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TMI Blog2015 (12) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... proximately Rs. 4.80 crores) for which an advance of Rs. 40.00 lakhs was paid by the assessee to the seller in terms of the agreement. However, because of certain disputes between the seller and one Vikas Housing, with whom also the seller and his brother had agreed to sell a large chunk of their land, including the land regarding which the agreement had been entered into with the assessee/appellant, and as an Original Suit No.3950/95-96 had been filed relating to the said land, the sale deed could not be executed. The litigation between the parties relating to the land in question went up to the High Court and ultimately, a compromise was entered into between the parties, and in terms of the said compromise, instead of 3 acres 39 guntas of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeralgi, learned counsel for the respondent/revenue, and perused the records. By agreement of the learned counsel for the parties, we have reframed the question of law to be determined in this appeal, which is as follows: "Whether the Tribunal was justified in law in holding that the income has to be treated as short term capital gains when the assessee had entered into an agreement to sell on 1.4.1995 and had paid a substantial advance of Rs. 40.00 lakhs even though the sale deed may have been executed on 5.12.2002 on payment of further sum of Rs. 1.00 lakh?" 5. The submission of Sri Shankar, learned counsel for the appellant/assessee is that in the facts of the present case, the authorities ought to have considered the date of agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Commissioner and the Assessing Officer. He submitted that the sale deed was executed in favour of the assessee on 05.12.2002, which property he sold on 20.05.2005, which was within 36 months from the date of its purchase, hence the assessee would not be entitled to the benefit of long term capital gains and the authorities have thus rightly given the benefit of short term capital gains, which is perfectly justified in law. It is further contended that the agreement entered into on 01.04.1995, on the basis of which advance of Rs. 40.00 lakhs had been given by the assessee, did not refer to the assessee being given possession of the land in question and as such, the authorities have rightly denied the benefit of long term capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for transfer of property in question as the date of transfer of the house/original asset". 10. The benefit of Section 54 of the Act is to be given only when the assessee purchases a property one year prior to the sale of his property or two years after such sale. In the case before the Apex Court, even though the purchase of the property by the assessee was on 30.04.2003, which was not within one year prior to the execution of the sale deed dated 24.09.2004, yet the benefit was given by the Apex Court to the assessee on the ground that it was within two years of the agreement to sell executed on 27.12.2002. While coming to such a conclusion, the Apex Court had, in paragraphs 20, 21 and 23 of the Judgment observed as under: 20. "The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...." 21. Now, in the light of the definition of "transfer" as defined under section 2(47) of the Act, it is clear that when any right in respect of any capital asset is extinguished and that right is transferred to someone, it would amount to transfer of a capital asset. In the light of the aforestated definition, let us look at the facts of the present case where an agreement to sell in respect of a capital asset had been executed on December 27, 2002, for transferring the residential house/original asset in question and a sum of Rs. 15 lakhs had been received by way of earnest money. It is also not in dispute that the sale deed could not be executed because of pendency of the litigation between Shri Ranjeet Lal on the one hand and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property to the proposed vendee but that is not the case at hand. 22....... 23. Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immovable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and, therefore, without hesitation we can say that some right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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