2018 (12) TMI 1951 - AT - Income Tax

Tribunal Confirms Legal Ownership Rights Over Land Sales, Upholds Capital Gains Tax Decision

ACIT, Circle-3, Nagpur Versus Shri Harish Narayan Patil

The Tribunal upheld the decision of the Ld. Commissioner of Income Tax (Appeals) in favor of the assessee regarding the classification of income from ... LTCG on sale of land - AO found that assessee is a 'Consentor' and not the owner of the lands sold - legal owner of land - HELD THAT:- We find from the records that assessee had purchased the land through the registered sale deeds and sold the said land for a total consideration of Rs. 1,55,00,000/- through registered sale deed dated 21.04.12. The said sale deed executed by the assessee has shown as a 'Consentor' because the name of the assessee was not mutated in the government record and the purchaser was not ready to purchase the agricultural land without authenticity of land owner. Therefore in such circumstances, there was no alternative that the assessee how to sell the lands with original owners and therefore, assessee executed the sale deed in favour of purchaser in the capacity of owners and had infer the possession of said land. As correctly appreciated by Ld. CIT(A) that the previous owners of the land after execution of sale deeds in favour of assessee in the year 1998-99 had no locus standi &s regards the owner of the land once they had preferred their right title and interest in the said lands in favour of the assessee in the year 1998-99 and till the possession by executing registered sale deed - CIT(A) had correctly concluded that the assessee as Such was the legal owner of both the lands as on execution of sale deed in the year 2012, had earned capital gains and thus allowed the said transaction. The assessee had correctly held to have earned capital gains and was liable to be taxed. - Decided in favour of assessee. Issues:1. Appeal against the order of Ld. Commissioner of Income Tax (Appeals) for Assessment Year 2012-13.2. Classification of income from long-term capital gains.3. Dispute regarding ownership of lands and treatment of the assessee as a 'Consentor'.4. Interpretation of legal provisions and case laws related to mutation entries and ownership rights.5. Assessment of capital gains tax liability based on ownership rights.Analysis:1. The appeal was filed by the revenue challenging the order of the Ld. Commissioner of Income Tax (Appeals) for Assessment Year 2012-13. The initial assessment by the Assessing Officer determined the total income at Rs. 1,28,10,955 under the head capital gains, where the assessee had shown long-term capital gains. However, discrepancies arose as the assessee was identified as a 'Consentor' and not the owner of the lands sold, leading to the addition of Rs. 1,25,00,000 received by the assessee as 'income from other sources'.2. The Ld. CIT (A) allowed the appeal of the assessee, contending that the assessee had purchased the lands through registered sale deeds and had the right, title, and interest in the lands, despite being shown as a 'Consentor' due to technical reasons related to mutation entries not being transferred in the assessee's name. The Ld. CIT (A) emphasized that mutation entries do not confer or extinguish title, citing legal precedents to support the decision.3. The Tribunal analyzed the orders passed by the Ld. CIT (A) and found that the assessee's inability to sell the land in their capacity as the owner due to mutation issues led to being shown as a 'Consentor'. The Tribunal agreed with the Ld. CIT (A) that the assessee had the legal right, title, and interest in the lands, earning capital gains upon sale. The Tribunal upheld the findings of the Ld. CIT (A) as judicious and well-reasoned, dismissing the revenue's appeal and affirming the assessee's ownership rights and tax liability on capital gains.4. The decision was supported by legal interpretations and case laws emphasizing that mutation entries do not determine ownership rights, and possession and execution of sale deeds establish legal ownership. The Tribunal concurred with the Ld. CIT (A) that the assessee's status as a 'Consentor' did not negate their ownership rights, as evidenced by possession and sale transactions. No new facts or contradictory judgments were presented to challenge the Ld. CIT (A)'s findings, leading to the dismissal of the revenue's appeal.5. The Tribunal's comprehensive analysis of the ownership dispute, legal provisions, and precedents ensured a fair assessment of the capital gains tax liability based on the assessee's established ownership rights, ultimately upholding the Ld. CIT (A)'s decision and dismissing the revenue's appeal.