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TMI Blog2016 (12) TMI 1911X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT ] - In this case it was held that where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the ITO is unsustainable in law. LTCG or STCG - whether agreement/deed of allotment granting of possession after completing all the payment formalities should be taken as date of transfer for the purpose of computation of capital gains or the date of registration of sale dee d? - We find that this issue is no more res-integra. Hon ble Apex Court in the case of Shri Sanjeev Lal Etc. [ 2014 (7) TMI 99 - SUPREME COURT ] wherein held once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. Thus we find that in this case the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by learned CIT in the order u/s 263 of the I.T. Act read as under : The assessee had filed the original return of income for the assessment year 2011-12 on 28/10/2012 declaring total income of Rs. 18,10,610/-. In the computation of income, the assessee had shown sale of an immovable property being land held jointly with 32 other persons. The share on the same was shown at Rs. 1,23,21,982/- and capital gains were calculated at Nil. The computation of capital gain as per return is reproduced herewith- Long term Capital Gains Share in land 22/04/2010 (Sale Consideration) - Rs. 1,23,21,982 Less : Transfer expenses. - Rs. 1,15,830 Rs. 1,22,06,152 Less : Indexed cost of acquisition 1. F.Y. 2005-06 - Rs. 19,67,052 2. F.Y. 2007-08 - Rs. 3,22,595 3. F.Y. 2008-09 - Rs. 26,876 4. F.Y. 2009-10 - Rs. 3,50,250 5. F.Y. 2010-11 - Rs. 15,400 Rs. 26,82,173 Rs. 95,23,979 Deducted u/s 54F. Rs. 95,23,979 000 Investment in House Property u/s 54F Rs. 1,23,56,640 0.2 During the assessment proceedings, the Assessing Officer had worked out the capital gain at Rs. 1,02,39,100/- on sale of this property after restricting indexed cost of acquisition of Rs. 19,67,052/- as against assessee s claim of Rs. 26, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 fixing the case for hearing on 25/02/2016. 4. The assessee responded as under : (i) The assessee is a HUF assessed to tax vide the above mentioned PAN. The assessee filed its return of income for the A. Y. 2011-12 on 2810112012 declaring total income of Rs. 18,10,6101- comprising of income from Business and Profession and Income from other Sources. That apart from the above, the assessee also had income from long term Capital Gains on account of sale of 1.1583% undivided share in land bearing City survey No. 36211, Sheet No. 6412 or Mouza JAT-TARODI, bearing Municipal House No. 2, Corporation Ward No. 11, Situated at Near Medical Square, Hambagh, Nagpur which was claimed 'exempt u/s. 54F of the Income tax Act, 1961. Order u/s. 143(3) of the Act was passed on 2310312014 accepting the returned income. The assessee has received notice u/s. 263, proposing revision u/s. 263 of the Act by disallowing the claim of deduction u/s. 54F by treating the Capital Gains on sale of properly as Short term Capital Gains instead of Long term Capital Gains declared by the assessee and accepted by the A.O. in the original assessment year. ii) The assessee at the outset submitted that the capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the deed of allotment, that the Society will execute the sale deed in favour of the members after getting the necessary permissions / approval / clearances from all the concerned departments. As per the deed of allotment, the society has mentioned the undivided share and interest in the land to allottee members as per their contribution for the purchase of the said land. iv) The contribution of the individual member is no where mentioned in the deed of allotment and no evidence Has been furnished for the payment of said property. No specific description I demarcation of the - part of land allotted to individual member are given in the said deed of allotment. v) In view of the above, the question regarding handing over of possession of the undivided share and interest in the land to the allottee members as per their contribution for the purchase of the said land as per deed of allotment is inconclusive. vi) In this context, further reliance is made on the decision of Hon'ble Supreme Court of India in the case of Suraj Lamp and Industries Pvt. Ltd. Vs. State of Haryana. 6. Thereafter learned CIT further referred to above said case law from the Hon ble Apex Court. He observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share of the said land on the date of deed of allotment i.e. 16-12-2005 which has hence rightly been taken as year of acquisition for the purpose of computation of capital gains. Referring to the deed of allotment, learned counsel submitted that the deed nowhere mentioned that the possession of the land was with the society. He referred to para 8 of the sale deed executed on 01-09-2009 as under : THAT the SELLER has already delivered the actual physical possession of the property hereby sold/transferred to the PURCHASER/S in vacant condition at the time of execution of Allotment Deed dt. 16.12.2005 and the PURCHASER/S Aare in possession since then. 10. Per contra learned D.R. relied upon the order of learned CIT. 11. We have heard both the counsel and perused the records. We find that on the same issue on which revisionary order u/s 263 has been passed, Revenue has initiated proceedings u/s 154 and thereafter dropped the same after receiving the assessee s reply. Thereafter on the same issue, show cause notice for reopening u/s 148 was issued. Upon assessee s explanation the AO was satisfied and so far no reopening u/s 148 has been done. The above facts make it clear that the expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed could not be executed because of pendency of the litigation between Shri Ranjeet Lal on one hand and the appellants on the other as Shri Ranjeet Lal had challenged the validity of the Will under which the property had devolved upon the appellants. By virtue of an order passed in the suit filed by Shri Ranjeet Lal, the appellants were restrained from dealing with the said residential house and a law-abiding citizen cannot be expected to violate the direction of a court by executing a sale deed in favour of a third party while being restrained from doing so. In the circumstances, for a justifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed had been registered only on 24th September, 2004, after the suit filed by Shri Ranjeet Lal, challenging the validity of the Will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term transfer , one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the appellants had, in respect of the capital asset in question, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the aforestated observations and the principles with regard to the interpretation of Statute pertaining to the tax laws, one can very well interpret the provisions of Section 54 read with Section 2(47) of the Act, i.e. definition of transfer , which would enable the appellants to get the benefit under Section 54 of the Act. 23. Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immoveable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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