case and the submissions made by the appellant. As pointed out earlier, perusal of the assessment order and the grounds of appeal No 3 raised indicate that there are three actions of the A O which deserve adjudication. Accordingly, the same are discussed in the succeeding paras. I) Ground of appeal No. 3(i), (iii), (v) & (vi) on the issue of taxation of capital gains during the year under consideration i) It is the case of the appellant that the entire LTCG of Rs. 2,49,78,280/- is not available for taxation during A Y 2009-10 but is available for taxation in A Y 2008- 09, the year in which it already stands disclosed. In support of his contentions, the appellant has submitted that the sale deed for Shahwadi land was executed on 31-3- 2008, payment we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art-promised. Sale how made. Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale.-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property." Section 53A of the TP Act defines 'part performance' thus : "Part Performance. - Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53 A". Advantages of Registration 10. In the earlier order dated 15.5.2009, the objects and benefits of registration were explained and we extract them for ready reference : "The Registration Act, 1908, was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future "any right, title or interest" whether vested or contingent of the value of Rs. 100 and upwards to or in immovable property. Section 49 of the said Act pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not to an interest or easement therein." In India, the word 'transfer' is defined with reference to the word 'convey'. The word The word 'conveys' in section 5 of Transfer of Property Act is used in the wider sense of conveying ownership that only on execution of conveyance ownership passes from one party to another." In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614] this Court held: "Protection provided under Section 53A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The done In exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee." An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor. Scope of Will 14. A will is the testament of the testator. It is a posthumous disposition of the estate of the testator directing distribution of his estate upon his death. It is not a transfer inter vivos. The two essential characteristics of a will are that it is intended to come into effect only after the death of the testator and is revocable at any time during the life time of the testator. It is said that so long as the testator is aliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions and they should be given sufficient time to regularize the transactions by obtaining deeds of conveyance. It is also submitted that this decision should be made applicable prospectively to avoid hardship. 18. We have merely drawn attention to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not 'transfers' or 'sales' and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. The said 'SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it clear that if the documents relating to 'SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision. 19. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. It is seen that the decision of Hon'ble Apex Court on the matter is the latest judgement on the issue of transfer of immovable properties as well as taxation thereof. In the light of this discussions, it is held that the action of the AO in taxing the impugned capital gains of Rs. 2,490,78,280/- in AY 2009-10 was a legally correct decision which also finds strength from the decision of Hon'ble Apex Court in the case of Suraj Lamps supra. The action of the A O is therefore confirmed and grounds of appeal No. 3, (i), (iii), (v) & (vi) challenging taxation of capital gains during the year under consideration stands dismissed. II) Ground of appeal 3(ii) is on the issue of adoption of cost of acquisition of Shahwadi Property at Rs. 13,72,000/- i) The appellant argues that u/s 55 (2) (b), in respect of properties acquired prior to 1-4-81. he has option of taking either the cost of acquisition of assets or the FMV of the asset as on 1-4-81. It has been argued that the property was acquired by way of gift from father long back. The value of 41,741/- was taken as per the gift deed wherein the value of the property was indicated at some Rs. 50,000/-. The appellant has submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uer of the impugned property at Rs. 13,72,0007- is a correct value or not. Facts on records, indicate that physical inspection of the property was done by the valuer on 26-9-2008 and the report was submitted by him on 29-9-2008 i.e. within a short period of three days. The valuation report further indicates that the comparable sale instances adopted by the valuer are in respect of properties which are not located in the immediate vicinity. Thus, the valuation report, prepared by the registered value M/s/ K C Engineers, cannot be accepted as a true and correct estimation of the FMV of the property as on 1-4-1981. The impugned property has not been disclosed in any wealth tax returns by the appellant which could have been helpful to estimate its FMV. Considering the peculiar aspect and the infirmities and deficiencies in the valuation of the registered valuer, it is considered reasonable, if the FMV of the property as on 1-4-1981 is restricted to Rs. 8,00,000/- as against Rs. 13,72,000/-. The A O is accordingly directed to recalculate LTCG taking the value of property as on 1-4-81 at Rs. 8,00,000/-. The addition made by the A O is therefore partly confirmed and ground of appeal 3(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l facts, the Coordinate Bench of this Tribunal (ITAT Ahmedabad Bench 'C') in ITA No.1536/Ahd/2011 for AY 2004-05 rendered in the case of Smt.Sandhyaben A.Purohi vs. ITO vide order dated 08/02/2013 in para-8 has held as under:- "8. Next is the question of the correct year of assessment of the capital gain. On the basis of the documents available on record, it is evident that a sale deed was executed on 9th July, 2001, a copy of which is placed by the Revenue Department on record, by Smt. Sandhyaben Amrishbhai Purohit as a vendor in favour of Smt. Meenaben Markandbhai Parikh, proprietor of M/s Siddhi Corporation, as a purchaser, for a sale consideration of Rs. 12 lacs. As per cl. 5 of the deed, it is evident that on the date of execution of the said deed the possession has also been handed over to the purchaser. As far as the passing of consideration from one hand to another hand, our attention has been drawn on the bank statement of the assessee to demonstrate that the amount of consideration was deposited on two dates, i.e. Rs. 31,000 on 30th April, 2001 and Rs. 11,69,000 on 23rd May, 2001. It has also been informed that on the said date, i.e. on 21st May, 2001, adhesive stamps of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under : "Part Performance.-Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty; ...... and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the trans-feror or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession other than a right expressly provided by the terms of the contract...." If the view that without there being registration, the transferor continues to be the owner is taken, still the question which arises is that the income has not been received by the owner and, therefore, whether the assessment of the transferee can be made by considering that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated under the law. The transferor puts transferee in possession but in view of the document, namely, power of attorney executed by the transferor, it is said that the transferee is not the owner of the property though for all practical purposes transferee acts as the owner, in view of irrevocable power of attorney. By this method tax evaders are securing double benefits, i.e., avoidance of income-tax and stamp duty. It seems that considering various devices which the tax evaders are applying, the Legislature, therefore, amended by inserting clauses in the definition of 'transfer' by clause (47) of section 2 which is as under : "(47) 'transfer', in relation to a capital asset, includes,- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (v) any transaction involving the following of the possession of any immovable property to be taken or retained in part performance of a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. State of Haryana and Another-supra) was delivered on 11/10/2011, but the sale agreement in the present case was executed on 31/03/2008. The Hon'ble Apex Court has observed that "It is also submitted that this decision should be made applicable prospectively to avoid hardship. We have merely drawn attention to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not "transfers" or "sales" and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said "SA/GPA/WILL transactions" may also be used to obtain specific performance or to defend possession under section 53A of the Transfer of Property Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by development authorities. We make it clear that if the documents relating to "SA/GPA/WILL transactions" has been accepted acted upon by the DDA or other developmental authorities or by the Municipal or Revenue authorities to effect mutation, they need not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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