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TMI Blog2016 (11) TMI 1656X X X X Extracts X X X X X X X X Extracts X X X X ..... considered opinion that the AO and ld. CIT(A) have justified in their action, hence, no interference on our part is required. Taking cost of the market value of the property as on 01.04.1981 in place of cost of acquisition while computing the capital gain - HELD THAT:- AO has considered the indexation cost of acquisition at ₹ 40,920/- as against actual cost of ₹ 6,000/- while computing the capital gains. Therefore, we are of the view that the benefit of indexation has already been allowed by the AO. Hence, this ground of appeal is rejected. - I.T.A. No. 609/Ind/2015 - - - Dated:- 21-11-2016 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER For the Appellant : Shri Anil Kamal Garg, C. A. For the Respondent : Shri Mohd. Javed, Sr.DR ORDER PER O.P. MEENA, ACCOUTANT MEMEBR. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-I, Bhopal [hereinafter referred to as the CIT(A)] dated 27.08.2014 and pertains to assessment year 2010-11 as against appeal decided in assessment order passed u/s 143(3) of the Act dated 19.03.2013 of ITO, Ward 1(1), Bhopal [hereinafter referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty by invoking provisions of Section 50C of the Act without considering the material fact that the provisions of Section 50C can be invoked for transfer of land or building only and not for transfer of any right in land or building. 6. That, without prejudice to the above, on the facts and in the circumstances of the case, the ld. CIT(A) grossly erred, both on facts and in law, in confirming the addition without considering the material fact that the subject property has been alleged to be acquired by the appellant; before 1.4.1981 and therefore, the appellant was eligible to substitute market value of the property as on 1.4.1981 in place of cost of acquisition while computing the capital gain. 3. Ground no.1 is of general nature and does not require any adjudication from our end. 4. Ground no.2 relates to confirming the addition in the status of persons, where the said property was proposed to be acquired on behalf of joint Hindu Undivided Family. 5. This ground was not pressed during the course of hearing before us and the same is treated as withdrawn and dismissed. GROUND NOS. 3 TO 5: 6. Briefly stated, the facts of the case are that Late Shri Shy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of sale consideration was shown at ₹ 50,60,000/-. Accordingly, the AO calculated the long term capital gain at ₹ 50,19,080/- ( Stamp Duty Valuation of ₹ 50,60,000/- (-) Index Cost ₹ 40,920/- ( 6000/- x 382 / 100 ) and assessed the long term capital gain at ₹ 50,19,080/-. Aggrieved with this order, the assessee filed appeal before the ld. CIT(A). 7. The ld. CIT(A) observed that the property was purchased in the name of the assessee, who was minor at that time from Smt. Jaintoon Bi and Smt.Roshan Aara for a consideration of ₹ 6,000/- on 25.03.1971 vide duly registered sale deed. The assessee s contention was that the title of the property was disputed as the property was in possession of Shri Liaqat Khan. The ld. CIT(A) referred the provisions of Section 2(14) of the Act, which defines the capital assets as property of any kind held by the assessee, whether or not connected with its business. The word held signifies ownership and possession, but in the assessee s case, the ownership did not rest with the assessee as per the decision of the Court nor did the assessee have possession of the property. However, the ld. CIT(A) was of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, was given subsequent to the transfer of the property by the assessee to Shri Mohd. Mahfooz. This case was filed by Shri Mohd. Mahfooz on 01.03.2013 to obtain interim relief to dispossess Shri Liaquat Khan and to give possession to him. The Hon'ble Court did not grant interim relief to him but the decision regarding ownership title was still pending for final decision which is evident from the concluding para 17 of the said decision. Therefore, the ld. CIT(A) was of the view that subsequent decision after the date of transfer of the capital asset could not affect the taxability of capital gains in the hands of the assessee. Therefore, the ld. CIT(A) held that the assessee had transferred capital asset to Shri Mohd. Mahfooz vide Sale Deed registered on 27.03.2010, wherein the assessee was shown as a seller and Shri Mohd. Mahfooz was shown as purchaser. Though the assessee had entered into an agreement to sell of the said property with Shri Mohd. Khalil on 01.06.2007, but there is no reference to the said agreement of sale with Shri Mohd. Khalil on 01.06.2007, but there is no reference to the said agreement to sale with Shri Mohd. Khalil in the sale deed registered on 27.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had received the entire consideration before execution of the agreement and no consideration was due to be received by the assessee from the purchaser of the property. In pursuance of the agreement, the assessee also relinquished his symbolic possession in the said property. It was further submitted that the assessee had transferred his right in the said property on as is where is basis and purchaser was also aware of that the assessee assessee was not having physical possession of and absolute legal title in the said property. The Ld. Counsel for the assessee further submitted that in pursuance of the agreement to sale on the instructions of buyer Shri Mohd. Khalil, the assessee had executed one Power of Attorney in favour of Shri Mohd. Imran duly registered before the Sub- Registrar of Property on 01.06.2007 for getting the registration of sale deed (paper book page 50-53). Ld. Counsel for the assessee submitted that under the Power of Attorney, the power of attorney holder was given the absolute right to execute the sale deed in respect of the subject property either in favour of the purchaser whose name was set out in the sale agreement or in the name of anyone else as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is declared illegal, shall remain illegal at all times and even at the time when such transaction was actually entered into and its illegality would not start from the date of the order of the Competent Court finding such illegality. 10. On the other hand, the ld. Senior Departmental Representative has relied on the order of the AO as well as CIT(A). Ld. Senior Departmental Representative further drew our attention to the fact that the property was purchased by the assessee was duly registered on 25.03.1971 for ₹ 6,000/- and same was sold by duly registered sale deed executed on 27.03.2010. The sale deed was signed by the assessee. Therefore, the sale consideration received on transfer of an immovable property is chargeable to tax as long term capital gain in the hands of the assessee. Further, the underlined assets is transferred being a house property, the provisions of Section 50C are very much applicable and hence, the AO and ld. CIT(A) were correct in assessing the long term capital gain at ₹ 50,19,080/- 11. We have heard the rival submissions and have perused the material available on record. It is seen that the assessee has purchased a house property situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f agreement to sale dated 01.06.2007 claimed to have been entered with Shri Mohd. Khalil. It is also a fact on record that the General Power of Attorney holder Shri Mohd. Imran had died in the meanwhile, therefore, the General Power of Attorney was given to him, is of no consequence and further the same was valid for only one year form the date of execution i.e. 01.06.2007 to 01.06.2008. Therefore, the contention of the assessee that he has sold the said house on 01.06.2007 to Shri Mohd. Khalil, is not established from the record. We also agree with the observation of the ld. CIT(A) that the agreement to sale might have been cancelled, as the reference of the same does not find any mention in the Registered Sale Deed dated 27.03.2010. If there had been any iota of truth with regard to the claim of the assessee that sale deed dated 27.10.2010 has been executed at the instance of Mohd. Khalil, then there should have been any mention with regard to the same in the registered sale deed and the earlier purchaser would have endorsed the subsequent Sale Deed with another party and a clear cut reference would have been mentioned in the Sale Deed registered. Therefore, the fact remains that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.1971 and same was transferred vide registered sale deed dated 27.03.2010. Therefore, provisions of Section 50C would be applicable, hence the sale consideration in the instant case would be at ₹ 50,60,000/- lakhs as per Registered Sale Deed dated 27.03.2010. The reliance of the ld. Authorized Representative of the assessee in the case of CIT vs. Vitthal Bhai P. Patel, (1999) 236 ITR 1001 (Guj), is not applicable, as in the said case, the assessee was owner of the vacant land, which was prohibited to be transferred to any person as per provisions of Section 4 of Gujarat Vacant Land in Urban Areas (Prohibition of Alienation) Act, 1972. Therefore, sale of the said land was declared as null and void by the Collector on 29th March, 1975, whereas in the instant case, there was no such prohibition at the time of transfer of land and building and the assessee is not the owner of this land and building under consideration and had a title of the said land and building in his name. Hence, the said decision is distinguishable on facts. Further, the assessee had received a consideration which was not as claimed to have been returned back to purchaser. Since the assessee has transferre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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