9911796707
TMI Blog2013 (7) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee also filed copies of the probates obtained from the Hon ble Judicature of Bombay. 3. Briefly stated, assessee furnished his return of income for the AY 2007-08 declaring total income of ₹ 24,69,626/- on 11.10.2007, which was accepted u/s 143(1). Assessee s case was re-opened by the AO on the basis of information received from DDIT (Inv) Surat, that the property situated at 5, Man Singh Road, New Delhi was sold for a total consideration of ₹ 1,48,93,93,500/- by 12 family members including the assessee and the assessee s share of the said amount was ₹ 6,21,07708/-. Accordingly, AO issued notice u/s 148 of the Act on 13/9/2010 asking assessee to furnish his return of income for the purpose of re-assessment. In response to the said notice the assessee submitted a copy of the return of income filed earlier to be treated as return of income filed in response to notice u/s.148. The AO vide questionnaire dated 28/11/2011 asked the assessee to show-cause as to why the capital gains shown by the assessee in A.Y 2006-07 and claimed exempt should not be brought to tax in A.Y 2007-08 and why the deduction u/s.54EC should not be disallowed. The assessee vide submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i and Three Daughters viz., Devhuti Vaidya (Assessee s Mother), Bhavani Mehta and Bhuvna Desai. Upon the death of the first three Legal Heirs (of Anantrai Family as above), there would have been some unequal distribution of the Rights in the Assets. However, as the Daughters raised objection to the same and lodged a case in the court at the time of signing the Probate. Thereafter, Kumar Pattani (Assessee s Maternal Uncle) arrived at Consent Terms, whereby, he received 25% and Balance 25% was distributed into three Daughters, Devhuti Vaidya (represented by her family members, i.e. Assessee, Assessee s Father Haresh Vaidya and Assessee s Sister Anita Vaidya ), Bhuvna Desail and Bhavani Mehta, in equal proportion @ 8.33 %. Thus, the Vaidya Family were entitled to an undivided 8.33 % share in the Property situated at 5, Man Singh Road, New Delhi (the Property ), which was bequeathed by Late Devhuti Haresh Vaidya. Mr. Kumar M Pattani, gave an offer dated 17-10-2005 to the Vaidya Family including the assessee for purchasing their share of 8.33 %. Accordingly, an Agreement to Sale dated 25-10-2012 was entered between the Vaidya Family and M/s Duce Properties Services Private L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 15-12-2008 the decision to tax the Sale Proceeds of the same property again in AY-2007-08 would amount to change of opinion, which is not acceptable as a Valid Reason for Reopening the Assessment of the preceding year. 5. That, the Agreement to Sale and consequently the Transfer of Property, and Receipt of the Consideration had been completed in FY2005-06(AY-2 006-07). Therefore, for the purpose of Income tax, the Sale was complete in FY-2005-06 which is the previous year relevant to AY-2006-07 and not AY-2007-08. 6. That, Assessee s share was only to the extent of 2.77 %, being 1/3 of the Total Share of the Legal Heirs, which was 8.33 % 7. That, Assessee s Father Haresh Vaidya (Expired on 05-01-2006) had also received his share in AY-2006-07 and offered the same to Tax in AY-2006-07, which was also assessed u/s 143(3) vide an Order dated 26-11-2008 passed by Hon. DCIT-7(3), Mumbai. Hence, his Capital Gains also could not be assessed partly in Assessee s hands. 8. The subsequent Transfer Deed was not signed by the assessee, but, by his power of attorney holder (to whom, the assessee had already sold the property) and therefore it was only the extension of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Mrs. Devhuti Haresh Vaidya is that I shall out of the sale proceeds of Delhi property pay jointly to all of you a sum of ₹ 12 Crores. In addition thereto, I shall transfer to your names 8236 plus bonuses totalling to 12354 shares of Zandu Pharmaceutical Works Ltd., that are listed in schedule I the probate petition filed in the Bombay High Court. This will cover all the rights of Mrs. Devhuti H. Vaidya (or her heirs) in the Delhi property and in the movable and immovable assets/ Properties including those mentioned in the Wills of Late Mr. Mahesh A. Pattani, the properties mentioned in the Wills of Late Smt. Yashomati A. Pattani and Late Smt. Vidyadevi M. Pattani and properties co-owned by late Mrs. Devhuti Haresh Vaidya with Kumar M Pattani. For distribution, the above offer-will-be divided into three equal-parts i.e. 4 Crores and 4118 shares each. You shall give your consent in writing for the Probate being issued by the Hon ble Bombay High Court. Please confirm within 2 days that the above offer is acceptable to you. Please note that this is the best offer that I can give you. There is no scope for any further negotiations. Yours Sincerely, Sd/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vendors shall not alienate, transfer, assign, mortgage, create any charge or encumbrance over the said Property in any manner whatsoever. 13. The vendors further undertake that this Agreement to Sell is final and irrevocable and they shall not enter into any other Agreement or transaction relating to their share with any other person. 14. The vendors will give necessary authorizations / power of attorney in favour of the vendee and will extend all necessary help for settling these issues. However, all cost and expenses incurred by Power of Attorney holder on behalf of the vendors shall be borne and paid by the vendee. 15. All expenses such as stamp duty, registration charges, charges for conversion of the property from lease hold to free hold and mutation of property in their name and for execution /registration of the Sale Deed shall be borne by the vendee along. 16. The vendee shall have the option to purchase the property in its own name or jointly with any other person or through any other individual(s), trust(s), company/companies or other entities or group of persons who/which may be nominated by it at its absolute discretion. 17. The vendors hereby authorize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006. 5.5 The Hon'ble Bombay High Court in the case of Chatrabhuj Dwarkadas Kapadia vs. CIT (260 ITR 491) has held : Clauses (v) and (vi) were introduced in section 2(47) of the Income-tax Act, 1961, with effect from April 1, 1988. They provide that transfer includes (i) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882, and (ii) any transaction entered into in a manner which has the effect of transferring or enabling the enjoyment of an immovable property. Therefore, in these two cases capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effective or complete under the genera law. Under section 2(47)(v) any transaction involving allowing of possession to be taken over or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act would come within the ambit of section 2(47)(v). In order to attract section 53A, the following conditions need to be fulfilled. There should be a contract for consideration; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee was bound to pay all outgoings. Under clause 20 of the agreement it was agreed that the sale should be completed by execution of conveyance. Till date, there was no conveyance. By March 31, 1996, the builder had paid almost the entire sale price of ₹ 1,85,63,220 except for the small amount of ₹ 9,98,000. However, the BMC issued a commencement certificate permitting construction of a building up to the plinth level only on November 15, 1996. In the meantime, the plan came to be amended. Ultimately, the power of attorney was executed on March 12, 1999. The assessee paid the capital gains in the assessment year 1999-2000 but the Assessing Officer held that it was payable in the assessment year 1996-9 7 and this was upheld by the Tribunal. On further appeal: Held, that section 2(47)(v) read with section 45 indicates that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property is not effective or complete under the general law. In this case, the test had not been applied by the Department. No reason had been given why that test had not been applied, particularly when the agreement in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise, no capital gain could be levied till registration was done. In this case what the assessee was having is only an undivided share in the property in Delhi, which was agreed to sold, transferred/ assigned to M/s. Duce Property and Services Pvt. Ltd. We can conclude that the transfer is complete, as per clause -11 of the agreement for sale. 5.7 Similar situation was also considered by the co-ordinate Bench in the case of Smt. Rajshree Bihani vs. ITO [2011] 16 taxmann.com 44(Kol) wherein it was held as under :- It was to be held that the assessee sold her 1/3rd undivided share in plot of land vide agreement of sale dated 28.12.2000 entered into with the purchaser in part performance of the contract after handing over the possession of the land on 28.12.2000 vide possession letter dated 28.12.2000. It meant that the assessee fulfilled the conditions of the provision of section 2(47)(v) and the said transaction fell within the ambit of transfer. Once, this was a transfer effected as on 28.12.2000, the provisions of section 50C, which are with effect from 1.4.2003 for and from the assessment year 2003-04, would not apply to the instant transaction. The assessee also made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed capital gain. Accordingly, by investing the amount as per provisions then existing to claim deduction assessee offered capital gain. This deduction was also accepted under section 143(3) after scrutiny by AO. Therefore, there is merit in assessee s contention that same amount can not be brought to tax in two separate assessment years. Therefore, the grounds raised by the assessee on the merits of the issue are upheld. 7. The assessee is also contesting the issue on re-opening of the assessment. As briefly stated, the ld. CIT(A) upheld the same for the reason that the proceedings have been accepted under section 143(1) and there was information from the investigation wing on the basis of which there was satisfaction to that extent. We agree with the findings to that extent. However, what we cannot agree is the action of the AO in coming to the satisfaction for re-opening the assessment. First of all the assessee has already declared capital gains in assessment year 2006-07 and same was also accepted. Therefore, AO cannot come to a conclusion that income has escaped assessment, when the income was already offered and assessed to tax, the transaction being same. Moreover, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
