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TMI Blog2020 (3) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law. Exemption u/s 54F - assessee has been offering rental income from three residential properties due to which the AO and the CIT(A) have denied exemption u/s 54F - assessee s contention that the said properties belong to the company which has constructed the houses but since they remained unsold and were let out and income was offered to tax in the hands of the assessee also needs verification by the AO. The AO has to examine as to when the flats were constructed and by whom, and if sold when the flats have been sold by the assessee or BNR Developers Pvt.Ltd. If it is found that assessee s contention is correct that these flats were stock-in-trade of the company, and income has been offered to tax in the assessee s hands and do not belong to assessee, then only assessee will be eligible to claim exemption u/s 54F of the Act. The AO is accordingly directed to verify assessee s claim afresh in accordance with our directions as above. - ITA No. 163/Hyd./2014 - - - Dated:- 25-2-2020 - Smt. P. Madhavi Devi, Judicial Member And Shri A. Mohan Alankamony, Accountant Member For the Assessee : Sh. S.Rama Rao, A.R. For the Revenue : Smt. K.J. Divya, D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the return of income filed on 03.07.2009. In response to the same, the assessee filed a Note stating as under. 1. Vide an agreement dated 16th of August 1989 Sri M. Suresh Reddy and 4 others entered into an agreement to pool their funds and invest in land which would be registered in the name of M. Suresh Reddy, and later sold and the realized profit would be shared in an agreed ratio. 2. In furtherance of this agreement on 28th of August 1989 land admeasuring Acres 2 Gts 20 was acquired as per above agreement was registered in the name of Sri M Suresh Reddy. 3. Mr Suresh Reddy and others then approached Mr B.C. Reddy to purchase 50% of the land on payment of consideration and as per agreement dated 4th day of September 1989 M. Suresh Reddy and others agreed to part with 50%. share of land in favour of B C Reddy. 4. On 6th September 1989 M Suresh Reddy along with others executed a GPA favouring B C Reddy for carrying out all such activities to result in sale of land. 5. On 17th September 2008 vide doc number 7357, M Suresh Reddy through GPA B C Reddy sold 1500 sq yds to C M Rajesh for ₹ 1,65,00,000/-. 6. As B C Reddy was entitled to 50% sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of ₹ 1,65,00,000/-. 6.The assessee despite being afforded number of opportunities failed to adduce any evidence in support of his claim that Sri M.Suresh Reddy and 4 others offered capital gains in respect of their alleged 'share in respective assessment years. This is necessary in the light of the fact that the assessee is GPA holder and is owner in his own right to the extent of 100%. The claim of division of sale consideration by giving effect to a MOU should be backed by evidence. 7. On perusal of bank accounts of the assessee, it is found that the entire sale consideration of ₹ 1.65 Crores was received by the assessee and the assessee failed to produce Sri M.Suresh Reddy and 4 others in support of his claim that the consideration is distributed amongst them in accordance with terms and conditions of the alleged MOU. 8. The assessee failed to adduce evidence that Sri M.Suresh Reddy and 4 others duly filed their returns of income for the respective assessment years offering their share of capital gains for taxation. 2.4 In view of the foregoing, the long-term capital gains arising on sale of plot 199 200 situated at Sy.No.5/3, Raidu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense but could only realize rent on vacant property. It may also be noted that there is no right to dispose of the property. As B C Reddy does not OWN any property on the date of transfer, he is eligible for deduction u/s 54F of the Income Tax Act in respect of investment in new property. 2.6. The AO however, was not convinced with assessee s contentions and at paras 3.2 and 3.3 of his order held as under:- 3.2 The above submissions are perused and found to be not acceptable for the following reasons: a)The assessee on his own volition admitted rental incomes from the above three residential properties as owner u/s 22 of I.T.Act, 1961 for the AYs 2008-2009 and 2009-2010. On one hand he is conceding that he is owner for the purposes of section 22 of the I.T.Act, 1961 and on the other hand he is contending that he is not owner in the conventional or legal sense. From the above, it is clearly evident that the assessee is blowing hot and cold on the same issue of ownership of the above three residential properties. b) As per the specific provisions of section 54F of I.T.Act, 1961 , the assessee should not own more than one residential house as on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is computed as under: Income returned ₹ 8,14,680/- Add: 1. Addition of LTCG as discussed above: ₹ 1,62,76,049/- ₹ 1,62,76,049/- Income assessed ₹ 1,70,90,729/- Agricultural income: ₹ 1,80,000 Tax thereon : ₹ 34,25,174/- Add: Surcharge : ₹ 3,42,517/- Educational Cess : ₹ 1,13,031/- Int. u/s. 234B : ₹ 12,32,385/- Int. u/s. 234C : ₹ 119/- ₹ 51,13,226/- Less: TDS : ₹ 1,46,258/- Self ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paras of CIT(A) s order wherein the CIT(A) has brought out the factual position for denying the claim of assessee. 6. Having regard to the rival contentions and material placed on record, we find that : (1) The landed property of 75 acres in Sy.No.5/3, at Raidurg Panmaktha Village, Serilingampally, R.R.Dist. originally belonged to one Khaja Moinuddin and after his dealth, it was mutated in the names of his legal heirs. (2) One Mr.G. Ramchander Rao was the tenant of the said property and he filed a suit in the Court of Munsif Magistrate (West) Taluk RR Dt. against three of the legal heirs of Late Khaja Moinuddin who were owners of the property, for perpetual injunction. (3) The suit ended in a compromise decree wherein tenant and the owners got Acres 37.20 guntas each. (Copy is not filed before us) (4) Thereafter, the legal heirs of Late G.Ramchander Rao entered into an agreement with one Sri K.Anjaiah, S/o Late K.Kotiah, for sale of the said land and also received sale consideration. (Copy is not filed before us) (5) Thereafter, the legal heirs of Late. G.Ramchander Rao and Sri K.Anjaiah, entered into an agreement of sale with M/s BNR Developers (P) Ltd. and rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his GPA holder i.e. the assessee herein sold 1500 sq.yds of the developed layout to one Mr.C.M.Rajesh and the assessee has received total consideration of ₹ 1,65,00,000/-. 6.1. The AO and the CIT(A) both held that the agreements relied upon by the assessee to say that he is only a 50% shareholder of 2.20 acres of land are both unregistered documents, and, therefore, cannot be relied upon, particularly since the assessee has become the owner of 37 acres -20 guntas of land i.e. the entire land by virtue of registered sale deed dated 28.8.1989. 7. We have perused the copies of documents filed in the paper book and find that the un-registered agreements are also on stamp papers which were purchased on the same dates on which the stamp papers which were used for registering the transactions were purchased. Therefore, the contentions of the assessee about the agreements cannot be brushed aside totally. It is true that the agreements for purchase of land between Mr. Suresh Reddy and others is not finding place in the registered documents by which Mr. Suresh Reddy has purchased the land and even the agreement between the assessee and the other six parties is also not finding p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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