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TMI Blog2019 (4) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... or the terms and conditions which were entered in F.Y. 2005-06 and accordingly sale-cum-GPA was executed, therefore the transaction took place in the F.Y. 2005-06 and not on the date of execution of sale-cum-GPA executed. Hon'ble Bombay High Court in the case of Amarjeet Thapar ( 2018 (12) TMI 1151 - BOMBAY HIGH COURT] has observed that the assessee had entered into an agreement for purchase of the property in the year 1992. The sale deed could not be executed only because the appropriate authority refused to grant no objection certification and instead, ordered compulsory acquisition thereof. This order was declared as illegal and ab initio void by the High Court, the sale deed was ordered to be executed in favour of the assessee-petitioner, there is no reason for not to accept the assessee s contention that the execution of the sale deed by virtue of the judgment of the High Court would relate back to the original agreement to sale. The petitioner was thus entitled to claim the benefit of cost indexation from the said date. When the assessee has already paid more than 80% of the sale consideration, it cannot be find fault with the assessee as the assessee has performed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of registration of sale deed. The land owners were directed to register the property in favour of the assessee either by execution of sale deed or sale-cum-GPA. Accordingly, the assessee got executed a sale-cum-GPA on 12/07/2012 for the entire property for a consideration of ₹ 5,37,50,000/-. Immediately thereafter, the assessee executed the sale deed on 16/07/2012 and sold 3480 sq.yds., out of total property admeasuring 5375 sq.yds. for a consideration of ₹ 5,22,00,000/-. The guide line value for levy of stamp duty was ₹ 7,72,08,000/- as on the date of sale. During the course of assessment proceedings, the assessee has offered a sum of ₹ 65,33,033/- to tax towards long term capital gain on sale of 3480 sq.yds. For this purpose, the assessee has adopted sale consideration of ₹ 7,72,08,000/- in terms of section 50C of the Act. In the assessment order, the Assessing Officer has noted that the assessee has not declared any capital gains in the return of income filed for the year under consideration. When this fact was put to the AR of the assessee at the time of assessment proceedings, the assessee s counsel has filed a detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already submitted. The property is purchased in the year 2005-06. But due to some dispute the property was registered on 12-07-2012 as per award of the Lok Adalat. Hence, gains on sale of property of 3480s q.yards site along with tiled and ACC structures on 16-07-2012 shall be treated as long term capita! gains. The assessee by over sight has not offered the long term capital gainsl on sale of property of 3480 sq.yards site along with tiled and ACC structures therein in the return of income filed for the Asst. year 2013-14 on 15-04-2014. We are enclosing herewith detailed working sheet of calculation of long term capital gains on property sold applying provisions of Sec. 60C of the IT Act, 1961. Long Term Capital Gains are arrived at ₹ 65,33,033/-. Hence, we are offering long term capital gains of ₹ 65,33,033/- as income and agreeing for addition this income to the total income returned while completing the scrutiny assessment u/s.143(3). 3. It was submitted before the Assessing Officer that for the purpose of calculation of capital gains, the oral agreement entered by the assessee for the F.Y. 2005-06 has to be taken into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit in O.S.No. 308/2011 on 11/11/2011 for specific performance of oral agreement of sale and the same is referred to Lok Adalat, Guntur wherein award was passed. Subsequently, on 02/07/2012 as per the direction of the Court, the assessee paid an amount of ₹ 15.00 lakhs and the vendors have executed the sale-cum-GPA. Under these facts and circumstances of the case, the case of the assessee has to be considered as a long term capital gain. He also relied on the following case laws:- i) Amarjeet Thapar Vs. ITO Ors. [(2019) 173 DTR (Bom.) 305] ii) Ms. Nita A. Pater Vs. ITO [(2011) 7 ITR 659] iii) Praveen Gupta Vs. ACIT [(2011) 137 TTJ 307] iv) Girish C. Bathija Vs. ITO [(2008) 113 TTJ 521] v) CIT Vs. Vijay Flexible Containers [(1990) 186 ITR 693)] vi) CIT Vs. Tata Services Ltd. [(1980) 122 ITR 594] 8. We have heard both the sides, perused the material available on record and orders of the authorities below. 9. The assessee is an individual entered into an oral agreement to purchase a site consisting of 5375 sq.yds. along with MTC tiled and ACC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the assessee has already paid more than 80% of sale consideration in the F.Y. 2005-06 and subsequently, he paid the remaining balance amount and therefore the assessee has paid full consideration. The assessee is already having interest on the property therefore the amount paid as per the directions of the Lok Adalat cannot be considered that the assessee only performed part performance. On that count alone, it cannot be treated that the sale consideration received by the assessee is a short term capital gain. The Assessing Officer further pointed out that the assessee has not taken the possession of the property and received only on 12/07/2012. The case of the assessee is that subsequent to the payment of the entire amount, the assessee has further spent ₹ 1,25,00,000/- towards development and therefore submitted that the property is in the possession of the assessee though no registration has taken place. The Assessing Officer came to a conclusion that the property is in the hands of the assessee subsequent to the order passed by the Lok Adalat and execution of sale-cum-GPA dated 12/07/2012, therefore, the sale proceeds received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case. 10. In the case of Ms. Nita A. Patel (supra), the ITAT, Mumbai I Bench has observed that the property was purchased by the assessee by way of agreement on 27/12/1990 and assessee obtained certificate u/s. 269UL(3) as early as 13/02/1991. The Assessing Officer held that since the assessee got possession of the flat after paying ₹ 18.00 lakhs to the tenant only on 06/01/1992, she held the property from that date and accordingly calculated the indexed cost of acquisition from that date not justified. Word held used in Explanation to section 48 refers to ownership rights only and not physical ownership or physical possession of the property. The assessee was holding the rights on the property from 27/12/1990 and accordingly the indexation has to be allowed from that date. 11. In the case of Praveen Gupta (supra), the ITAT, Delhi F Bench has observed that the assessee had entered into an agreement to acquire a flat in 1995 and the assessee had identified a particular property which he intended to buy and the builder was also bound to provide that property by accepting certain advance payment and making agreement for balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital asset. Payment of earnest money under the agreement for sale was the cost of acquisition of capital asset. The ITO was therefore justified in brining to tax the amount received by assessee under the consent decree. 14. From the above judgments, it is very clear that when the assessee is having a right over the property it is not a mere right to sue, a right of conveyance also. In the present case, the assessee is having interest or right conveyance in the matter. When the assessee has paid substantial amount which is more than 80% in the F.Y. 2005-06, therefore, the sale of land executed by the assessee has to be considered for the purpose of capital gains and indexation cost has to be granted from the date of payment of substantial amount. 15. In the case of Tata Services Ltd. (supra), the Hon'ble Bombay High Court has observed that the word property used in section 2(14), is a word of the widest amplitude and the definition has re-emphasises this by use of the words of any kind . Thus, any right which can be called property will be included in the definition of capital asset . A contract for sale of land is capable of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed compromise petition on 02-07-2012 whereby the Vendors agreed to register the property for ₹ 5,37,50,000/- as agreed to earlier. The Lok Adalath passed an AWARD under Sec.21 of the Legal Services Authority Act, 1987, on 2nd day of July, 2012 in case No.1309/2012 (in S.No. 308/2011 on the file of the Judge, Family Court, Guntur) and the operative part of its Award is recorded INFRA for ready reference. The defendants agreed to sell the schedule property of 5375 Sq. Yds. @ ₹ 10,000/- per sq. yard to the Plaintiff for a total consideration of ₹ 5,37,50,000/- (Rupees Five Crores Thirty Seven lakhs and fifty thousand only). The payments of ₹ 5,22,50,000/- paid commencing from 18-05-2005 on wards and on other dates advanced by the Plaintiff to the Defendants is adjusted towards the total sale consideration payable by the plaintiff to the defendants. The balance amount of ₹ 15,00,000/- payable to defendant No.8, Boorugu Ramesh Babu shall be paid at the time of execution of the Sale Deed or Sale-cum-GPA in favour of the plaintiff or in favour of the nominees of the plaintiff. The defendants declare that they have executed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed to be the date of Agreement; that due to the failure of the Vendor to register the property, Civil Suit was filed in the Court at Guntur on 14-11-2011 for specific performance that ultimately, Registration of the same could be effected to as per the award of Lok Adalath cited Supra; that by oversight the capital gain arising out of sale of a part of the above site admeasuring about 3480 sq. yds. along with a part of the tiled and ACC structures referred to above for ₹ 5,22,00,000/- of which the SRO's value was ₹ 7,72,08,000/-; was not accounted for earlier, and that with reference to the above Sale deed, the Long Term Capital Gains would work out to ₹ 65,33,033/- and that he is agreeable for making addition to the above extent towards Long Term Capital Gains for the aforesaid assessment year while completing the Regular assessment under Sec. 143(3) of the Act. It is to pertinent to mention the following court judgments. The Hon'ble Supreme Court of India in the case of COOPER (RC) Vs. UNION OF INDIA AIR 1970 it was held that in its normal connotation property means the highest right a man can have to anything, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute possession within the meaning of Sec. 53A of T.P. Act read with Sec. 2(47)(v) of the I.T. Act, 1961. Hon'ble ITAT, Delhi Bench in the case of ITO V. Balaram Bhasim (2006) 154 Taxman (118)(Del) wherein it is held that even if property in question had not been registered in the name of the assessee, but because of agreement, ownership rights to the extent of one-half of property vested with father of assessee and his legal heir, i.e., assessee inasmuch as he had right to possession and enjoyment of property and such rights were in the nature of capital assets for purposes of Sec45 and, therefore, consideration received by assessee for transfer of his rights in property was liable to be treated as long term capital gains . Hon'ble ITAT, Mumbai in the case of Girish C. Bathiza Vs. ITO (2008) 113 TTJ 521 wherein it is held that where the assessee entered into an agreement for purchasing a FLAT on 15-02-1992 of which possession was given by builder on 16.11.1997, however, prior to obtaining possession by assessee flat was sold on 06.10.1997, it was held that nature of asset which is transferred is only certain rights in a FLAT for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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