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TMI Blog2022 (1) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax act is required to be used. In the present case for assessment year 2005 - 06 there is no transfer of asset, and therefore, there is no chargeability of capital gain u/s 45 of the act. Thus the provisions of Section 48 are also not triggered for this year. Therefore for assessment year 2005 06 there is no implication of provisions of Section 50C. The learned dispute resolution panel in paragraph number 2.5 has noted that assessee has failed to provide evidence to substantiate its claim of transfer of possession and final receipt of money in assessment year 2004 05 and as the property was registered on 23/4/2000 for i.e. during assessment year 2005 06, therefore, it confirmed the action of the learned assessing officer to tax capital gain in the assessment year 2005 06. DRP ignored the agreement to sell entered into by the assessee. Further if the learned DRP was of the view that capital gain is chargeable to tax in assessment year 2005 06, they should have directed the learned assessing officer to make the total addition of the capital gain in assessment year 2005 06. Even for ld AO and ld DRP it cannot act as deterring fact that capital gain is offered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income on 31st October, 2005 at a total income of ₹680,94,57,960/-. Assessment order under section 143(3) of the Act was passed on 19th March 2008 at ₹ 96,28,18,807/-, which was subsequently rectified under section 154 of the Act on 30th May, 2008 at ₹909,67,56,864/-. 4. Case of the assessee was reopened by issue of notice under section 148 of the Act on 14th December, 2010 based on Survey under section 133A of The Act conducted in case of Z Square Shopping Mall, Kanpur on 13th May, 2010. During survey, it was noted that premises owned by the assessee was sold to a third party on 23rd April, 2004 by sale deed for a total sum of ₹14,25,00,000/- having market value as per stamp duty law of ₹23,74,08,709/-. Thus, Provisions of Section 50C of the Act were applicable which shows that there was a difference of ₹9,49,08,709/- in the full value of consideration for computation of capital gains. Therefore, notice u/s 148 of the Act was issued. Assessee responded stating that assessee has executed the agreement to sale of the above property on 31st August, 2003 offering entire sale consideration received by the assessee for capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, wherein the reasons recorded shows that the reopening has been made for substituting fair market value of property sold by registered sale deed dated 23rd April 2004. The sale deed shows the sale consideration of ₹14,25,00,000/- whereas, the stamp duty shows the market value of ₹23,74,08,709/-. Thus, the full value of the consideration received by the assessee was to be substituted by the fair market value as per stamp duty Act. He further, referred to the agreement to sale executed on 31st August, 2003, wherein, the property have been transferred for ₹14,25,00,000/- and total consideration has been received on 29th August, 2003. He referred to clause 1 of the Agreement for this proposition. He also referred to clause 3, where the actual physical vacant possession of the property was delivered to the buyer. He also referred to the statement of the computation of total income for Assessment Year 2004-05, where assessee computed the capital gain by considering the sale value of ₹14,25,00,000/- and offered capital gain of ₹3,56,77,724/-. He submitted that for Assessment Year 2004-05, the assessee has been assessed under section 143(3) of the Act by ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reopening of the assessment as well as addition made by LD AO. 10. The learned Authorized Representative submitted that the transfer is required to be seen in view of the Provision of Section 2(47) of the Act. The decision of Hon ble Supreme Court is on section 54 of the Transfer of Property Act and does not deal with the provision of Income Tax Act. He further relied on the order of the learned Dispute Resolution Panel wherein addition only being difference between the sale considerations was confirmed and it did not say that the transfer did not take place in Assessment Year 2004-05, but in AY 2005-06, according to the provisions of the Income Tax Act. Thus, he submitted that even if the reopening was to be made it was for Assessment Year 2004-05 and could not have been made for Assessment Year 2005-06. 11. We have carefully considered the rival contentions and perused the orders of the lower authorities. We also considered the various judicial precedents cited before us by the parties. In the present case the assessment u/s 143 (3) of the act was completed on 19th of March 2008. Subsequently notice u/s 148 of the income tax act was issued wherein the reasons were recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. Further as per clause 2, sale consideration is not refundable to the purchaser Under any circumstances. It was further stated that the purchaser has confirmed that they have received the actual, physical, vacant possession of both the properties and the assessee bank is left with no right, title, interest, claim in the property and the purchaser has become the absolute owner of the property with full right to use the property as an absolute owner. The assessee also referred to clause 3 and 4 of the agreement to sale and therefore it was stated that the ownership and the property has been transferred to the purchaser during financial year 2003 04 relevant to assessment year 2004 05. The assessee also submitted that according to the provisions of Section 45 of the income tax act read with Section 2 (47) (v) any transactions involving allowing of, the possession of, any immovable property to be taken on retained in part performance of a contract of the nature referred to in Section 53A of The Transfer Of Property Act, amounts to transfer according to income tax act which is chargeable to tax u/s 45 of the and computed in terms of provision of section 48 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the property as described u/s 50 C of the income tax act is required to be used. 15. In the present case for assessment year 2005 06 there is no transfer of asset, and therefore, there is no chargeability of capital gain u/s 45 of the act. Thus the provisions of Section 48 are also not triggered for this year. Therefore for assessment year 2005 06 there is no implication of provisions of Section 50 C of the act. 16. In the present case, a. agreement to sale has been entered in assessment year 2004 05, b. full value of consideration is received by the assessee, c. possession of the property has been given to the buyer, d. assessee offered same in the computation of total income Under the head capital gain, e. the learned assessing officer assessed the same u/s 143 (3) of the act, f. In the assessment, order for assessment year 2005 06 the learned assessing officer also did not make addition of total capital gain but merely the difference between the sale consideration and fair market value as determined by stamp authorities. g. Notice u/s 148 of the Act is issued for Ay 2005-06 and not for 2004-05, for substituting fair market value of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of immovable property by way of sale can only be by a deed of conveyance. In the absence of a deed of conveyance, which is duly stamped and registered as required by the law, no right, title, or interest in any immovable property, can be transferred. Honourable Supreme Court further held that any contract of sale which is not a registered deed of conveyance would fall short of the requirement of Section 54 and 55 and will not confer any title not transfer any interest in any immovable property (except to the limited right granted u/s 53A of the act. Therefore, an agreement of sale, whether with the possession or without possession is not a conveyance. It conclusively held that sale of immovable property can be made only by registered instrument and an agreement of sale does not create any interest or charge on its subject matter. In paragraph 12 of the judgment, honourable Supreme Court has made a specific exclusion of provisions of Section 53A of the transfer of property act. When we look at the definition of the transfer of a capital asset Under the provisions of Section 2 (47) of the act, it includes in the definition of transfer any transaction involving the allowing of the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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