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TMI Blog2019 (5) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sh. Ashok Bhatia/his legal heirs, therefore, the same would in no way assist for either supporting or dislodging the claim of the assessee that the actual physical possession of the property under consideration had remained with Sh. Ashok Bhatia and thereafter with his legal heirs. Clause 19 of the registered conveyance deed categorically evidences the fact that the assessee along with the other two legal heirs of late Sh. Ashok Bhatia viz. Smt. Kavita Bhatia (mother of the assessee) and Sh. Gaurav Bhatia (brother of the assessee) had in equal shares received an amount aggregating to ₹ 5,85,00,000/- in lieu of handing over the actual and physical possession of the property under consideration to the purchasers who had agreed to pay the said amount to the legal heirs after obtaining the consent of the vendor i.e. Sh. Kishore B Dalal. In our considered view, it would be relevant to cull out Clause 19 of the registered conveyance deed which contemplates the reason for making of the payment of ₹ 5,85,00,000/- by the purchasers of the property to the legal heirs of late Sh. Ashok Bhatia. As was discernible from the registered conveyance deed, assessee who as acknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant prays that the order of the CIT(A) on the above grounds be set aside and that the order of the AO be restored. The appellant craves leave to amend or alter any ground or add new ground, which may be necessary. 2. Briefly stated, the assessee had e-filed his return of income for A.Y. 2013-14 on 30.07.2013, declaring total income of ₹ 45,20,540/- The return of income filed by the assessee was processed as such under Sec.143(1) of the I.T Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2). 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had in his return of income offered for tax Long Term Capital Gain‟ (for short LTCG‟) of ₹ 42,99,858/- on sale of land, as under :- Sale Consideration received ₹ 1,95,00,000/- Less Cost of land : ₹ 7500/- (01/02/1984) ₹ 68,212/- (01/04/2010) Indexed cost of land ₹ 55,086/- ₹ 81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share in the land for which the assessee viz. Sh. Prem Ashok Bhatia along with his mother and brother had given their No Objection Certificate (hereinafter referred to as NOC‟). Accordingly, the aforesaid conveyance deed dated 07.09.2012 was executed between viz. (i). Sh. Kishore B. Dalal (Vendor) (ii). Mrs. Kavita Ashok Bhatia and S/sh. Prem Ashok Bhatia (assessee) and Gaurav Bhatia (jointly referred to as First confirming party‟) (iii). Sh. Abrar ( Second confirming party‟) AND (iv). Sh. Rajesh Singh, Sh. Omprakash Kumawat, Sh. Harinarayan Singh and Sh. Joseph Mudliyar (jointly referred to as Purchasers‟). ( v) As per the conveyance deed the aforementioned purchasers had acquired 50% undivided share, interest and title in the land belonging to Sh. Kishore B. Dalal for a consideration of ₹ 8,00,00,000/-. The purchase consideration as per the registered conveyance deed was shared between the parties, as under : Name of Party Amount Paid Sh. Kishore B. Dalal ₹ 89,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with him during his lifetime. It was submitted by the assessee that after the death of Sh. Ashok Bhatia the possession of the entire land had remained with him alongwith Smt. Kavita Ashok Bhatia (mother) and Sh. Gaurav Bhatia (brother). In the backdrop of the aforesaid facts, it was the claim of the assessee that as he had received the amount of ₹ 1,95,00,000/- towards his 1/3rd share of consideration for transfer of his Possessory Rights of the land under consideration, thus the same was rightly offered for tax under the head Capital Gains . It was submitted by the assessee that the fact as regards holding of the possessory rights by him along with Smt. Kavita Ashok Bhatia (mother) and Sh. Gaurav Bhatia (brother) was acknowledged in the registered conveyance deed, dated 07.09.2012 in order to avoid any kind of litigation between the vendor i.e. Sh. Kishore B. Dalal and the purchasers on the one hand AND the first confirming party i.e. the assessee viz. Sh. Prem Ashok Bhatia, Smt. Kavita Ashok Bhatia (mother) and Sh. Gaurav Bhatia (brother) on the other hand. In sum and substance, it was the claim of the assessee that as the exclusive possessory rights of the land were co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashok Bhatia had acted as a constituted attorney for Sh. Ajiwal Gracious and Sh. Kishore B. Dalal, and resultantly was solely responsible for clearing and settling the litigation pertaining to the land under consideration. The A.O was not persuaded to subscribe to the claim of the assessee on the basis of his following observations: ( i) As per the original purchase deed, dated 31.01.1984 Sh. Kishore B. Dalal and Sh. Ashok Bhatia were the purchasers, wherein both of them had equal 50% undivided share, title, right and interest in the land inclusive of the possession of the land. Insofar the details of payment were concerned, it was noticed by the A.O that the same were not submitted by the assessee. ( ii) On a perusal of Clause 37(e) of the MOU‟, dated 29.03.2008 that was entered between Sh. Kishore B. Dalal and Sh. Abrar, it was stated that Sh. Kishore B. Dalal was in joint use, occupation and possession of the property as a co-owner. Apart there from, as per Clause 37(k) of the MOU‟, dated 29.03.2008, it was stated that Sh. Kishore B. Dalal was in full right, power and absolute authority to sell, assign or transfer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, the A.O was of the view that as the same was not backed by any basis or evidence, hence the same was of no consequence. The A.O held a conviction that the land under consideration had remained in the possession of both the co-owners till its disposal by way of the conveyance deed dated 07.09.2012, and no material was produced by the assessee to prove to the contrary that the said land was in exclusive possession of his father viz. Sh. Ashok Bhatia, which after his death had passed over to his legal heirs. Apart there from, it was observed by the A.O that Clause 36 of the MOU‟ dated 29.03.2008 in no way established that the possession of the land had exclusively remained with Sh. Ashok Bhatia. Insofar Clause 38 of the MOU‟ dated 29.03.2008 was concerned, it was observed by the A.O that the same did not establish that the land under consideration was in exclusive possession of Sh. Ashok Bhatia. It was also observed by the A.O that Clause 15 of the conveyance deed, dated 07.09.2012 stated that the MOU‟, dated 29.03.2008 and the irrevocable general power of attorneys dated 29.03.2008, 01.04.2010 and 07.04.2010 were still valid and binding and subsisting betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g support of his aforesaid conviction the A.O concluded that the amount received by the assessee viz. Sh. Prem Ashok Bhatia, Smt. Kavita Ashok Bhatia (mother) and Sh. Gaurav Bhatia (brother) for giving NOC was liable to be taxed as Income from other sources under Sec. 56 of the I.T Act. On the basis of his aforesaid deliberations the A.O recharacterized the receipt of ₹ 1,95,00,000/- as the income of the assessee from other sources and assessed his income at ₹ 1,97,20,680/-. 8. Aggrieved, the assessee assailed the assessment framed by the A.O in appeal before the CIT(A). The CIT(A) after deliberating at length on the contentions advanced by the assessee was persuaded to subscribe to the same. The CIT(A) was of the view that the amount of ₹ 1,95,00,000/- received by the assessee on account of transfer of rights or interest in the property was rightly shown by him as taxable under the head LTCG. On the basis of his aforesaid view the CIT(A) allowed the appeal. 9. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Ld. Departmental representative (for short D.R‟) took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, the Ld. D.R also took support of the deed of confirmation, dated 14.05.2009 between Sh. Kishore B Dalal and Sh. Abrar which stated that the former was seized and possessed of and otherwise well and sufficiently entitled to 50% of all that piece and parcel of NDZ land. The Ld. D.R further relied on the observations of the A.O to drive home his contention that Sh. Ashok Bhatia and thereafter his legal heirs were not in exclusive possession of the land under consideration. The Ld. D.R further adverting to Clause 17 of the conveyance deed, dated 07.09.2012 wherein it was stated that the possession of the entire land had during the life time of late Sh. Ashok Bhatia remained with him and after his death had passed over to his legal heirs, submitted that as the same was without any basis or evidence, hence the same was of no relevance. Further, the Ld. D.R rebutting the contents of sub-clauses (a) to (c) of Clause 36 of the MOU, dated 29.03.2008 submitted that the same in no way established that the possession of land was exclusively with Sh. Ashok Bhatia. In fact, the Ld. D.R took support of Clause 15 of the conveyance deed, dated 07.09.2012. It was submitted by the Ld. D.R t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heirs of late Sh. Ashok Bhatia on the other hand, wherein the latter were vested with the exclusive possession of the property under consideration, it was mutually agreed to pay a consideration aggregating to ₹ 5,85,00,000/- to the legal heirs of Sh. Ashok Bhatia, in lieu whereof the latter had handed over the actual and physical possession of the property under consideration to the purchasers. The Ld. A.R taking us thorough Clause 19 of the registered conveyance deed submitted that keeping in view the factual aspect of physical and actual use, occupation and possession of the land which remained with the legal heirs of late Sh. Ashok Bhatia that the purchasers had agreed with the consent of the vendor i.e. Sh. Kishore B Dalal to pay more consideration to them i.e. a sum of ₹ 5,85,00,000/-, in lieu whereof the said legal heirs pursuant to such arrangement had delivered the actual and physical possession of the property to them. In sum and substance, it was averred by the Ld. A.R that now when the fact that the physical and actual use, occupation and possession of the property under consideration was transferred by the legal heirs of late Sh. Ashok Bhatia to the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the land revenue records, it was submitted by the Ld. A.R that the same did not certify about the actual physical possession of the land and only stated that Sh. Kishore B Dalal was 50% owner as per the records. Adverting to the title search report of Mr. M.S Rodrigues, Advocate, it was submitted by the Ld. A.R that the fact that the property under consideration was coowned by S/sh. Kishore B Dalal and Ashok Bhatia was not disputed, and in fact was acknowledged by all the parties in the conveyance deed dated 07.09.2012. The Ld. A.R further rebutting the observations of the A.O on the basis of Clause 10 of the conveyance deed, dated 07.09.2012 submitted that the same in no way dislodged the claim of the assessee that he along with the other legal heirs of late Sh. Ashok Bhatia had the exclusive possession of the property under consideration. In fact, it was submitted by him that the said fact was also recognized in the MOU Para 36(a) and (f) by both S/sh. Kishore B Dalal and Abrar Ahmed. In sum and substance, it was the contention of the Ld. A.R that now when the fact that the assessee along with the other legal heirs had transferred their exclusive possessory rights of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other property with claim of deduction u/s 54F of the I.T. Act. The appeal in the case of Shri Gaurav Ashok Bhatia appeal has been decided in appeal No. CIT()-41/IT/454/2015-16 dated 31.10.2017 by the undersigned. In the said order, the under signed has held that : 1. On bare reading of the provision of section 2(14) and sections 2(47), it is clear that the expression property of any kind‟ used in s. 2(14) is of wide connotation. When this expression is read along with expression defined in s. 2(47)(ii), which includes sale, exchange or relinquishment of the assets of extinguishment of any rights therein, in my considered opinion, giving up of right to claim specific performance by the assessee to get conveyance of immovable property in lieu of specified consideration resulted in extinguishment of right in property, thereby attracting the provisions of s. 2(14) rws 2(47) of the I.T. Act. In other words, the action on the part of assessee in giving up his right over the property and accepting the money compensation is a clear case of relinquishment of a right in the property resulting in transfer as defined in s. 2(47) of the Act. 2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of Shri Gaurav Ashok Bhatia. 4. From the clauses of the deed of conveyance, it is found that all the parties to the said deed of conveyance have duly acknowledged the fact that use and possession of the property from the date of purchase was initially with Shri Ashok Bhatia and after his demise with his legal heir. On the basis, as per clause 19 higher payment of consideration was paid to the First confirming party i.e. the appellant and his family. At least from the conveyance deed, it is found that the consideration was received by the appellant for transfer of his right of possession in favour of the purchaser and not only for issue of No objection certificate . Since the payer or purchaser party must have considered this right vested with the appellant being of greater importance, higher consideration was paid to the appellant his family members. In this regard, I had agreed with the Ld. AR of the appellant that such rights of interest in the property will be of capital in nature as held in a no. of landmark judgments. 5. It is found that the AO solely relied upon the MOU between Shri Kishor B Dalal and Shri Abrar Hussain whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was paid only to avoid any possible future dispute. Therefore, the said decision has no applicability in the instant case, wherein the appellant is holding right in the said property, as elaborate d in the registered conveyance deed, which has duly acknowledged by all the concerned parties. Apart therefrom that nowhere in the assessment order, the AO has ever doubted that the rights linked with the land is not a capital asset, therefore there is no scope to tax the said income in any head other than capital gain, which is a specific head to tax such income. On the contrary, the ratio of the judgment in the case of J K Kashyap Vs. ACIT (302 ITR 255) (Del. HC) is fully applicable in the instant case, wherein the Hon‟ble High Court has clearly laid down the principal of taxability of such receipts as capital gain in nature. Considering the totality of the facts and circumstances of the issue involved, in my considered opinion, the said receipts of ₹ 1,95,00,000/- by the appellant on account of transfer of rights or interest in the property is taxable under the head Long Term Capital Gain. Accordingly, the grounds of appeal no. 1, 2 and 3 are allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the actual and physical possession of the plot of land therein described in the third schedule forming part of the registered conveyance deed to the aforementioned purchasers. Apart there from, the vendor i.e. Sh. Kishore B Dalal had agreed with the legal heirs of late Sh. Ashok Bhatia and the purchasers of the property that the aforesaid factual aspect would not be disputed by him. In fact, as is further discernible from the registered conveyance deed the legal heirs of late Sh. Ashok Bhatia only pursuant to the aforesaid arrangement had agreed to join hands as a party to the aforesaid registered deed of conveyance. 13. Insofar the reliance placed by the A.O on certain documents in his attempt to dislodge the claim of the assessee that the possession of the property under consideration had remained with Sh. Ashok Bhatia during his lifetime and thereafter with his legal heirs is concerned, we find substantial force in the contention advanced by the Ld. A.R that as the said respective documents were unregistered documents to which the assessee was not a party, therefore, the same would not have any superseding or overriding effect over the contents of the regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered view that as the said documents only affirm the undisputed fact of co-ownership of the property by Sh. Kishore B Dalal and Sh. Ashok Bhatia/his legal heirs, therefore, the same would in no way assist for either supporting or dislodging the claim of the assessee that the actual physical possession of the property under consideration had remained with Sh. Ashok Bhatia and thereafter with his legal heirs. 15. As observed by us hereinabove, the Clause 19 of the registered conveyance deed categorically evidences the fact that the assessee along with the other two legal heirs of late Sh. Ashok Bhatia viz. Smt. Kavita Bhatia (mother of the assessee) and Sh. Gaurav Bhatia (brother of the assessee) had in equal shares received an amount aggregating to ₹ 5,85,00,000/- in lieu of handing over the actual and physical possession of the property under consideration to the purchasers who had agreed to pay the said amount to the legal heirs after obtaining the consent of the vendor i.e. Sh. Kishore B Dalal. In our considered view, it would be relevant to cull out Clause 19 of the registered conveyance deed which contemplates the reason for making of the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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