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TMI Blog2020 (4) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... deed executed on or after 16.01.2015 and therefore, as per the AO, the new asset was acquired prior to one year before the date of sale of flats - whether date of sale agreement should be considered or date of sale deed should be considered for the purpose of counting the period of one year before the date of sale as provided in section 54? - HELD THAT:- Latest date of Agreement and Date of possession/transfer is 27.11.2014. Even if we consider this date as the date of sale, the acquisition of the new asset acquired by the assessee on 10.01.2014 is not prior to one year before the date of sale of flats. As relying on SH. SANJEEV LAL ETC. VERSUS COMMISSIONER OF INCOME TAX ANOTHER [ 2014 (7) TMI 99 - SUPREME COURT] we decline to interfere in the order of CIT (A) on this issue also because as per this judgment, date of sale agreement has to be considered as date of sale because some rights of the vendor gets extinguished and the vendee acquires some rights in the property in question on the date of the sale agreement coupled with part payment. - Decided against revenue. - ITA No. 3362/Bang/2018 - - - Dated:- 29-1-2020 - Shri Arun Kumar Garodia, AM And Shri Pavan Kumar Gadale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.73% and the other land owner 11.87% total 35.60% equivalent to residential units and balance 64.40% was the share of the builder. Total 127 Apartments, Villaments and Row Houses were constructed and the assessee got 23 apartments equal to built up area of 47,524 sq. ft. In Para 6.1 of the assessment order, the AO has noted that capital gain arising on account of transfer of land in consideration of 23 apartments as per JDA dated 16.12.2010 was offered to tax in A. Y. 2011 12 as per return filed by the assessee in compliance to notice issued u/s 148 dated 18.06.2014 and assessment was completed on 28.03.2016. Hence, this is admitted position of fact that capital gain on transfer of land as per JDA was brought to tax in A. Y. 2011 12 and the sale consideration received by the assessee in respect of this capital gain was the same 23 flats which are sold in the present year giving rise to further capital gain. This gain was offered by the assessee in the present year as LTCG as per the revised return filed but as per Para 11 of the assessment order, the AO held that as per section 2 (42A) of I T Act, the asset is short term capital asset and gain on its sale is STCG. As per secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DR of the revenue that sell agreements were not executed in F. Y. 2013 14 and 2014 15 as noted by CIT (A). His argument is same as stated by the AO in the assessment order that only two sale deeds were brought on record being dated 16.01.2015 and 23.01.2015 and hence, it is held that all sales has taken place on 16.01.2015 or thereafter and therefore, acquisition of new asset on 10.01.2014 is prior to one year before the date of sale of flats and hence, deduction u/s 54 is not allowable. Now, we have to decide this aspect as to whether date of sale agreement should be considered or date of sale deed should be considered for the purpose of counting the period of one year before the date of sale as provided in section 54. On page no. 16 of his order, learned CIT (A) has given a chart for all 23 flats giving date of Agreement, Date of Possession/Transfer and date of Sale Deed. No mistake is pointed out by the learned DR of the revenue in this chart. As per this chart, the latest date of Agreement and Date of possession/transfer is 27.11.2014. Even if we consider this date as the date of sale, the acquisition of the new asset acquired by the assessee on 10.01.2014 is not prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te on which the property i.e. the residential house had been transferred. In normal circumstances by executing an agreement to sell in respect of an immoveable property, a right in personam is created in favour of the transferee/vendee. When such a right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because the vendee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the vendor, for some reason is not executing the sale deed. Thus, by virtue of the agreement to sell some right is given by the vendor to the vendee. The question is whether the entire property can be said to have been sold at the time when an agreement to sell is entered into. In normal circumstances, the aforestated question has to be answered in the negative. However, looking at the provisions of Section 2(47) of the Act, which defines the word transfer in relation to a capital asset, one can say that if a right in the property is extinguished by execution of an agreement to sell, the capital asset can be deemed to have been transferred. Relevant portion of Section 2(47) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h contractual right can be surrendered or neutralized by the parties through subsequent contract or conduct leading to no transfer of the property to the proposed vendee but that is not the case at hand. 22. In addition to the fact that the term transfer has been defined under Section 2(47) of the Act, even if looked at the provisions of Section 54 of the Act which gives relief to a person who has transferred his one residential house and is purchasing another residential house either before one year of the transfer or even two years after the transfer, the intention of the Legislature is to give him relief in the matter of payment of tax on the long term capital gain. If a person, who gets some excess amount upon transfer of his old residential premises and thereafter purchases or constructs a new premises within the time stipulated under Section 54 of the Act, the Legislature does not want him to be burdened with tax on the long term capital gain and therefore, relief has been given to him in respect of paying income tax on the long term capital gain. The intention of the Legislature or the purpose with which the said provision has been incorporated in the Act, is also v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt court, which they could not have violated. 25. In view of the aforestated peculiar facts of the case and looking at the definition of the term transfer as defined under Section 2(47) of the Act, we are of the view that the appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property being House No. 267, Sector 9-C, situated in Chandigarh and used for purchase of a new asset/residential house. 6. In the above case also, sale agreement was executed on 27.12.2002 and sale Deed was executed on 24.09.2004 whereas the new asset was acquired on 30.04.2003. Hence, if we count from date of sale deed in that case i.e. 24.09.2004, the acquisition of new asset on 30.04.2003 is prior to one year before the date of sale as in the present case but if count from the date of sale agreement on 27.12.2002 in that case, it is within two years after the date of sale agreement and hence, eligible for deduction u/s 54. Respectfully following this judgment, we decline to interfere in the order of CIT (A) on this issue also because as per this judgment, date of sale agre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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