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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 ..... our of the assessee. Denying the benefit of exemption u/s 54B for investment in agriculture land in the name of son and daughter of the assessee - Held that:- The provisions of Section 54B 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. Reason that why the benefit should not be given for purchase of agriculture land in the name of his son and daughter who are not someone not connected or strangers to the assessee and as held by the Hon'ble High Court that the assessee includes his legal heirs also so as to give the vide and legal interpretation. We therefore are of the view that the CIT(A) erred in denying the exemptions u/s 54B of the Act to the assessee for investment of sale consideration for purchasing agriculture land in name of his son and daughter at ₹ 49,86,085/- and ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1 The Learned C.LT. (Appeal) has erred in confirming the consideration for sale of land as ₹ 3,97,79,240/- to arrive at capital gain of ₹ 3,83,79,019/-, ignoring the consideration shown in documents of transfer of land by the assessee 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2010) and had shown Long Term Capital Gains chargeable to tax at ₹ 3,85,258/-. The A.O. asked the appellant to furnish copies of sale deeds/agreements in respect of sale and .purchase of property. He was also asked to furnish evidences regarding fair market value of his land as on 01.04.1981 adopted at ₹ 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 ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urjeet Rani W/o Shri Madan Lal Mehdiratta, E-3/68, Arera Colony, Bhopal 5000 04/02.2010 20,91,100/- 5,00,000/- 9 Shri Naresh Sharma S/o Shri Jaikishan Sharma, H.No.15/49, Sector 17-C Gurgaon 5000 04/02.2010 20,91,100/- 5,00,000/- 10 Shri Vinay Saggi S/o Shri Yashpal Saggi, 11 Varun Surendra Palace, Hoshangabad Road, Bhopal 10000 04.02.2010 41,82,200/- 10,00,000/- 11 Sharda Chaturvedi Smt. Shivangi Chaturvedi, G-2/255, Gulmohan Col.ony, Bhopal 7000 15.02.2010 29,27,150/- 7,00,000/- 12 Smt. Ratna Rai Shri Arun Kumar Rai, C5/203 Paras Hermitage, Hoshangabad Road, Bhopal 7050 30.03.2010 29,48,420/- 8,81,000/- 13 Smt. Sarla Singh Shri B.R. Singh, E-7/237, Arera Colony, Bhopal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. The A.O. noticed that 'agreement to sale' dated 20.03.2009 entered with Shri R.K. Lalwani was not registered under the Registration Act. In view of Section 17(lA) of the Registration Act. 1908, it is made clear that with effect from 24.09.2001, if an agreement for transfer of an immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purposes of Section 53A of the Transfer of Property Act. Hence, the contention of the appellant regarding transfer of agricultural land to Shri R.K. Lalwani through agreement was not accepted. It was also observed by the A.O. that as per the sale deeds, the possession of the pieces of land was handed over by the appellant to various purchasers on the date of registration on sale deeds in their favour. Therefore, the A.O. held that there was no transfer of agricultural land in favour of Shri R.K. Lalwani and the land was in fact transferred in small pieces to various purchasers only on the date of sale deeds registered. Hence, the fair market value as assessed by the Stamp Valuation Authority on the date of transfer was to be adopted as full value of consideration for the sale of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,97,79,240/- Cost of acquisition ₹ 27,580/- Year of acquisition 1981-82 Year of sale 2009-10 Indexed cost of acquisition ₹ 27580X632/100 ₹ 1.74,306/- Long Term Capital Gain Rs. 3,96,04,934/- 9. Thus, the A.O. assessed the Long Term Capital Gains at ₹ 3,96,04,934/- in the hands of the appellant for A.Y. 2010-11 and did not entertained the revised return and thus no exemption was allowed u/s 54B of the Act. 10. Subsequently, the assessee filed an appeal before the Ld. CIT(A) and partly succeeded. The findings of Ld.CIT(A) is reproduced below; 3.4 I have carefully considered the submission of the appellant and facts of the case. The issue involved is regarding the transfer of capital asset sold by the appellant. As per the appellant, he had transferred the total agricultural land measuring 4.07 acres to Shri R.K. Lalwani, as per agreement to sale dated 20.03.2009 entered, on the date of giving possession to him of the land on 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly mentioned that possession of the land was handed over to the purchaser on that date. Similarly, other pieces of land were also handed over to the respective purchasers on the date of respective sale deed registered. It is also pertinent to note that the appellant claimed to have handed over the possession to Shri R.K. Lalwani on 20.03.2010 and furnished in his support a documents titled ..but on perusal of the sale deed registered, it is. noticed that the appellant had already given possession of these pieces of land to most of the purchasers on the dates of sale deed registered before 20.03.2010, the date of the said document. When the appellant had already handed over the possession to the respective purchaser, it is unconceivable that the appellant could again hand over the possession to Shri.R.K. Lalwani on 20.03.2010. Hence, this document furnished by the appellant is not reliable. Further, it is a well known principle that the document duly registered under the Registration Act is a better evidence than an unregistered document. In this case, all the sale deeds registered clearly specify that the appellant had handed over possession directly to the purchaser on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant portion of the decision of the Hon'ble ITAT is reproduced as under: - 18. Now we deal with the contention of A.O. that there was transfer of land within the provisions of section 2(47)(v) and section 2(47)(vi) of the Act. We find that the Assessing Officer had held that land was 'capital asset' and therefore, there .is transfer within the meaning of Section 2(47)(v) of the Income-tax Act,1961 ('Act') which provides that '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. The Assessing Officer has mainly relied on the decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (2003) 260 ITR 491 to support his conclusion. As per our considered view for application of section 2(47)(v) of the Act, it is essential that land should be a 'capital asset'. However, in the instant case the land no longer remained 'capital asset' as the series of activities undertaken by the assessee discussed hereinabove clearly show that the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered they shall have no effect for the purposes of said Section 53A. 21. Amendment made in section 53A in 2001 is also relevant wherein an additional condition for registration of the written agreement was introduced as a result of which if the agreement between transferor and transferee is not registered, the transferor can dispossess the transferee from the property. Simultaneously, a consequential amendment was also been made in The Registration Act, 1908 to provide that unless the documents containing contracts to transfer any immoveable property for the purpose of section 53A of the TOPA is registered, it shall not have effect for the purposes of section 53A of the TOPA. A perusal of the Section reveals that registration of document is a sine qua non for applicability of section 53A of TOPA which entitles the transferee to remain in possession of the property. In the instant case, Development Agreement was executed on stamp paper of ₹ 100/- find the same was not registered, hence, provisions of section 2(47)(v) of the Act are not applicable since the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding the deemed full value of consideration as per Section 5OC of the Act. It would be fruitful to reproduce Section 5OC of the Act as under: Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable} shall, for the purchases of section-48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. From the above provisions, it is clear that value assessed by any authority of a State Government for the purpose of payment of stamp duty shall, for the purpose of Section 48, be deemed to be full value of consideration received as a result of such transfer. There is.no dispute on the issue that the value of the pieces of land assessed by the Stamp Valuation Authority was &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as worked out by the A. 0. Less: Cost of transfer paid to/retained by Rs.12,25,915/- Shri R.K. Lalwani Long Term Capital Gain ₹ 3,83,79,019/- Therefore, the AO is directed to compute Long Term Capital Gains on the transfer of these 13 pieces of land for A.Y. 2010-11 at ₹ 3,83,79,019/- 4.4 I have carefully considered the submission of the appellant and facts of the case. The first issue involved in this case is that even if an assessee has not made a claim of deduction before the Assessing Officer by filing a revised return, can he make such claim before the CIT(A) in the appeal filed against the assessment order. Now, in this case, the admitted facts are that the appellant had filed his original return of income for A.Y. 2010- 11 u/s 139(4) of the Act on 12.12.2011 i.c. after a lapse of considerable time from the due date of filing of return as specified u/s 139(1) of the Act. Therefore, the appellant could not have filed legally a revised return. Hence, the revised return filed by the appellant on 07.l1.2012 was not a valid return. Therefore, the A.O., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 prescribed by the statutory provisions. In the absence of any statutory provision of the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. 32. In case of National Thermal Power Co. Ltd. v. CIT [1998J 229 ITR 383 (SC) when the question of law was raised for the first time before the Tribunal though facts were already on record, the Supreme Court observed that there is no reason why the assessee should be prevented from raising such a question before the Tribunal for the first time so long as the relevant facts are on record in respect of the item concerned. There is no reason to restrict the power of the Tribunal in such appeal only to decide the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed 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 of-India Ltd./1985J ITR 499 (Guj.), Full Bench of this Court held that merely because a ground has not been raised though it could have been raised in support of the relief sought in the appeal, it cannot be said that such ground cannot be raised before the Tribunal. Such ground can be raised provided it falls within the contours of the subject matter of the appeal. 38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze India) Ltd (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. (supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 before us in such form. For the present, we answer Questions (3) and (4) against the Revenue and in favour of the assessees in manner described above. Thus, the Hon 'ble High Court held that any legal claim raised even for the first time before the Appellate Authority without revising the return before the Assessing Officer has to be considered. Therefore, the issue regarding exemption u/s 54B of the Act claimed by the appellant is considered in the case of the appellant. 4.5 The appellant made claim of exemption uls54B of the Act of Rs.l,56,O1,610/- during appellate proceedings as against the claim of Rs.l,52,23,340/- in the revised return after considering the expenses incurred on stamp value and registration fee paid in respect of some agricultural land. The appellant had made claim in respect of purchase of agricultural land in the name of himself, wife, son and daughter. The details of such claim are as under: - ( a) In the name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the appellant s son, Shri Umesh 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.) Shri Umesh Patidar 2009- 10 03.12.2010 0.677 125000 11100 1175 137275 Shri Umesh Patidar 2009- 10 06.01.2010 11.74 2133385 0 0 2133385 Shri 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of years by the appellant. He had furnished Form P-II to, evidence that land was used for agricultural purpose. He had also furnished copies of sale deeds for the purchase of new agricultural lands. It was, thus, prayed that the appellant may please be allowed exe mption u/s 54B of the Act of Rs.l,56,01,610/- 4.6 I have carefully considered the submission of the appellant and facts of the case. On reading of provisions of Section 54B of the Act, it can be observed that an assessee has to satisfy the following conditions in order to claim the benefit of Section 54B of the Act: - The capital gain arises on the transfer of a capital asset, being agricultural land, by the assessee; ( b) Such land was being used by the assessee or his parent for agricultural purposes for last two years immediately preceding date of transfer; and (c) The assessee has within a period of two years after the date of transfer, purchased any other land being used for agricultural purposes. In the instant case, there is no dispute about the fact that the capital gains had arisen on the transfer of agricultural land, which was used by the appellant for agricultural purposes for many years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-12 declaring income of Rs.l,50,000/-- Similarly, Ms. Seema Patidar is having PAN No. BSMPP2583G. It is important to note that the asset or income from such asset purchased in the name of major son or major daughter is not clubbed in the hands of the assessee for computing his wealth or income. It has been held by various courts that assessee cannot claim benefit of Section 54B or 54 F of the Act if he makes investment in the name of any other person such as his son or grandson, his daughter-in-law or married daughters. Some of the decisions of courts are discussed herein under: 4.6.2 In the case of Prakash v. Income Tax Officer, Ward No. 1(5) [2008} 173 Taxman 311 (Bom), the Hon'ble High Court of Bombay, Nagpur Bench held as under (head notes): Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house - Assessment year 1983-84 - Whether for qualifying for exemption under section 54F, it is necessary and obligatory to have investment made in residential house in name of assessee only and not in name of any other person - Held, yes - Whether investment of sale proceeds of agricultural land by assessee in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from deduction under section 54B of the Act. On appeal by the assessee, the High Court held as under: Held, dismissing the appeal, that the assessee having purchased agricultural land in the name of his son or grandson could not be held entitled for exemption under section 54B of the Act. 4.6.4 The Hon'ble Rajasthan High Court in the case of Kalya v. Commissioner of Income-tax [2012] 22 taxmann.com 67(Raj.) also held as under: Section54B of the Income-tax Act, 1961 - Capital gains - Transfer of land used for agricultural land - Whether word 'assessee' used in Incometax Act needs to be given a legal interpretation and not a liberal interpretation and, consequently, an assessee would not be entitled to get exemption under section 54B for land purchased by him in name of his son and daughter-in-law - Held, yes [In favour of revenue) 4.6.5 In a recent decision, in the case of Ganta Vijaya Lakshmi v. IncomeRaja tax Officer, Vijayawada [2015] 54 taxmann.com 301 (A.P.), the Hon'ble High Court of Andhra Pradesh observed that the assessee will not be entitled to capital gains exemption under sections 54B and 54F on properties purchased in nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase. But he died in April, 1976 after paying the earnest money. The purchase was completed by the representative within one year of the sale of the original receipts, In these facts, it was decided that sale and purchase were two links in the same chain and the legal representative of the assessee was entitled to exemption u/s 54B of the Act Therefore, the ratio of this case also does not apply to the fact of the instant case of the appellant. 4.6.8 From the above, it is evidently clear that the appellant was not entitled to claim benefit of Section 54B of the Act for the purchase of agricultural lands in the names of his son, Shri Umesh Patidar, and his daughter, Ms. Seema Patidar. Therefore, the appellant is not allowed the benefit of deduction u/s 54B of the Act in respect of purchase of agricultural land in the name of his son, Shri Umesh Patidar, and his daughter, Ms. Seema Patidar. Thus, the appellant is allowed benefit of Section 54B in respect of investment made by the appellant in his own name and in his wife's name for purchase of agricultural land aggregating to ₹ 91, 18, 190/- (Rs.62,23,730 + ₹ 28,94,460). Hence, the A.O. is directed to allow bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation of Stamp Duty value was filed before the A.O., which is also enclosed vide Page No.9 of the Paper Book. The A.O., for the calculation of capital gain, has taken the rates which are applicable for smaller pieces of land, which are the transactions of further sale by Shri R.K. Lalwani. However, so far as sale transaction (though sale deed was not executed) made by appellant with Shri R.K. Lalwani was for 4.07 acres of land and stamp duty value of sale has to be calculated at a price which is applicable to agriculture land on per hectare basis. The Learned A.O. and CIT (Appeals) erred in merging two transfers (one between the appellant and Shri R.K. Lalwani and the other between Shri R.K. Lalwani and other buyers). Two independent transfers, duly evidenced by documents like sale agreement and confirmed by personal statement on oath by the buyer Shri R.K. Lalwani, cannot be merged together for the reason that transfer deed was executed by the appellant and not Shri R.K. Lalwani. Even the affidavit given by Shri R.K. Lalwani confirms that he has sold these properties to the ultimate customers (Page No. 21 of Paper Book). Appellant was merely a signatory to the sale deed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by him only and this was not paid to the appellant and it was not payable to appellant, as his contract was completed earlier. A.O. has not objected / denied the fact that land was possessed by Shri R.K. Lalwani and that the money from further sale of such land by Shri R.K. Lalwani was held by him only. The A.O. has not denied the fact that possession was handed over to Shri R.K. Lalwani and he merely computed the consideration uls50C for small pieces of land sold by Shri R.K. Lalwani. In terms of sec. 2(47)(v) of the Income Tax Act, 1961, for the purpose of capital gain, transfer takes place at the time when possession of property is handed over to the recipient, therefore for all practical purposes, possession of property was handed over to Shri R.K. Lalwani himself, on the date of agreement, which is clearly perceived from the agreement and subsequently issued possession letter cum receipt from Shri R.K. Lalwani. Even Shri R.K. Lalwani issued Affidavit to confirm the facts, which is enclosed herewith. 10) The appellant, while entering into agreement, has clearly stated that, registration of property should be done in acres only (not in sq .ft.) and if the buyer of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual consideration received by the appellant. The A.O. has adopted the guideline rate which is applicable for small pieces (plots) of land (which is different from the guideline rate for total one piece of land), although appellant has sold the land in one piece. The invocation of section 5OC cannot be made without referring the matter to DVO, particularly so, when the assesee has objected to that, which is evident from the appellant's reply before the A.O. on 18/03/2013. It is important to note that the A.O. has passed the order on 25/03/2013. 15) During the assessment for A.Y. 2010-11, the same land was referred to DVO to assess the fair market value and DVO has valued this land at an approximate rate of ₹ 89,27,807/- per acre (this valuation is based when piecemeal sale of land (plots) are considered). However, the consideration u/s 50C was taken by the A.O. at the rate of ₹ 1,44,23,000/- per acre. The value, even if adopted for A.Y. 2010-11, shall be much less than this valuation. 16)The sole reason for which CIT (Appeals) has not accepted the Sale Agreement as a document of transfer is that, the agreement was not a Registered Agreement. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier land and investment was made in the name of son daughter (unmarried), and when all the family members have common and only source of living, substantive benefit should not be denied. Your kind attention is drawn to the following citations: a) CIT vs. Gurnam Singh (2008) 170 Taxmann 160 (p H) b) Jagpal Singh v. ITO( Ward-2), Hisar (2010) 186 Taxmann 26 (ITAT,Delhi) c) CIT vs. Kamal Wahal (2013) 30 faxmann.com 34 (Delhi) d) Bant Singh v. ITO (2014) 52 taxmann.com 364 (ITAT, Chandigarh) e) K.S Jain Sons (HUF) v. ITO (2008) 173 Taxmann114 (ITAT, Delhi) 13. On the other hand the Ld. Departmental Representative vehemently argued and supporting the orders of lower authorities and also place on record the copy of assessment order dated 30.03.2015 framed in the case of Shri R.K. Lalwali (the alleged purchaser of agriculture land from the assessee) framed u/s 144/147 r.w.s. 143(3) of the Act wherein undisclosed income of ₹ 6,46,82,000/- has been assessed in the hands of Shri R.K. Lalwani. 14. We have heard rival contentions, perused the records placed before us and carefully gone through the judgments referred and relied by Ld. Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act by making following observations which are also mentioned in seriatim; 1. Agreement for sale dated 20.03.2009 was not given any effect and not accepted to be valid agreement as it was not registered. 2. For the sale of 13 plots by Shri R.K. Lalwani during the period from 1.4.2009 to 31.3.2010, Ld. Assessing Officer computed Long Term Capital Gain after invoking the provision of Section 50C of the Act thereby adopting the sale consideration at ₹ 3,97,79,240/- as against ₹ 1,26,81,000/- shown in the registered sale deed. 3. No benefit was given u/s 54B of the Act as it was not claimed in the original return and revised return filed by the assessee during the assessment proceedings was not accepted by the Ld.A.O 4. Minor additions were also made on account of cost of acquisition of land. 17. Now coming the findings of Ld.CIT(A) can be bifurcated into following points; 1. Ld. CIT(A) confirmed the action of the Ld.A.O to the extent of computing the Long Term Capital Gain on sale of plots of lands made before the date of handing over the possession by the assessee to Shri R.K. Lalwani on 20.03.2010, as a result directions were given to calculate Long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Lalwani by the assessee. The transfer of plot of lands through registered sale deed were effected with the signature of the assessee on the basis of terms and conditions mentioned in the agreement to sale dated 20.03.2009. 20. The validity of the agreement to sale dated 20.3.2009 has not been accepted by the revenue authorities only for the reason that it was not registered and the Ld.A.O observed that in view of Section 17(1A) of Registration Act, 1908 as the agreement was not registered therefore no benefit for the purpose of section 53A of the transfer of property Act can be given and therefore it cannot be constituted that the transfer took place under the provisions of Section 2(47)(v) of the Act. 21. We find that very same issue about accepting the validity of transaction entered into between two persons through agreement of sale which was not registered under the Registration Act and whether the same can be accepted to be a genuine document because as per the contract Act both the parties have signed the document and in case any one of the two parties do not comply to the conditions mentioned in the contract Act, the other party is at liberty to sue him in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to the agreement. If no rights would accrue, then it will be construed that the possession was not delivered by the assessee vide agreement dated 4.4.2008 and 2.3.2009, meaning thereby, no transfer has taken place. The ld.First Appellate Authority further put reliance upon the judgment of the Hon'ble Supreme Court in the case of Suraj Lamp Industries Pvt. Ltd. Vs. State of Haryana, 14 taxmann.com 103. 24. On due consideration of the above reasoning, we are of the view that as far as the judgment of the Hon'ble Supreme Court in the case of Suraj Lamp Industries (supra) is concerned, it is altogether in different context. There is no dispute with regard to the proposition that transfer of an immovable property having value of more than ₹ 100/- can only be completed by way of registered sale deed, as contemplated in section 17 of the Registration Act. This judgment deals with the concept of power of attorney, lease, licence etc. Definition of expression transfer provided in section 2(47) is more wider than in the general law. As observed earlier, while dealing with the issue no.(ii), the expression transfer employed in section 2(47) includes (a) any tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution of agreement as referred to in section 53A may not be able to protect his possession on account of non-registration of the agreement, but for all other ITA No.2414/Ahd/2013 collateral purposes, i.e. for tendering the agreement into evidence for suit for specific performance, etc. it is to be treated as valid agreement. A controversy in this aspect had arisen whether such non-registered agreement can be entertained in evidence or not in a suit for specific performance. A reference was made before the Division Bench of Punjab Haryana High Court in regular Second appeal No.4946 of 2011 in the case of Ram Kishan Vs. Bijeder Mann. The Hon'ble High Court has resolved the controversy and held that such unregistered agreement can be produced as evidence in suit for specific performance. It can be made basis of suit for specific performance. The finding recorded by the Hon'ble Punjab Haryana High Court in this case reported in (2013) 1 PLR 195 as under: 11. A conjoint appraisal of sections 53A of the Transfer of Property Act, 1882, sections 17(1A) and 49 of the Indian Registration Act, 1908, particularly the proviso to section 49 of the Indian Registration Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be persuaded to execute the sale deed in favour of SDS by virtue of this agreement. The validity of this agreement under general law viz. Specific Relief Act as well as Indian Registration Act has not been effected. This aspect has not been appreciated by the ld.CIT(A) while holding that since the agreements are unregistered, therefore, they are non-genuine. 27. Let us examine the issue with different angles. For example, the assessee refuses to honour her agreement dated 4.4.2008 and SDS/Capital Consultancy files a suit for specific performance. A decree for performance of the contract is being granted in favour of the SDS. In that situation, the assessee has to register sale deed in favour of SDS. On such registration she would get the amounts only agreed upon by way of agreement dated 4.4.2008. She could be charged for capital gain on this amount only. Even for argument's sake, the reasons of the Revenue authorities are being accepted that the agreements dated 4.4.2008 and 2.3.2009 are unregistered, therefore, ITA No.2414/Ahd/2013 they shall not goad the adjudicator to construe part performance of the contract u/s.53A of T.P. Act and no transfer of the land could be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorizes the Controling Officer to grant permission for such sales. The sale could be executed after the agreement and after getting approval. As far as this section is concerned, it does not create any disqualification for entering into contract - it creates disqualification for enforcing that contract. The contractee can enforce contract in favour of a person who is an agriculturist. It is important to note that the land transacted by the parties was within the vicinity of Ahmedabad City. It was going to be converted into urban land under the Town Planning scheme and ultimately before the agreement dated 2.3.2009, the status of the land was changed from agriculture land. When SDS has assigned his right under the agreement dated 2.3.2009, the land was already converted into a non-agriculture land. Thus, this section has no bearing as a corroborative piece of evidence to goad any authority to conclude that agreements were not genuine. 29. Next reasoning given by the ld.First Appellate Authority is that there is a huge change in the price of land between a short span of time. When the assessee acquired the land, she incurred a cost of ₹ 67,96,432/-. She had acquired th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also pertinent to note that the assessee has purchased the land from 18.12.2007 to 4.3.2008. She had purchased the agriculture land ITA No.2414/Ahd/2013 from non-associate vendors. The purchase cost shown by the assessee was at ₹ 67,96,432/-. No circumstances have changed, and therefore, she has sold the land on 4.4.2008 at a price of ₹ 76,75,413/-. There is no substantial change or appreciation of the value of the land in just short span. The ld.Revenue authorities have failed to compare this figure while evaluating the evidence. The change in the value taken place only at the moment, when, the land was converted into a non-agriculture land. From analysis of the orders, it revealed that approach of the Revenue authorities for appreciating the genuineness and veracity of the agreement is guided by the tax liability. According to the Revenue authorities, since tax liability has been avoided by the parties, therefore, their agreements are not genuine. In our opinion, genuineness of any agreement is not depended upon the actual payment of tax resulted on account of execution of these agreements. It is other way round. First genuineness of the agreements has to be ascerta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us in no doubt that the principle enunciated in the above case has not affected the freedom of the citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the framework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity. This accords with our own view of the matter. In CWT v. Arvind Narottam , a case under theWealth Tax Act, three trust deeds for the benefit of the assessee, his wife and children in identical terms were prepared under section 21(2) of ITA No.2414/Ahd/2013 the Wealth Tax Act. Revenue placed reliance on McDowell . Both the learned Judges of the Bench of this Court gave separate opinions. Chief Justice Pathak, in his opinion said (at p.486): Reliance was also placed by learned counsel for the Revenue on McDowell and Company Ltd. v. CTO (1985) 154 ITR 148(SC). That decision cannot advance the case of the Revenue because the language of the deeds of settlement is plain and admits of no ambiguity. Justice S. Muk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plantation Ltd. Therefore, the transactions are arranged in the family itself. The assessee has pointed out that Capital Consultancy is a proprietary concern of SDS. This concern has taken unsecured loan from the company in F.Y.2006-07 relevant to the Asstt.Year 2007-08. In F.Y.2006-07, the interest of ₹ 1,77,534/- was charged from SDS by Ganesh Plantation. In F.Y.2007-08 an interest of ₹ 61,74,961/- was charged. Thus, according to the assessee, the funds were provided on interest in the ordinary course of business. Similarly, the AO has raised a point that the funds to the assessee were provided by Tarang Reality Pvt. Ltd. which is also family concern. The assessee has contended that she has taken loan from Tarang Reality Pvt. Ltd. of ₹ 66,55,000/- and on receipt of sale consideration of ₹ 73,75,413/-, she had repaid the loan to Tarang Reality Pvt. Ltd. In the case of the assessee, no phenomenal rise in the value of the land has arisen. She has purchased at ₹ 67,96,342/- for the period starting from 18.12.2007 upto 4.3.2008. She had agreed to sell this property on 4.4.2008, just in a span of 3-4 months. She has earned small amount of capital gain whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- per acre and is above the prevailing rate of ₹ 40,48,552/- as provided in the guidelines of Zila Panjiyak Sanyojak. We therefore are of considered view that both the lower authorities erred in calculating the sale consideration by invoking provisions of Section 50C of the Act and applying the price of each plot of land sold during the year and thereby computing the Long Term Capital Gain. We therefore allow this issue in favour of the assessee and direct the revenue authorities to calculate the Long Term Capital Gain by taking the sale consideration of impugned agriculture land at ₹ 1,68,90,500/- as against the sale consideration confirmed by the Ld.CIT(A) at ₹ 3,83,79,019/-. Accordingly issue No. 1 2 mentioned by us in para 11 above which are at Ground No.1, 1.1, 1.2 and 1.3 are decided in favour of the assessee. 23. Now we take up the third issue that whether the Ld.CIT(A) is justified in denying the benefit of exemption u/s 54B of the Act for investment in agriculture land in the name of son and daughter of the assessee. 24. Brief facts relating to this issue are that the assessee applied the sale consideration from sale of agriculture land for purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 treated as the property purchased by the assessee in his name and merely because hehas included the name of his wife and the property purchased in the joint names would not make any difference. Such a conduct has to be, rather, encouraged which gives empowerment to women. There are various schemes floated by the Government itself permitting joint ownership with wife. If the. view of the Assessing Officer (AO) or the contention of the Revenue is accepted, it would-be a derogatory step. 10. Even when we look into the matter from another angle, facts remain that the assessee is the actual and constructive owner of the house. In CIT Vs. Podar Cements (P) Ltd. Ors., (1997) 226 ITR 625 (SC), the Supreme Court has also accepted the theory of constructive ownership. Moreover, Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. Here is a case where the house was purchased by the assessee and that too in his name and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife. 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 and Karnataka High Courts (supra) are in favour of the assessee, the revenue fairly brought to our notice a similar view of this Court in CIT Vs. Ravinder Kumar Arora: (2012)342 ITR 38 (Del.). That was also a case which arose under Section 54F of the Act. The new residential property was acquired in the joint names of the assessee and his wife. The income tax authorities restricted the deduction under Section .54F to 50% on the footing that the deduction was not available on the portion of the investment which stands in the name of the assessee's wife. This view was disapproved by this Court. It noted that the entire purchase consideration was paid only by the assessee and not a single penny was contributed by the. assessee's wife. It also noted that a purposive construction is to be preferred as against a literal construction, more so when even applying the literal construction, there is nothing in the section to show that the house should be in the name of the assessee only. As a matter of fact, Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer 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 capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by [the assessee being an individual or his parent, or a Hindu undivided family] for agricultural purposes (hereinafter referred to as the original asset),, and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- ( i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the shall be charged under section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and daughter who are not someone not connected or strangers to the assessee and as held by the Hon'ble High Court that the assessee includes his legal heirs also so as to give the vide and legal interpretation. We therefore are of the view that the Ld.CIT(A) erred in denying the exemptions u/s 54B of the Act to the assessee for investment of sale consideration for purchasing agriculture land in name of his son and daughter at ₹ 49,86,085/- and ₹ 12,50,175/- respectively. We accordingly set aside the findings of both the lower authorities and direct the Ld. Assessing Officer to give the benefit of exemption u/s 54B of the Act to the assessee at ₹ 62,36,260/- which is over and above the benefit of ₹ 91,18,190/- already allowed by Ld.CIT(A) u/s 54B of the Act. In the result the issue No.3 raised by the assessee under Ground No.2 of the appeal is allowed. 29. Now we are left with Ground No. 1.2 of the assessee s appeal relating to cost o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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