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TMI Blog2019 (6) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... e deed in the A.Y. 2011-12 will not amount to transfer of property under the provisions of section 2(47). Accordingly, the question of capital gain for the year under consideration does not arise. The impugned land transferred by the assessee in the A.Y.2009-10 when it was an agricultural land which does not fall within the meaning of capital assets as provided u/s 2(14). Accordingly the same cannot be the subject matter of capital gains under the Act in the AY 2009-10. The buyers of the impugned land have recorded the purchase consideration in the books of accounts at the actual cost incurred by its group company. As such we note that there was no element of profit transferred by the companies to the assessee. Therefore it can be inferred that there is no loss to the Revenue as the buyers of the land have recorded the purchase consideration at the actual cost incurred by its group company. Accordingly, the buyers (group companies) will show the profit at the high value or less loss as the case may be on the subsequent sale of such impugned land in the given facts circumstances. We hold that the assessee is not liable to pay tax on the capital gain computed by the AO as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been issued in contravention of the provisions of Section 144A itself, may please be deleted. 2.1 In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals), Ahmedabad-5, Ahmedabad has grossly erred in confirming the action of the AO in making addition for an amount of ₹ 85,00,658/- on account of short term capital gain on transfer of immovable property at Survey No. 197 and 213 at Village Gokharva, Sabarkanta in utter disregard to the fact that these properties were transferred by the assessee as the possession over the land was handed over to the buyers of the property pursuant to agreement to sell in F.Y. 2009-10 and therefore the transfer of the property in question took place in A.Y. 2009-10 and not in A.Y. 2011-12. 2.2 It is therefore prayed that impugned addition may please be cancelled. 3.1 In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals), Ahmedabad-5, Ahmedabad has grossly erred in confirming the action of the AO in holding that the transfer of the properties in question took place on 14/02/2011 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company. Therefore, on the facts circumstances of the case, which the AO has failed to recognize, understand appreciate, the addition on account of short term capital gain is wholly unjustified, wrong and requires to be deleted in full. 5.2 It is therefore prayed that the impugned addition made by the AO may please be deleted. 6.1 In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals), Ahmedabad-5, Ahmedabad has grossly erred in confirming action of the AO in computing the short term capital gain at ₹ 85,00,658/- without considering the cost of improvement on the land as per the provisions of Section 48(ii) of the Income Tax Act. 6.2 In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals), Ahmedabad-5, Ahmedabad has grossly erred in not appreciating the fact that after considering the cost of acquisition and cost of improvement there would be no capital gain chargeable to tax. 6.3 It is therefore prayed that the impugned addition made by the AO may please be deleted. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dist/ Taluka/ Village Block/ survey no. Area Date of purchase / cost of purchase Name of the party from whom purchased Registration no. and date of deed Name of Sub Registrar Sabarkantha Modasa Gokharva 197 26507 sq. Me 20-09-2008 / ₹ 1383003 Patel Sudhir Kantilal, Village Gokharva 2558/ 20-09-2008 Sub Registrar, Modasa Sabarkantha Modasa Gokharva 213 23472 28-12-2010/ ₹ 1224652 Patel Maganbhai karsanbhai villabe Gokharva 2589/ 20-09-2008 Sub Registrar, Modasa 3(iii) During the assessment proceedings the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor for land survey no. 197 ₹ 59,65,000 Credit balance 3. Abellone Agriscience Loan Given(Survey no. 197) ₹ 13,83,003 Debit balance 4. Abellone Agriscience Loan Given(Survey no. 213) ₹ 12,24,652 Debit balance 3.2 The assessee also claimed that the transaction of transfer of the lands had been concluded in the A.Y.2009-10 by way of the agreement to sell. Accordingly, the possession of the lands was handed over to the purchaser, i.e. Abellon Clean energy Ltd. and Abellon Properties Pvt. Ltd. respectively and the only some technical compliance like sale deed has been registered in the year under consideration. Hence there are no transactions for the transfer of any capital assets in the year under consideration. 3.3 The assessee further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 85,00,658/- as detailed under: Block / survey no. Date of sale Sale consideration Date of purchase Cost of purchase/value of stamp duty/ registration charges Short term capital gain 197 14-02-2011 ₹ 59,65,000 20-09-2008 1452190 (1383000+67800+13900) 45,12,810 213 28-12-2010 ₹ 52,85,000 20-09-2008 12,97,152 (1224652+6001000+12400) 39,87,848 85,00,658 Hence the AO added the sum of ₹ 85,00,658/- on account of short term capital gain to the total income of the assessee. 4. The aggrieved assessee preferred an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.09 (i.e Y 09-10) Abellon Properties Pvt. Ltd 74-82 (Gujarati) 164-178 (English) Possession was handed over to purchasers at the time of entering into ATS (Pgs.129-142 @ 133 of P/B and Pgs.164-178 @ 169 of P/B) It was categorically mentioned in ATS that duration of such ATS was three years and during such period, seller (i.e. assessee ) was to obtain permission for conversion of land from agricultural land to non-agricultural land (Pgs.129- 142 @ 134 of P/B and Pgs. 164-178 @ 170 of P/B). Post conversion of such land to Non-agricultural land, final sale deeds were executed during the year under consideration as follows: Survey No. Date of deed Purchaser Pgs. P/B 197 15.02.09 Abellon Clean Energy Ltd. 42-56(Gujarati) 143-163(English) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r development of the housing project. Combined reading of Section 2(47)(v) and Section 53A of the Transfer of Property Act would lead to a situation where the land would he for the purpose of Income Tax Act deemed to have been transferred to !he assessee. XXX... The AR submitted that in assessee's case, ATS were entered into in AY 09-10 and also possession of land was handed over to prospective buyers at that point in time. Thus, as per S.2(47)(v), lands were transferred in AY 09-10. Hence, no capital gain can be charged to tax during the year under consideration i.e. AY 11-12. As regards AO's reference to sale deed which contains a clause that possession is handed over while executing sale deed, it is submitted that such words were part of the standard format of the sale deed. From the ATS, it absolutely clear that possession was handed over to the prospective buyers while entering into the ATS. Neither AO nor CIT (A) has brought any clinching evidence to controvert the fact that possession was handed over while entering into ATS, as duly mentioned in such ATS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Specific Relief Act is annexed at Annex. B . Further, COI in the case of Abellon Cleanenergy Ltd. was dated 07.07.08 (Pg.9 of Asst. Order) i.e. prior to ATS dated 15.02.11. AO as well as CIT (A) conveniently chose not to comment on the same at all Pg.l9 of Asst. Order and Pg.23 of CIT (A)'s order]. Thus, there is no reason for doubting at least ATS dated 15.02.11. Thus, transfer very well took place in AY 09-10 and not in AY 11-12. Hence, impugned addition deserves to be deleted. 5.3 Agricultural land is not a capital asset in terms of S.2(14)(iii); Hence, no capital gain can be charged to tax: As per S.45, capital gain arising on transfer of capital asset can be charged to tax. The term capital asset is defined u/s 2(14). As per such definition, agricultural land is excluded from the ambit of capital asset . Hence, gain on transfer of agricultural land is not chargeable to tax. In assessee's case, transfer took place in AY 09-10 and that point in time, the concerned lands were Agricultural lands . In fact, time gap of three years was fixed so as to ensure that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal sale deeds; In light of the above, followings are certain undisputed facts: 1. Purchase consideration for land was paid by Abellon group; 2. Soon after purchasing the lands, ATS were entered into with the Abellon group and possession was handed over to it; 3. Abellon group incurred expenditure on development of such lands; 4. No sale consideration has actually flown to the assessee; The above aspects are also clear from assessee's statement recorded by AO u/s 131 (Pgs.7-9 of Asst. Order) as well relevant ledgers in the books of the Abellon group (Pgs.57-59, 98-100, 110-115 of P/B). Thus, in reality, assessee was merely acting as agent and representative of the Abellon group for effecting the final transaction of purchase of lands in order to meet the requirements of the revenue laws. In such a scenario, no tax liability, emanating from such transactions can be fastened upon the assessee. Hence, impugned addition must be deleted. 5.6 Alternatively, deduction of cost of improvement in terms of S.48(ii) be given to the assessee: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record. The assessee in the instant case has purchased 2 pieces of agricultural lands out of the money advanced by M/s Abellon Agrisciences Ltd (for short AAL) in the A.Y. 2009-10. As such M/s AAL directly paid the money to the landowners but the same was registered in the name of the assessee dated 20-09-2008. It is because the impugned lands were the agricultural lands and it can be registered only in the name of the agriculturist. 7.1 The assessee in the same A.Y. has transferred the lands to the group companies namely M/s Abellon Properties Pvt Ltd (for short APPL) and M/s Abellon Cleanenrgy Pvt Ltd. (for short ACPL) through an agreement dated 15-01-2009 and 31-03-2009 respectively. However, the assessee executed the sale deed in the name of the above companies in the A.Y. 2011-12 after the conversion of agriculture land into non-agriculture land. The AO accordingly treated the transfer of land by the assessee to these two companies as a transfer in the year under consideration. 7.2 Thus the AO worked out the short-term capital gain on the transfer of the lands amounting to ₹ 85,00,658/-only. The Ld. CIT (A) subsequently confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * Section 53A of the TP Act defines 'part performance' thus : Part Performance. - Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the transferee company and credited the account advance for acquisition of land in respect of both the lands. This fact can be verified from the copy of the ledger placed on page 57 and 98 of the paper book. 10. There was no transfer of the fund by AAL or its group company to the assessee directly or indirectly as the case may be. Thus from the above discussion, it is transpired that the assessee was never the real owner for the impugned lands and the entire transaction was carried by AAL and its group company to acquire the lands through the involvement of the assessee being an agriculturist. Thus the assessee was just a name lender in the entire deal of the transactions, and at all the time the AAL its group companies were the beneficial owners of the impugned land right from the inception of the deal. 7.6 Thus in the given facts and circumstances and after considering the question no. 2 as discussed above, we feel that the assessee did not have any occasion to receive any consideration on the transfer of such lands on the agreement to sell. It is because the assessee has not incurred any cost on the purchase of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract. 7.9 Therefore after considering all the facts in totality we are of the view that there was a property transfer by the assessee to the companies as discussed above in the A.Y.2009-10. Accordingly, we are of the view that the subsequent registration of the conveyance deed in the A.Y.2011-12 will not amount to transfer of property under the provisions of section 2(47) of the Act. Accordingly, the question of capital gain for the year under consideration does not arise. 7.10 We are also conscious to the fact that the impugned land transferred by the assessee in the A.Y.2009-10 when it was an agricultural land which does not fall within the meaning of capital assets as provided u/s 2(14) of the Act. Accordingly the same cannot be the subject matter of capital gains under the Act in the AY 2009-10. 7.11 We also want to make it clear that the buyers of the impugned land have recorded the purchase consideration in the books of accounts at the actual cost incurred by its group company. As such we note that there was no element of profit transferred by the companies to the assessee. Therefore it can be inferred that there is no loss to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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