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TMI Blog2022 (8) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee could be granted deduction u/s 54 merely on the basis of unregistered Agreement to Sale couple with possession which never fructified into registered Sale Deed till date? - HELD THAT:- The provisions of Sec.54 enable the assessee to claim deduction of Long-Term Capital gains provided the assessee, within specified period, purchases or construct a residential house. The term purchase, in our considered opinion, has to be absolute purchase since the object of the beneficial provision is to encourage investment in housing. An agreement to sale, till it translates into conveyance of full ownership rights, by way of registered documents, is merely an agreement and do not result into transfer of ownership absolute. It only given partial rights out of bundle of rights to the parties intending to purchase the property. However, till actual conveyance happens, it could not be said that the assessee has purchased the houses property. Another fact to be noted is that the agreement has never fructified into registered sale deed till date despite the fact that the assessee has paid full consideration of Rs.165 Lacs and the document was executed on 30-03-2012. No valid circumstances wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h materials available with the Assessing Officer warranting invocation of the provisions in section 147 of the Act and further ought to have appreciated that the change of opinion on the part of the Assessing Officer was wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) failed to appreciate that the reopening of the assessment based on the audit objection without independent application of mind on the part of the Assessing Officer would indicate the absence of 'reasons to believe' thus vitiating the initiation of the re-assessment proceedings in terms of section 147 of the Act. 5. The CIT (Appeals) went wrong in recording the findings in this regard from para 10 to para 15 of the impugned order without assigning proper reasons and justification. 6. The CIT (Appeals) erred in disallowing the claim of exemption u/s 54F of the Act in the computation of Long-Term Capital Gains overlooking the provisions in Section 2(47) of the Act without assigning proper reasons and justification. 7. The CIT (Appeals) failed to appreciate that having noticed the actual flow of money for the purpose of investment and further having noticed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property was not registered in the name of the assessee till date. The Ld. A.O opined that to claim exemption u/s. 54 of the Act, the assessee should have purchased the property through a registered sale deed. However, this was not done and the assessee entered into a mere agreement for sale only. 3.3 The Hon'ble Supreme Court in the case of CIT vs. Balbir Singh Maini (supra) discussed the legal impact of unregistered Joint Development Agreement. The Hon'ble Court held that fulfillment of conditions of Sec.53A of Transfer of Property Act itself was not enough to consider a transfer within the meaning of Sec. 2(47) of the Act. It was further held that after the commencement of amendment act, 2001, an unregistered agreement would have no effect in law for the purposes of Sec.53A. In short, there is no agreement in the eyes of law which could be enforced u/s 53A of the Transfer of Property Act. In order to qualify as a transfer u/s 2(47)(v), there must be contract which could be enforced in law u/s 53A of Transfer of Property Act. A reading of Section 17(1A) and Sec.49 of the Registration Act shows that in the eyes of law, there is not contract which could be taken cognizance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant assessee had become 'owner' of the flat as envisaged u/s. 54F of the Act. It is also contended that for the purpose of section 54F, there is no requirement of registered Sale Deed. 17. On the other hand, the A.O has relied on the recent decision of the Hon'ble Supreme Court in the case of CIT vs. Balbir Maini, dated 04/10/2017 wherein the legal implication of unregistered Joint Development Agreement has been discussed in details. I have perused the impugned assessment order of the AO in the light of the above decision of the Hon'ble Apex Court and have found that the AO has very judiciously and correctly applied the ratio of this judgement to the present case of the assessee and has disallowed the claim of the assessee u/s 54F of the Act. I do not find any infirmity in the finding of the AO in this regard. 18. In the above referred decision of the Hon'ble Supreme Court, it has been held that fulfilment of section 53A of the Transfer of Property Act itself is not enough to consider a transfer within the meaning of section 2 (47) of the Income Tax Act subject to the amendments made to Sections 17 and 49 of the Indian Registration Act. The amendments to the sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has earned Long- Term Capital Gains of Rs.102.19 Lacs against which the assessee has claimed deduction u/s 54 on the strength of agreement for sale for purchase of flat. The assessee is stated to have taken a possession of the same. However, it is undisputed fact that the agreement has not fructified into registered sale deed and the full ownership rights have not been acquired by the assessee. Pertinently, the agreement is unregistered document which is executed as early as on 30-03-2012. 8. The provisions of Sec.54 enable the assessee to claim deduction of Long-Term Capital gains provided the assessee, within specified period, purchases or construct a residential house. The term purchase, in our considered opinion, has to be absolute purchase since the object of the beneficial provision is to encourage investment in housing. An agreement to sale, till it translates into conveyance of full ownership rights, by way of registered documents, is merely an agreement and do not result into transfer of ownership absolute. It only given partial rights out of bundle of rights to the parties intending to purchase the property. However, till actual conveyance happens, it could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the addition to the extent of deduction claimed by the assessee in the return of income. In Ground No.10, the assessee has pleaded for violation of principle of natural justice. However, the same is without any substance since adequate opportunities have been provided to the assessee to substantiate its stand. 11. So far as the legal grounds are concerned, we find that the regular assessment was framed u/s 143(3) and the case was reopened within 4 years. There is nothing on record which would show that any such verification of examination was carried out by Ld. AO during regular assessment proceedings. The proceedings were triggered on the basis of Audit Objection which certainly constitutes 'information'. As long as there is independent application of mind by Ld. AO to arrive at conclusion that there was escapement of income, this information could certainly be utilized to arrive at this formation of belief. The case laws as cited by the Ld. CIT(A) duly support the validity of reassessment proceedings. We are in complete agreement with the adjudication of Ld. CIT(A), in this regard, in the impugned order. Ground Nos. 1 to 5 stands dismissed. 12. The appeal stands partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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