9911796707
TMI Blog2020 (3) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... had shown long term capital gain of Rs. 73,01,087/- and claimed exemption u/s 54F of the Act for Rs. 71,76,700/- and, therefore, the net long term capital offered for taxation was Rs. 1,24,387/-. 2.1. During the course of assessment proceedings, the assessee was requested to furnish details of properties sold on which capital gain was offered to tax. In response to the same, the assessee filed the copy of the sale deed according to which, in the Previous Year relevant to the A.Y. 2009-10, the assessee had transferred plot nos. 199 and 200 (admeasuring 1500 sq. yards) situated at Survey No.5/3, Raidurg Panmaktha Village, Serilingampally Mandal, R.R. District. The assessee was also requested to furnish all the relevant details with regard to acquisition of above property, cost of improvement, full value of consideration received and entitlement of assessee with regard to exemption claimed u/s 54F of the Act. 2.2. The A.O. observed that on 17.09.2008, the assessee as a GP Holder of Sri M. Suresh Reddy has sold the above plot admeasuring 1500 sq.yds to Sri CM Rajesh for a consideration of Rs. 1,65,00,000/- and the entire consideration was received by the assessee on various dates as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the pendency of the above suit, Sri G.Ramchander Rao expired. Subsequently, the legal heirs of late Khaja Moinuddin and the legal heirs of G. Ramachander Rao entered into a compromise and agreed for possession of 37 acres 20 guntas each under the compromise decree passed on 2.4.84. 2. Sri G.Ramachander Rao entered into an agreement with Sri K.Anjalah for sale of the above land and received sale consideration also. Sri K.Anjaiah in turn entered into an agreement of sale with BNR Developers (P) Ltd and received advances. Sri G.Ramachander Rao and Sri K.Anjaiah entered into a sale agreement with BNR Developers (P) Ltd and registered irrevocable GPA on 15.09.1986 vide regd. document no.660/86 in favour of assessee who is managing director of BNR Developers (P) Ltd. 3. The assessee had all along been in continuous possession of 12 acres 20 guntas of land situated in Sy No.5/3, Raidurg Panmakhta village as GPA holder of Sri G.Ramachander Rao and his nominees since 15.09.1986 till the developed plots were sold out in the above lay-out. 4. Sri M.Suresh Reddy and 4 others never paid any consideration to anybody for acquisition of land situated at Sy.No.5/.3, Raidurg and the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. He observed from computation of income and Form 26 AS for the A.Y. 2008-09 and 2009-10 that the assessee is the owner of 3 residential properties as on the date of transfer of the plot. Therefore, he asked the assessee to explain as to why the exemption claimed u/s 54F of the Act should not be denied. The assessee vide letter dated 15.05.2009 submitted as under: "Ownership of more than one property on date of sale Assessee has been asked to show cause why deduction u/s 54F should be allowed at all given that he has shown rent from more than one property on date of transfer. The other 3 residential properties do not belong to him. B C Reddy and B N R Developers (P) Ltd developed and sold apartment blocks in Kantisikhara Complex, Punjagutta and B N Reddy Towers, Basheerbagh. After all other space was sold in these blocks, there was some space left which was not/could not be sold. As the space remained unsold, the assessee let these premises on rent and returned the rent in his account. Please note that there is no purchase of property or obtaining of ownership of property in the conventional or legal sense but could only realize rent on vacant property. It may also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of IT Act, 1961. However, during the course of assessment proceedings, the assessee made a fresh claim of investment in a residential property which was not considered for the simple reason that the assessee failed to comply with the provisions of section 54F( 4) of the IT Act, 1961. Since exemption is being denied for violation of the threshold condition of owning more than one residential house, the fresh claim of the assessee became academic and hence not considered: 3.3. In view of the foregoing, exemption claimed u/s 54F of the I.T.Act, 1961 is denied and entire long-term capital gain of Rs.l,64,00,436/- as discussed at para 2 above is assessed to tax. The assessee offered net long term capital gains of Rs. 1,24,387/- only and hence the difference of Rs. 1,62,76,049/- is added to the income returned under the head capital gains. 3.4. Penalty proceedings u/s. 271(1) (c) are initiated separately for furnishing inaccurate particulars of long term capital gains and for wrong claim of exemption u/s 54 F of I.T.Act, 1961. 3.5. Subject to the above, the total taxable income is computed as under: Income returned Rs. 8,14,680/- Add: 1. Addition of LTCG as discussed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. With regard to the claim of deduction u/s S.54F of the Act, he relied upon the contentions of assessee before the CIT(A). He argued at length to convince the Bench that the assessee is not the sole owner of the property. 5. The Ld.DR however, supported the orders of CIT(A) and drew our attention to relevant 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11) On 5.9.1989, a Regd. GPA No.1224 of 1989, was executed in favour of the assessee before us, to act on their behalf for development of their land of 12-20 acres of land in Sy.No. 5/3, Raidurg, Panmaktha Village. (12) Subsequently, on 17th September, 2008, Shri M.Suresh Reddy represented by 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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