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TMI Blog2018 (2) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... in. Admitted factual position is that the Assessee was to receive only a sum of ₹ 32 lacs from S.K.Todi as sale consideration in respect of the property. The admitted position is that the difference between ₹ 32 lacs and ₹ 56 lacs has already been taxed in the hands of S.K.Todi. In this factual background, we are of the view that the STCG on sale of the property has to be determined in the hands of the Assessee by adopting the income received as accruing as a result of transfer as ₹ 32 lacs and not ₹ 56 lacs. To this extent the plea of the Assessee is accepted. - ITA No.238/Kol/2016 - - - Dated:- 2-2-2018 - Shri N.V.Vasudevan, JM And Shri Waseem Ahmed, AM For The Appellant : Shri Raja Ram Chowdhury, CA For The Respondent : Shri S.Dasgupta, Addl. CIT (DR) ORDER PER N.V.VASUDEVAN, JM: This is an appeal by the Assessee against the order dated 30.1.2015 of C.I.T- (A)-13, Kolkata relating to A.Y.2007-08. 2. The Assessee is a partnership firm. It owned a property in M.G.Road, Bangaluru. By an agreement dated 20.10.2005 the partnership firm .i.e. assessee agreed to sell the property to one Shri Sanjay Todi alias Shri Sanjay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u. The AO accordingly computed the short term capital gain invoking the provision of section 50(1) of the Act. The assessee took a stand before the AO that as far as the assessee is concerned the sale consideration receivable by the assessee was only ₹ 32,00,000/- and therefore capital gain should be taxed in the hands of the assessee by regarding ₹ 32,00,000/- as full value of consideration received on transfer and not ₹ 56,00,000/-. The assessee submitted that the difference between ₹ 32,00,000/- and ₹ 56,00,000/- (price for which property was sold to a third party) should be brought to tax in the hands of Shri Sanjay Todi. The AO however rejected the contention of the assessee for the following reasons : The contention of the assessee firm in this regard is not tenable, because, Mr.Sanjay Todi, a partner of the assessee firm, neither got registered in his name nor took the possession of the flat. Since the provisions in clauses (v) of section 2(47) were not complied with. Therefore, it is factual correct that the right in the property was not transferred by the assessee firm, M/s. M.M.Export in favour of the Mr.Sanjay Todi and acquired any ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd possession was not taken. In this regard it is pertinent to mention here that before C.I.T(A) the facts of the case of M.M Export were not placed. Had it been placed before C.I.T(A) that the assessee M/s M.M Export. from where Mr. Sanjay Todi stated to have purchase in F.Y 2005-06. has not shown any transfer in its books of account, no capital Gain/income is shown. the asset has not been taken out from the balance sheet, then the unilateral action of Mr. Sanjay Todi would not have been accepted for treating it capital gain. While adjudicating the case of Mr. Sanjay Todi by C.I.T(A) it has been decided in isolation without taking into consideration the facts of the case M/s M.M Export hence no force and the same is rejected. 6. Aggrieved by the order of the CIT(A) the assessee has preferred the present appeal before the Tribunal. 7. The assessee has raised several grounds of appeal. The sum and substance of which is that the short term capital gain pertains to A.Y.2006-07 and not A.Y.2007- 08. Alternatively the assessee has submitted that Capital Gain should be computed by considering the full value of consideration received or accrued on transfer of capital asset at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multistoreyed constructions in big cities. The definition also does not cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in section 53A of the Transfer of Property Act, 1882. New sub-clauses (v) and (vi) have been inserted in section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. 11.2 The newly inserted sub-clause (vi) of section 2(47) has brought into the ambit of transfer., the practice of enjoyment of property rights through what is commonly known as Power of Attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted.A person holding the power of attorney is authorised the powers of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices Ltd. (supra). It was a case in which the question for consideration before the Hon ble Court was as to whether giving up right to claim performance extinguishes the right to property so as to attract the rigour of section 2(14) of the act r.w. s.2(47). This decision is of no relevance to the facts of the present case. The ld. Counsel also drew our attention to the decision of the Hon ble Supreme Court in the case of Suraj Lamps Industries (P)Ltd vs State of Haryana 340 ITR 1 (SC). We have perused the aforesaid decision and we find that the aforesaid decision was rendered in the context of the transfer of immovable property in the light of provisions of Registration Act. The decision was rendered in the context of sale which usually takes place by executing agreement for sale coupled with an instrument of power of attorney in favour of the purchaser without registration of the sale deed. The court held that such transaction are not in accordance with law. The Hon ble court however held that the transactions which were being done in the past should be recognised as valid mode of transfer of immovable property. This decision is not applicable to the facts of the assessee s ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer of short-term capital assets; ( 2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets. 15. In the present case the block of assets ceases to exist and therefore the provisions of Sec.50(2) of the Act would apply. Under Sec.50(2) of the Act, it is only the income received or accruing as a result of transfer that should be reduced from the WDV of the block of building as on 1.4.2006 to arrive at the Short Term capital gain. Admitted factual position is that the Assessee was to receive only a sum of ₹ 32 lacs from S.K.Todi as sale consideration in respect of the property. The admitted position is that the difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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