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TMI Blog2018 (10) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 20/03/2009, being agreement to sale, under which possession was granted to buyer from time to time. 1.2 The learned A.O. has erred in treating Cost of Acquisition of land to be Rs. 27,580/-, for the purpose of computation of long term Capital gains. 1.3 The Learned CIT(A) has erred on facts and in law, in treating appellant as seller of land, ignoring the fact that the appellant sold the land to Shri R.K Lalwani, who has taken the possession of land and thereafter he sold the land to various customers in small pieces. Also ignored the fact that transaction between appellant and Shri R.K. Lalwani was on the stamp value determined by stamp value authority. 2. The learned A.O. has erred in denying the exemption u/s 54B to the appellant for land purchased in name of his dependent son and daughter." 3. The appellant reserves the right to add, amend or alter grounds of appeal at any time before the appeal is decided. 3. The brief facts of the case are that the appellant is an individual earning income from other sources and agricultural income. The appellant had filed his return of income for A.Y. 2010-11 on 12.12.2011 declaring total income of Rs. 1,00,000/- on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,00,000/- per hectare as claimed by the appellant. The appellant was also asked to substantiate his claim regarding deduction u/s 54B of the Act. The appellant submitted copy of agreement dated 20.03.2009 with Shri R.K. Lalwani, K-4/4, Windsor Hills, Chuna Bhatti, Bhopal. It was stated that the appellant had agreed to sell his land admeasuring 1.647 hectares for a total consideration of Rs. 1,68,90,500/- to Shri R.K. Lalwani. It was claimed that the appellant, after receiving the total consideration gave the possession of the land to Shri R.K. Lalwani on 20.3.10. It was, thus, contended before the A.O. that the appellant had transferred the land to Shri R.K. Lalwani for Rs. 1,68,90,500/- and in view of provisions of Section 2(47)(v) of the Act, there was transfer of the land in favour of Shri R.K. Lalwani on 20.03.2010. It was also informed that Shri Lalwani had sold the land into smaller pieces to various persons during the F.Yrs. 2009- 10 & 2010-11 relevant to the A.Yrs. 2010-11 & 2011-12. In the registered sale deeds, the appellant had signed the documents as agreed with Shri R.K. Lalwani. But the Ld. A.O. was of the view that the appellant had in fact sold the land in smaller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant was asked to explain why the transfer of such pieces of land should not be treated as sale by the assessee in view of registered sale deed signed by assessee in favour of these persons and why not the full value of consideration should be adopted in view of Section 50C of the Act as per fair market value determined by the Stamp Valuation Authority. 5. The appellant contended that the land was sold by the 'agreement of sale' executed between the appellant and Shri R.K. Lalwani on 20.03.2009 @ Rs. 41,50,000/- per acre for a total consideration of Rs. 1,68,90,500/- and the consideration was received by the appellant in cash/post dated cheques. As per guidelines of the Collector (Zila Panjiyak and Sanyojak), the prevailing rates at that time were Rs. 40,48,582/- per acre. The appellant also furnished a copy of guidelines issued by the Zila Moolyankan Samiti, Bhopal for F.Y. 2009-10. It was, thus, contended that the sale consideration of Rs.l,68,90,500/- shown by the appellant was in excess of the market price assessable as per guidelines of the Collector as on the date of transfer. It was contended by the appellant that he had sold the land in acres and not in small piece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral land admeasuring 22.86 acres to Shri Babu Lal Agrawal through registered sale deed dated 25.07.1985 for a total consideration of Rs. 2,26,9001-. The land has been sold at the rate of less than Rs. 10,000/- per acre. (2) Sh. Aizaz Ahmed and Sh. Ashfaq Ahmed have sold agricultural land admeasuring 3.87 acres to Shri Babu Lal Agrawal through registered sale deed dated 31.07.1985 for a total consideration of Rs. 40,0001-. The land has been sold at the rate of slightly more than Rs. 10,000/- per acre. 8. The A.O stated that sale instances of the land mentioned above were not in respect of the land which was in the same village where the land of the appellant was situated but they show a fair rate of sale of the land in the vicinity of Bhopal city prevailing in the financial year 1985-86. Even if it is accepted that the land sold by the appellant was situated at a place having a higher value, such an increase in rate will have to be adjusted towards lower side in view of the fact that comparative sale instances relate to financial year 1985-86, whereas the fair market value to be estimated was for 01.04.1981. Considering these facts, the A.O. adopted fair market value of agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et. includes.- (i)...... (v) any transaction involving the allowing of the possession of any immovable property 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 (4 of 1882) : or" From the above provisions, it can be seen that two conditions should be fulfilled to hold that the transfer of the capital asset has taken place i.e.: The following of the possession of immovable property 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 3.4.2 Now, in this case, on verification of the facts, it is noticed that the appellant had directly given possession of the pieces of land to the various purchasers on the date of registration of the sale deeds. This fact is clearly mentioned in each sale deed registered. All the sale deeds are identical. It will be relevant to refer the relevant portion of sale deed in favour of Shri Mukesh Kumar for the sale of a piece of land for Rs. 4,00,000/- vide sale deed registered on 29.10.2009, which reads as under:- From the above sale deed registered, it is evidently cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, they shall have no effect for the purposes of the said section 53A. " Thus, as per the plain and unambiguous provision of Section 17(1A) of the Registration Act, 1908, if after 24.01.2001 an agreement for transfer of immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purpose of Section 53A of the Transfer of Property Act. In the instant case, the agreement to sale dated 20.03.2009 entered with Shri R.K. Lalwani was not registered under the Registration Act, 1908. Hence, in view of Section 17(1A) of the Registration Act, the transaction was not of the nature referred to in Section 53A of the Transfer of Property Act, 1882. Thus, there was no transfer of land in favour of Shri R.K. Lalwani as envisaged in Section 2( 47(v) of the Act. 3.4.4 The Hon'ble ITAT, 'F' Bench, Mumbai had an occasion to consider the issue regarding "Transfer" as per Section 2(47(v) of the Act in a recent decision in the case of Mr. Fardeen Khan Vs. ACIT, Mumbai in ITA No. 1588/Mum/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty to be developed In this respect, reliance can be placed on the order of the Tribunal, Chennai Bench, in the case of R. Gopinath (HUF) v ACIT 133 TTJ 595. We also find that the A.O. has wrongly invoked provisions of section 2(47))v) of the Act because it deals with contracts of part performance referred to in section 53A of the Transfer of Property Act. 20. Section 53A of the TOPA prescribes following cumulative conditions to be satisfied/or application of doctrine of 'part performance':- a) there should be a written contract for consideration,. the contract should be signed by the transferor; b) the contract should pertain to transfer of immoveable property; c) the transferee should have taken possession of the property; d) as per clause no 1 4 (b) possession continued with Appellant e) the transferee should be ready and willing to perform his part of contract and f) the contract should be registered as per the provisions of The Registration Act, 1908 (this condition has been introduced with effect from September 2001). This part has been elaborated below. Section 17 (1A) of the Registration Act, provides as under: "The documents containing contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the transaction within the purview of section 53A of the Act. As provisions of section 53A was amended in 2001 by which additional condition of registration of the written agreement was introduced and since in the instant case the agreement was not registered, the decision rendered by Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra) with respect to relevant provisions of section 53A' applicable in A. Y. 1996-97 will not he applicable to the facts of instant case. We can therefore safely conclude that the conditions stipulated in section 53A of TOPA are not satisfied the case of assessee as discussed above, there is no transfer as per the provisions of section 2(47) of the Act." 3.4.5 Therefore, considering the totality of facts and circumstances of the case as well as position of law on the issue, it is held that the appellant had transferred the pieces of land to various Customers on the date of registration of the respective sale deeds as mentioned in the assessment order, as per Section 2(47) of the Act. There was no transfer of the said capital asset by the appellant in favour of Shri R.K. Lalwani as envisaged u/s 2(47)( v) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount retained by Shri R.K. Lalwani was cost incurred by the appellant for transfer of capital assets is reasonable and acceptable. It is an admitted fact that Shri R.K Lalwani had made payment to the appellant. He had found the customers and received the payments from the customers. Therefore, the difference in the sale price given to the appellant by ShriK R.K. Lalwani and the sale consideration received from various customers by Shri R.K. Lalwani was retained by him, which was nothing but service charges for the services rendered by him and is to be considered as cost of transfer. Therefore, the A.O. is directed to allow the cost of transfer of Rs. 12,25,9I5/- in A.Y. 20 10-11, the amount paid/retained by Shri R.K. Lalwani in respect of transfer of these 13 pieces of land. 3.4.9 In view of the above, the computation of Long Term Capital Gains would work out as under: - Sale consideration u/s 50C Rs. 3,97,79,240/- Cost of acquisition Rs. 27,580/- Year of acquisition 1981-82 Year of sale 2009-10 Indexed cost of acquisition Rs. 27580X632/100 Rs. 1,74,306/ Long Term Capital Gain Rs. 3,96,04,934/- as worked out by the A. 0. Less: Cost of transfer paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do what the Income-tax Officer can do and also direct him to do what he has failed to do. It was observed that there was no reason why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. The Act does not place any restriction or limitation on the exercise of appellate power. It was observed that:- "The above observations are squarely applicable to the interpretation of section 251 (l)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the Income-tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the case. 35. In case of CIT v. Pruthvi Brokers &Shareholders (P.) Ltd. [2012] 349 ITR 336/208 Taxman 498/23 taxmann.com 23 (Bom.) the Bombay High Court considered the issue at considerable length and held that Commissioner (Appeals) as well as the Tribunal have the jurisdiction to consider the additional claim and not merely additional legal submissions. The appellate authorities have discretion to permit such additional claims. Such claims need not be those which became available on account of change of circumstances of law but which were even available when the return was filed. 36. The Delhi High Court once again in recent judgment in the case of CIT v. Sam Global Securities Ltd. [2014J 360 ITR 6821/2013J 38 taxmann.com 129 observed that the Courts have taken a pragmatic view and not a technical one as to what is required to be determined in taxable income. In that sense assessment proceedings are not adversarial in nature. With these observations Court confirmed the view of the Tribunal reversing the decision of the assessing officer rejecting the claim of the assessee on the ground that no revised return was filed. 37. In case of CIT v. Cellulose Products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppened in the present case. The Appellate Commissioner and the Tribunal did not need to nor did they travel beyond the materials already on record, in order to examine the claims of the assessees for deductions under sections 80-IB and 80HHC of the Act. 41. In the decisions that we have noted above, the Courts have considered such questions when a legal contention or a claim was based on material already on record but raised at an appellate stage. On such premise we wholeheartedly agree that the appellate authority and the Tribunal would have the power to entertain any such new ground, legal contention or claim. However, it is only the Bombay High Court in the case of CIT V. Pruthvi Brokers &Shareholders (P.) Ltd (supra), which has travelled a little beyond this preposition and come to the conclusion that even if facts necessary to examine such a claim are not placed before the assessing officer and, therefore, not on record, there would be no impediment in the Commissioner (Appeals) entertaining such a claim. Such an issue does not arise in these appeals. We would, therefore, reserve our opinion on this limited aspect of the matter if and when in future the question presents be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Umesh Patidar 2009- 10 06.01.2010 3.08 413025 0 0 413025 Shri Umesh Patidar 2009- 10 13.01.2010 2.366 432115 0 0 432115 Shri Umesh Patidar 2009- 10 13.01.2010 1.549 172065 0 0 172065 Shri Umesh Patidar 2009- 10 13.01.2010 2.329 423185 0 0 423185 Shri Umesh Patidar 2011- 12 03.12.2010 1.885 457800 28620 5840 492260 Shri Umesh Patidar 2010- 11 06.08.2010 3.863 782775 0 0 782775 Total 4939350 7015 4986085 (d) In the name of appellant's daughter, Ms. Seema Patidar S. No. Name of Purchaser F.Y Date of registration Area Cost of Purchase (Rs.) Stamp Value (Rs.) Registration Fee (Rs.) Total Cost Rs.) Ms. SeemaPatidar 2011- 12 29.09.2011 4.799 1165800 72870 11505 1250175 Total 1165800 72870 11505 1250175 The appellant claimed that the agricultural land purchased by the appellant in the name of his wife, son and daughter were also eligible for exemption u/s 54B of the Act as all these lands were purchased by the appellant from the funds received on sale of agricultural land. He had also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the name of his wife. But the same was assessed in the hands of the assessee. Hence, he was entitled to exemption uls 54 of the Act. This view was followed by Hon'ble Delhi High Court in the case of CIT Vs. Kamal Wahal (2013) 30 Taxmann.com 34 (Delhi), the case relied upon by the appellant. Thus, in the case of his wife, since the asset was purchased from the sources of the husband, the income arisen from that asset is liable to be assessed in the hands of the husband. Hence, the courts have allowed benefit uls54, uls54B &uls 54F of the Act if the new asset is purchased in the name of the wife. Therefore, considering the consistent view of the courts, it is held that the appellant is entitled to benefit of Section 54B in respect of agricultural land purchased in the name of his wife also. 4.6.1 However, in respect of agricultural lands purchased in the name of his son, Shri Umesh Patidar and his daughter, Ms. Seema Patidar, it is noticed that Shri Umesh Paditar was aged 22 years at the time of purchase of agricultural land and Ms. Seema Patidar was aged 20 years, as mentioned in the sale deeds registered. Thus, both son and daughter of the appellant were major at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreted in such a manner as to accord with the context and subject of its usage. A reading of section 54B of the Act nowhere suggests that the Legislature intended to advance the benefit of the section to the assessee who purchased the agricultural land even in the name of the third person. The term "assessee" is qualified by the expression "purchased any other land for being used for agricultural purposes ", which necessarily means that the new asset which is purchased has to be in the name of the assessee himself for seeking exemption under section 54B of the Act. In this case, the Assessing Officer while computing the income under the head "Capital gains" for A. Y 1996-97 did not allow the deduction under section 54B of the Act for the purchase of land as it had been purchased by the assessee in the name of his son and grandson. The appeal filed by the assessee was allowed by the Commissioner (Appeals) holding that the assessee was entitled to deduction under section 54B of the Act for the agricultural land purchased by him in the name of his son and grandson and directed the Assessing Officer to recompute the income. On appeal by the Revenue, the Tribunal set aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... literate person, not having any other source of income. His son was bachelor and was not having any independent source of income. He was dependent upon his father even for livelihood. Whereas in the instant case, the appellant was aged 49 years only at that time and had other sources of income. Similarly, his son was an independent and had filed his own return of income. The agricultural land was also not purchased as coowner but exclusively in the name of the son and daughter. It may also be not out of place to mention that the earlier decision of the Hon'ble High Court in the case of Jainarayan Vs. ITO (2008) 306 ITR 335 (P&H) was not brought to the notice of the Hon'ble High Court while deciding this case. Therefore, the ratio of the decision in the case of CIT Vs. Gurnam Singh (Supra) is not squarely applicable on the facts of the instant case. 4.6.7 Here it may also be relevant to mention that there was another decision of Hon'ble Andhra Pradesh High Court in the case of Late Gulam Ali Khan Vs. CIT (1987) 165 ITR 228 (A.P.) wherein deduction uls54 of the Act was allowed for purchase of residential house in the name of legal heirs. But this decision was given on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of land and thereafter he sold the land to various customers in small pieces. Also ignored the fact that transaction between appellant and Shri R.K. Lalwani was on the stamp value determined by stamp value authority. 2. The learned A.O. has erred in denying the exemption u/s 54B to the appellant for land purchased in name of his dependent son and daughter". 3. The appellant reserves the right to add, amend or alter grounds of appeal at any time before the appeal is decided 12. The Ld. Counsel for the assessee submitted referring to the following written submissions; A.O/CIT(Appeals) has ignored the fact that Capital gain shall attract on the appellant at the stage of possession being granted to Shri R.K. Lalwani under agreement to sale dated 20.03.2009 in terms of se. 2(47)(v). A.O/CIT(Appeals) has ignored the fact that, the capital gain on a transaction which has resulted into transfer [by way of transfer of possession u/s 2(47)] is attracted only to the sale which appellant made to Shri R.K. Lalwani under an agreement whereby possession was with Shri R.K. Lalwani. In the given case, there is no non compliance of sec. 50C as at the time of sale of total chunk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hoorjiVallabhdas&Co. (1962) 46 ITR 144 (SC) A.O./CIT(Appeals) has failed to appreciate that the appellant was not in possession of property on the date of registration of portion of properties made with the Registrar and he was also not the beneficial owner of the said property at the time of physical transfer. This fact has been confirmed by Shri R.K. Lalwani in his statement on oath before the A.O. A.O./CIT(Appeals) ignored the fact that the tentative value of 4.07acres of land on the date of agreement and handover of possession was equal to the consideration for sale received by the appellant. Variation taken by the A.O. is on account of value in piecemeal sale of land by the buyer of land (Shri R.K. Lalwani) to his customers. A.O. /CIT(Appeals) has ignored the statement of Shri R.K. Lalwani (Buyer of the land), recorded u/s 131 on oath, in which he has confirmed that he has purchased 4.07acres of land from the appellant for a sum of Rs. 1,68,90,500/- . He even confirmed that he has sold the same land in small pieces to various buyers during the relevant Qperiod. He has further confirmed that, money from such sale was deposited in his (Shri R.K. Lalwani) bank account, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be taxed in the hands of other person, when the facts have not been denied by A.O./CIT(AppeaIs), and there are clear evidences to show that the income Which is being taxed, was earned by some other person. 13) In case of Chaturbhuj Dwarkadas Kapadia v. CIT (2003) 260 ITR 491 (Bombay) - High Court has held that " if the contract, read as a whole indicates passing of, or transferring of complete control Over property in favour of the developer, then the date of contract would be relevant to decide the chargeability", as a result of which High Court has held that, if the agreement/contract indicates that complete control of property has been transferred, then the capital gain shall be charged at that point - in the given case, the whole reading of contract clearly indicates that the property was sold on the date of agreement itself and cheques were issued to the appellant, and there is a specific mention in the agreement that registration may be done in favour of the buyer (ShriR.K. Lalwani) or any other person. A similar view was taken by Honourable Tribunal in case of Mrs. DurdanaKhatoon v. ACIT (2013) 58 SOT ( ITAT, Hyderabad). 14) It is further submitted that, section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of contracts" referred to in sec. 53A. It does not in any manner says that it will be invoked to the contracts to which sec. 53A legally applies. Since sec. 17(1A) of the Registration Act, 1908 is purely connected/related with the registration proceedings and it bars the application of sec. 53A for that limited purpose, it shall not apply to sec. 2(47)(v), as sec. 2(47)(v) only refers to the "nature of contracts" and does not refer to the contract to which sec. 53A is legally applicable. The limited purpose of sec. 2(47)( v) is, to identify a particular type of agreement and contract, it does not intend to make sec. 53A legally applicable or invocable u/s 2(47)(v). Therefore, the sole reason of the finding given by the CIT(Appeals) is unsustainable and such interpretation is primarily defeating the objects of sec. 2(47)(v). The A.O. has denied deduction u/s 54B for the sole reason that deduction Was not claimed in the original return and Was claimed in the revised return. However, CIT(Appeals) while Considering facts and evidences, has Partially allowed the deduction u/s 54B, in respect to properties which Were purchased in the name of his son and unmarried daughter. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he possession of unsold area was handed over to Shri R.K. Lalwani (8) During the course of assessment proceedings, assessee filed revised return claiming exemption u/s 54B of the Act for investment in agriculture land at Rs. 1,52,23,340/- in the name of self, wife, son and daughter. (9) Ld.A.O did not entertained the revised return, however Ld.CIT(A) gave the benefit of exemption u/s 54B of the Act for the investment in agriculture land in the name of the assessee and his wife. (10) Shri R.K. Lalwani stated on oath before the Ld.A.O that he has purchased the agriculture land from the assessee and made payments through account payee cheques/cash and the alleged transactions was undertaken as per the agreement entered into by him i.e. Shri R.K. Lalwani and all the sale considerations from plot owners received by him and the assessee merely signed the sale deeds as agreed in the agreement of sale. (11) Shri R.K. Lalwani has also been assessed to tax and the alleged receipts from sale of plots on lands was part of the total addition of undisclosed income of Rs. 64,68,32,000/- made by the Ld. ITO Ward-1(3), order dated 30.3.2015. 16. Now we find that the Ld. Assessing Officer m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for investment in agriculture land in the name of son and daughter of the assessee. (iv) Whether both the lower authorities were justified in limiting the claim of cost of acquisition to Rs. 27,580/- 19. As regards (i) and (ii) issue mentioned above, we find that the assessee entered into an agreement with Shri R.K. Lalwani for sale of agriculture land vide agreement for sale dated 20.03.2009. Thereafter during the year under appeal the assessee received the consideration from Shri R.K. Lalwani from time to time which are mostly through account payee cheque. During the year assessee acted on the basis of the "agreement to sale" and signed the documents for sale deeds registered in the name of plot owners which were sold by Shri R.K. Lalwani and the consideration for which was also received by Shri R.K. Lalwani. Letter of hading over the possession was given on 20.03.2010 by the assessee to Shri R.K. Lalwani and the agreed sale consideration was received towards the agreement of sale of agriculture land. It is a fact that some part of the impugned agriculture land which was converted for use for residential purposes by Shri R.K. Lalwani was sold by Shri R.K. Lalwani to various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Authority, sections 17 and 49 of the Indian Registration Act have been amended by Act No.2001 whereby it has been laid down that the registration of sale agreement/contract for the purpose of section 53A is mandatory. The ld.DR while putting reliance upon the order of the ld.CIT(A) also brought to our notice copy of the Govt. of Gujarat Extraordinary Gazette Notification published on Saturday, February, 2002 whereby amendment of the Indian Registration Act in section 17 of the Registration Act has been published. The ld.CIT(A), while construing the impact of sections 17 and 49 of Indian Registration Act along with section 53A of TPA within the meaning of ITA No.2414/Ahd/2013 section 2(47) of the Income Tax Act has concluded that the "transfer" within the section 2(47) of the Income Tax Act can only be completed, if in part performance of the contract, possession has been handed over as per section 53A of the TPA. Once the agreement was not registered then it will lose its evidentiary value within the meaning of Section 53A of the TPA. In other words, the rights flowing from an agreement can only be recognized if it was duly registered. If the agreement was not registered, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents required to be registered.--No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall-- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered : Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877), or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882 (4 of 1882) or as evidence of any collateral transaction not required to be effected by registered instrument." 25. Section 53A of the T.P. Act provide a shield to defend the possession taken by virtue of the agreement. The vendee can claim protection of the possession even against the owner i.e. vendor, during the period sale deed was not registered. The person who has acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the ITA No.2414/Ahd/2013 proviso to section 49 of the Indian Registration Act, 1908, put paid to any argument to the contrary. 14. We, therefore, hold that : (a) a suit for specific performance, based upon an unregistered contract/agreement to sell that contains a clause recording part performance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/agreement; (b) the proviso to section 49 of the Registration Act, legitimises such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract." 26. Thus, if the assessee refused to honour her agreement dated 4.4.2008, SDS has a right to get this agreement enforced by way of suit for specific performance and the assessee could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the ld. Revenue Authorities have failed to notice distinction between a valid and genuine contract under the general law vis-à-vis a contract having effected for the purpose of section 53A of TP Act. 28. Next reason assigned by the ld.First Appellate Authority in the impugned order is section 63 of Gujarat/Bombay Tenancy and Agriculture Land Act, 1948 which prohibits non-agriculturists to purchase the agriculture land. As per ld. CIT(A), since SDS was not proved to be an agriculturist, therefore, he was not competent to purchase the agriculture land. Once he was prohibited by the provisions of Tenancy Act, then he cannot purchase agriculture land, meaning thereby, he will be disqualified even to enter into an ITA No.2414/Ahd/2013 agreement for purchase of the land. On consideration of all these reasons, we are of the view that the assessee and the SDS are duly eligible to enter into any contract as per the Indian Contract Act. The effect of the contract may not be given by virtue of Gujarat/Bombay Tenancy and Agriculture Land Act, as per clause (c) of Section 63 referred by the ld.CIT(A). But the ld.CIT(A) failed to note proviso appended to his section. The proviso aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmedabad by its order no.Masal/Bakhap/SR-131/Vashi-1526 to 1552 dated 12.9.2008. This was a significant change in the character of the land. The moment, it was converted into non-agriculture land, its value increase many folds. It is also pertinent to note that as per section 40jj(i) of the Gujarat Town and Country Planning Act, 1976, the land falling within the scheme of development, would vests upto 40% in the development authorities for utilisation of roads, park, schools, drainage etc. Thus, once the land is being converted into non-agriculture land, the whole nature of the land would change. As far as observation of the ld.CIT(A) is concerned, that nothing prevented the assessee to retract from the agreement is concerned, we fail to understand the basis of making such observation. She entered into a lawful contract, which is of binding nature, and how can she retract ? The moment she retracts, then other party can file suit for specific performance. Even if the court does not grant specific performance of the contract, then, would compensate the contractee for damage ? The damages again would be quantified considering the market value of the land. It is also pertinent to note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur finding, we would like to note the observations of the Hon'ble Supreme Court judgment in the case of Union of India Vs. Azadi Bachao Andola, (2003) 132 taxmann 373 (SC). The Hon'ble Supreme Court while referring to the decision of the Hon'ble Gujarat High Court in the case of Banyan & Berry Vs. CIT, 222 ITR 831 made the following observations. "134. We may also refer to the judgment of Gujarat High Court in Banyan and Berry v. Commissioner of Income-Tax where referring to McDowell, the Court observed: ".....The court nowhere said that every action or inaction on the part of the taxpayer which results in reduction of tax liability to which he may be subjected in future, is to be viewed with suspicion and be treated as a device for avoidance of tax irrespective of legitimacy or genuineness of the act; an inference which unfortunately, in our opinion, the Tribunal apparently appears to have drawn from the enunciation made in McDowell case (1985) 154 ITR 148 (SC). The ratio of any decision has to be understood in the context it has been made. The facts and circumstances which lead to McDowell's decision leave us in no doubt that the principle enunciated in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in IRC v. Duke of Westminster and the observations of Lord Simonds in Russell v. Scott It thus appears to us that not only is the principle in Duke of Westminster alive and kicking in England, but it also seems to have acquired judicial benediction of the Constitutional ITA No.2414/Ahd/2013 Bench in India, notwithstanding the temporary turbulence created in the wake of McDowell . 144. If the Court finds that notwithstanding a series of legal steps taken by an assessee, the intended legal result has not been achieved, the Court might be justified in overlooking the intermediate steps, but it would not be permissible for the Court to treat the intervening legal steps as non-est based upon some hypothetical assessment of the 'real motive' of the assessee. In our view, the court must deal with what is tangible in an objective manner and cannot afford to chase a will-o'- the-wisp." 32. Next reasoning assigned by the AO is that funds have been provided by Ganesh plantation to SDS. Husband and father-in-law of the assessee were holding voting power of more than 20% in the Ganesh Plantation Ltd. Therefore, the transactions are arranged in the family itself. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue has not disputed the fact that the Ld. CIT(A) has granted the benefit of Section 54B of the Act to the assessee for purchasing the agriculture land out of the sale consideration received from selling agriculture land. It itself prove that the revenue authorities have accepted that the alleged sale consideration received by the assessee against which benefit/ exemption u/s 54B of the Act has been granted was for agriculture land only and not the residential plots as inferred by the Ld.A.O while recasting the Long Term Capital Gain. Shri R.K. Lalwani has also stated on oath before the Ld.A.O accepting all the transactions entered into between the assessee and Shri R.K. Lalwani as per "agreement of sale" dated 20.03.2009. It was also stated by him on oath that the residential plots sold during the year were effected by him only and he has duly received the sale consideration from various plot owners and those transactions had no financial relation with the assessee. There is no dispute about the price of agriculture land per acre which is at Rs. 41,50,000/- per acre and is above the prevailing rate of Rs. 40,48,552/- as provided in the guidelines of Zila Panjiyak Sanyojak. We the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for investment made in the name of his children needs to be examined in view of the judicial pronouncements. There are judgments both in the favour of assessee and revenue but as held by Hon'ble Apex Court in the case of Vegetable Products Ltd 88 ITR 192, that "if two reasonable construction of a taxing provision are possible, then construction which favours the assessee must be adopted. This is will accepted rule of construction recognized by the Hon'ble court in several of its decisions". Keeping the above discussions and judgments in mind we observe that the Hon'ble High Court in the case of CIT V/s Ravinder Kumar Arora I.T.A. No.1106/2011 order dated 27.9.2011 held that "for the purpose of giving exemption under section 54F the word assessee must be given wide and liberal interpretation so as to include his legal heirs also Hon'ble Court further held that there is no warrant for strict interpretation to the word assessee as that would frustrate the object of granting exemption". Holding so, the Hon'ble Court observed as under; "9. On the aforesaid facts, we are of the view that the conditions stipulated in Section 54F stand fulfilled. It would be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation to the word "assessee" as that would frustrate the object of granting exemption. I1. We also find judgments of other. High Courts giving benefit of Section 54F(l) of the Act when the house of the assessee is purchased jointly with his wife. In the case of CIT V~. Natrajan, (2007) 287 ITR 271 (Mad), though this case was decided in relation to Section 54 of the Act, the said Section is pari materia of Section 54F(l) of the Act. Likewise, the Punjab & Haryana High Court in the case of Cl'I' Vs, Gurnam Singh, (2010) 327 ITR 278 took the same view while discussing the provisions of Section 54 of the Act which is again pari materia of Section 54F(1) of the Act. 26. Hon'ble Delhi High Court in the case of CIT V/s Shri Kamal Wahal, ITA. No.4/2013 dated 11.1.2013, while adjudicating the issue relating to exemption under section 54F of the Act, held in favour of the assessee that the benefit could be given for deduction u/s 54F of the Act if the investment is made in the name of assessee's wife. The Hon'ble Court held as under; "7. We have no hesitation in agreeing with the view taken by the Tribunal. Apart from the fact that the judgments of the Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction and the object which Section 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the revenue." 27. From going through the above judgments as well as the facts of the instant appeal we find that the assessee has claimed exemption u/s 54B of the Act. If we apply the finding of Hon'ble courts on the issue before us we conclude that the provisions of Section 54B of the Act is mainly focused on providing the benefit to such assessee who sells their agriculture land and invest the sale consideration so received for purchasing another piece of agriculture land. The main weightage is for applying the consideration for purchase of agriculture land and it is not specifically mentioned as to whether it has to be purchased in the name of the assessee. For better perusal we mention below the provisions of Section 54B; S.54B:73 [Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B. [Subject to the provisions of sub-section (2), where the capital gain arises] from the transfer of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then - the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid". 28. The above provision contemplates that the benefit/exemption is available if an agriculture land is purchased out of the sale consideration of sale of agriculture land. In the instant appeal also the assessee received the sale consideration from sale of agriculture land and applied the same to purchase another piece of agriculture land in the name of self and others in the name of wife and children. The revenue authorities have also accepted the claim and allowed by Ld.CIT(A) made by the assessee for purchase of agriculture land in the name of the assessee as well as his wife. The other two remaining persons are assessee's son and daughter. We do not find any reason that why the benefit should not be given for purchase of agriculture land in the name of his son an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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