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TMI Blog2018 (10) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... e of property in question is completed in the preceding year then the provisions of Section 56(2)(vii)(b) of the Act cannot be invoked on such transaction. - Decided in favour of assessee. - ITA No. 227/JP/2018 - - - Dated:- 5-10-2018 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Madhukar Garg (CA) For the Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 06/11/2017 of ld. CIT(A)-2, Jaipur for the A.Y. 2014-15. 2. There is delay of one day in filing the present appeal. The assessee has filed an application for condonation of delay, which is also supported by an affidavit. 3. We have heard the ld AR of the assessee as well as the ld DR and perused the reasons explained in the application for condonation of delay as well as in the affidavit filed by the assessee. The assessee has explained that due to State holiday on 13/2/2018, which was a working day for the Tribunal, the assessee was under the impression that the appeal can be filed only on 14/2/2018 and which was again a holiday of the ITAT and consequently the appeal could be filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the assessee purchased the property vide agreement dated 28/3/2013 though the sale deed was finally registered on 28/4/2013. Thus, the assessee contended that the transaction of purchase took placed in the preceding year for which the provisions of Section 56(2)(vii)(b)(ii) of the Act are not applicable. The Assessing Officer did not accept the contention of the assessee and held that the property was purchased by the assessee only when the sale deed was registered on 26/4/2013 as prior to the said date even the vendor was not having full right in the immovable property in question. 6. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and reiterated its contention that the property in question was purchased by the assessee vide agreement dated 28/3/2013 and therefore, the provisions of Section 56(2)(vii)(b)(ii) of the Act are not applicable, therefore, the transaction itself does not fall in the year under consideration. The ld. CIT(A) was not impressed with the contention of the assessee and confirmed the action of the Assessing Officer. 7. Before us, the ld AR of the assessee has submitted that the ld. CIT(A) has denied the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Sanjeev Lal Vs CIT 365 ITR 389 and submitted that the Hon'ble Supreme Court has held that in normal circumstances, the entire property cannot be said to have been sold at the time when an agreement to sale is entered into. However, looking at the provisions of Section 2(47) of the Act which defines the word transfer in relation to a capital asset, if a right in the property is extinguished by execution of an agreement to sale and that right is transferred to someone, it would amount to transfer of a capital asset. Thus, the ld AR has submitted that by virtue of agreement dated 28/3/2013, the seller transferred substantial right in the property in question in favour of the assessee and therefore, a transaction was completed on 28/3/2013 which does not fall in the year relevant to the assessment year under consideration. 8. On the other hand, the ld DR has submitted that the provisions of Section 56(2)(viib) of the Act provides chargeability of excess consideration to income tax if the stamp duty value of such property purchased by the assessee is more than the consideration for which the property is received. Further as per the second proviso to the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferred on 28/03/2013 in favour of the seller and the he did not have the right to deal with the immovable property as an owner on the date of agreement. Thus, on 26/04/2013 the seller of the property became the owner when the flat was registered by M/s Ansal property and subsequently sold this land to the assessee. Further, the Assessing Officer placed reliance on the registered sale deed which clearly stated that the actual physical possession was given on 26/04/2013 i.e. on the day of the registry. Based on the above, the Assessing Officer applied the provision of section 56(2)(vii)(b) of the I.T. Act as the transaction related to A.Y. 2014-15. In the present proceedings it is submitted that the assessee by virtue of the agreement had acquired full rights in the property on 28.03.2013 and therefore the property was acquired during the F.Y. 2012-13 and provisions of section 56(2)(vii)(b) were not applicable. As seen in the discussion above, on the day of the agreement, the seller himself was not the owner of the property and so could not have passed it on to the assessee. The entries in the sale deed also establish that the promoter has handed over actual possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t read with Section 53A of the Transfer of Property Act includes if a right in the property is transferred by one person to another person thereby the said right get extinguished from transferor and vested with the transferee by virtue of an agreement to sell then to that extent it amounts to transfer of capital assets. Even otherwise the deficiency of registration in the agreement was subsequently made up as the sale deed was executed and registered and therefore, the transaction of transfer would take effect from the date of agreement which was subsequently culminated into the sale deed. Accordingly in the facts and circumstances of the case when the agreement to sell dated 28/3/2013 has not been held to be bogus then the transaction would be treated to have been completed on 28/3/2013 and consequently the same would not fall in the year under consideration. Once the transaction of purchase of property in question is completed in the preceding year then the provisions of Section 56(2)(vii)(b) of the Act cannot be invoked on such transaction. Hence, we set aside the orders of the authorities below and delete the addition made by the Assessing Officer. We make it clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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