TaxTMI 
TaxTMI 
2012 (4) TMI 417
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.... of original assessment. The CIT (Appeals) failed to note that the authorized representative of the assessee wrongly submitted before the Assessing Officer vide letter dated 23.02.2004 that date of sale of Kilpauk Garden property to Sanmar Properties was 28.11.1999 when no sale deed with the Sanmar Properties was registered and in fact impugned property was registered in name of some other concern in 2001 to whom the property was finally sold and Sanmar Properties acted as conforming party. 4. The learned C.I.T. (Appeals) failed to note that the correct sequence of events was furnished by the assessee only subsequent to the passing of assessment order and only in course of re-assessment proceedings. It was only in the course of re-assessment proceedings that the assessee changed his stand from "sale" of the impugned property to Sanmar Properties; to deemed ''transfer'' u/s 2(47)(v) to Sanmar Properties on account of handing over of the possession to the buyers on 28.11.2009. 5. The learned C.I.T. (Appeals) failed to note that only in re-assessment proceedings the fact that there was sale agreement in respect to Kilpauk property with M/s Sanmar Properti....
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....lers have already filed statement in Form 371 to the Appropriate Authority and consequently as per Section 269 UK r.w.s. 26900 & 269UL of the Act; no transfer could take place unless NOC is issued by the Appropriate Authority. Allowing deduction u/s 54 & 54F by the CIT (Appeals) was therefore against the ratio of the decision cited above. 9. The CIT (Appeals) failed to note that since the NOC was obtained only on 21.02.2000, the deemed transfer u/s 2(47)(v) r.w.s. 269 UK of the Act could have taken place on 21/2/2000 and not on 28/11/1999. Consequently, relief u/s 54 & 54F was not available to the assessee in respect of purchase and construction of the Bangalore Property. The CIT (Appeals) should have confirmed the order of the Assessing Officer. 10. The C.I.T. (Appeals) erred in relying upon the decision of Chaturbuj Dwarakadas Kapadia v. C.I.T. 260 ITR 491 which was rendered in a different context and involved different issue. If the ratio of this decision (Chaturbuj D. Kapadia) is followed, then the transfer took place on 28.06.1996, i.e., relevant for A.Y. 1997-98 and not A.Y. 2000-01. The assessee himself offered for tax the capital gains only in respec....
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....awn. Again a fresh notice u/s. 148 had been issued and served on the assessee on 27.03.2007 to re-open and re-consider the determination of Long Term Capital Gain. The assessee had in response to the said notice filed the return under protest return of income revised by the CIT(A) in his order cited above. The assessee had also questioned the validity of re-opening of the assessment after a period of 4 years in the absence of any failure on his part as he has disclosed fully and truly all materials required for completion of the re-assessment. The assessee had also contended that the definition of transfer u/s. 2(47) of the IT Act mentions only about the delivery of possession in pursuance of the agreement to sale and once the delivery had been given the transfer takes place and charging of capital gain has to be done based on such date of transfer. The Assessing Officer had in his order stated that the assessee had obtained NOC from appropriate authority on 21.02.2000 and therefore, the transfer can take place only after the said date. He has also presumed that the assessee should have transferred the property only after that date since provision of Chapter XXC had been complied w....
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....gain is attracted. The compliance of Chapter XXC is an independent act and it is not the charging section for levy of capital gains. Therefore, it is the contention of the assessee's representative that the date of transfer is only 28.11.1999 and even if the certificate under Chapter XXC is obtained itself relates back to the date of agreement and date of delivery of possession for the purposes of levy of tax since the taxing event is delivery of possession. It was, thus pleaded that first reassessment is correctly made and does not call for any interference. So, the impugned order to be set aside on the issue of reopening as well as on merits. 4. The ld. CIT(A), while considering and accepting the plea of the assessee in the light of Hon'ble Bombay High Court's decision in the case of Chaturbhuj Dwarakadas Kapadia of Bombay v. CIT [2003] 260 ITR 491/129 Taxman 497 by drawing conclusion in para 9 onwards, allowed the appeal on reopening as well as on withdrawing of deduction claimed under section 54 and 54F of the Act. 5. Aggrieved by this order of the ld. CIT(A), the Department has come up in appeal and raised various grounds on both the issues decided by the ld. CIT(A) in f....
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....ng of the assessment is impermissible as per proviso to sec 147. Reliance is placed on the following decisions: i. CIT v. Tube Investments of India Limited 11 DTR 73 (Mad.) ii. CIT v. Indbank Housing Limited 11 DTR 68 (Mad) iii. Garden Silks Limited v. CIT 222 ITR 27 2. The original assessment was appealed against before the Commissioner of Income Tax (Appeals) Trichy and the decision of the CIT(A) was accepted by the department. Later proceedings were initiated for revision u/s 263 on 17.2.2007 and based on the objections filed on 5.3.2007 the proceedings were dropped. Subsequently the assessment was re-opened by issue of notice u/s 148 on 28.3.2007. The sequence of these events clearly bear testimony to the suggestion that the assessment had been re-opened on change of opinion and such re-opening had been held to be invalid under law in 320 ITR 561 by the Supreme Court. 3. The respondent believes that the re-opening has been made at the instance of the directions of the Commissioner of Income Tax subsequent to the dropping of the proceedings u/s 263. Such an act of re-opening the assessment on the ....
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....pleaded that first agreement was entered into between the assessee with other co-owners and Sanmar Properties development Ltd. on 26.08.1996, where consideration amount in the hands of the assessee is shown to be at Rs.65,68,79,750/- and supplementary agreement was executed on 06.02.1998 in which the consideration amount in the hands of the assessee was Rs.5,62,64,450/- and in another restated agreement dated 25.11.1999, the consideration amount in the hands of the assessee was to the extent of Rs. 5,42,64,650/- and as per letter given by the ld. AR of the assessee, the possession was handed over on 28.11.1999. Whereas, application to Appropriate Authority under Chapter XXC was given on 30.11.1999 and final approval was granted on 25.05.2000 and since possession was handed over on 28.11.1999, so approval of the Appropriate Authority under Chapter XXC even if granted on 25.02.2000 has no bearing of transfer having taken placed with the giving of possession on 28.11.1999, because as per provisions of section 2(47)(vi) r.w.s. 53A for transfer of Property Act, actual transfer has already been taken place on 28.11.1999 and further investment in new house was within one year prior to mak....
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....ond the amount prescribed within the specified period and even giving possession, no transfer could take place. There is a specific provision for issuing 2nd NOC and if there is change in the amount or year or other particulars entered into between the parties as specified in earlier agreement and 2nd NOC has the same effect as that of the first NOC, so when 2nd NOC's terms and conditions as that of the first agreement even altered, so the assessee has necessarily to obtain 2nd NOC and till that is issued, no valid transfer could take place and even after it takes place, it would be void as per provisions of section 269 UK(2). Therefore, in view of the specific provisions in this regard, in the absence of NOC under section XXC, any transfer of any immovable property is not only be in contravention of the relevant provisions as contained in the said Chapter, shall also be void so the assessee's contention that the relevant provisions is in conflict with the section 2(47)(vi) is liable to be rejected because special provision has to be given preference over general provisions. It was thus pleaded to reverse the order of the ld. CIT(A) and restoring that of the Assessing Officer. 8....
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....ee to fully disclose all the material facts concerning the assessment, I am satisfied income has escaped assessment within the meaning of Sec. 147." 8.2 In response to notice under section 148, the assessee filed return of income on 26.11.2007 returning total income of Rs. 41,77,550/-. After due notice and considering the objections of the assessee, the assessment order dated 14.12.2007 was passed by determining total income at Rs. 1,36,19,334/-, which includes income from long term capital gains on property at Rs. 1,21,61,564/-, against which the assessee came up in appeal and the ld. CIT(A) allowed the appeal of the assessee on both the issues of reopening as well as determining of income on long term capital gains and Department has filed this present appeal. 8.3 In this case, No Objection Certificate was issued on 21.02.2000 by the appropriate authority under section 269UA of the Income Tax Act and it is a case of the Department since transfer of the property could take place only after the date of issuance of No Objection Certificate, which was finally issued on 21.02.2000 and not before that date, whereas, as per assessee, the deemed transfer took place on execution of ....
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....r only on executing a power of attorney in favour of the developer who will prepare necessary drawings of the building to be submitted to the Municipal Authorities for approval of the Plan. Hence, the transaction will be deemed to be completed only when the assessee gives a power of attorney. The power of attorney is written to avoid stamp duty for the developer and the state Government will collect the stamp duty from the buyers of the flats. The undivided share of land will be sold to the buyers of the flats by the developer on the strength of the power of attorney. In this case no power of attorney has been executed and hence the developer does not have the right over the property. The assessee has obtained NOC from the appropriate authority only on 21.02.2000. In the prescribed application for obtaining 'No Objection Certificate', the assessee and the purchaser has to specifically state that it/he intends to sell/purchase thereby enclosing the required document and if assessee has given such declaration before the appropriate authority, how could it change his stand. So, this statement becomes contradictory if his arguments that possession has already been handed over before ob....
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....ficer by the assessee during the course of original assessment proceedings. 3. However, vis-à-vis the second issue regarding the date of transfer of the property which is relevant for deciding whether assessee is eligible for claiming deduction under Section 54/54F of Income-tax Act, 1961 (in short "the Act"), I am unable to agree with the view of the ld. JM. Facts of the case have been narrated by ld. JM at paras 2 to 4 of his order. Nevertheless, for clarity, some pertinent facts which, according to me, are relevant for deciding on the second issue, is spelt out once again. 4. There was an initial agreement for sale dated 28.7.1996 which the parties call as "principal agreement", under which what was to be sold was 7 grounds and 510 sq. ft. for a total consideration of Rs. 5,69,78,750/-. No Objection Certificate under Section 269UL of the Act was also obtained by the assessee from the Appropriate Authority for this agreement. Thereafter, it seems, on finding the actual measurement of the property to be only 7 grounds and 293 sq. ft., supplementary agreements were executed on 18.12.1996 and 06.02.1998 and the consideration was brought down to Rs. 5,62,64,458/-. There ....
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....transaction will be deemed to be completed only when the assessee gives a power of attorney. The power of attorney is given to avoid stamp duty for the developer and the State Government will collect the stamp duty from the buyers of the flats. The undivided share of land will be sold to the buyers of the flats by the developer on the strength of power of attorney. In this case no power of attorney has been executed and hence the developer does not have the Right over the property. The assessee has obtained NOC from the Appropriate Authority only on 21/2/2000. The assessee can give a power of attorney only after obtaining the NOC from the Appropriate Authority. Hence the power of attorney would have been executed by the assessee to the developer only after 21/2/2000 and then only the transfer of property will be deemed to be completed. The assessee has given a wrong declaration to the Department that the transfer is over on 29/11/99 so as to claim the exemption u/s. 54/54F of the Income-tax Act. Since the assessee has made a wrong claim, which has not been considered by the Department in the original assessment, the reopening of the assessment is valid. The question that has been d....
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....,458/- Except for Rs. 10,83,000/-, the whole of the consideration stood paid by 05.02.1998 and original title deeds also stood handed over as spelled out at clause (4) of the last supplementary restated agreement. Now the first question to be determined is whether there is a transfer within the meaning of clause (v) of Section 2(47) of the Act by part performance. If we look at the conditions set out under Section 53A of Transfer of Property Act, 1882 (T.P. Act in short), Hon'ble Apex Court in the case of Nathulal v. Phoolchand AIR 1970 SC 546, has summarized them as under:- "(i) there must be a contract to transfer for consideration any immovable property; (ii) the contract must be in writing, signed by the transferor, or by someone on his behalf; (iii) the writing must be in such words from which the terms necessary to construe the transfer can be ascertained with reasonable certainty; (iv) the transferee, in part -performance of the contract, take possession of the property, or of any part thereof, or if the transferee is already in possession, he must continue in possession in part-performance of the contract; (v) the transferee must....
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....off is between definition of "transfer" under Section 2(47)(v) of the Act and Chapter XXC of the Act, in so far as it applied the categories of immovable property falling within the purview of the latter chapter. If the interpretation given by the learned D.R. is accepted, definition of "transfer" as given in Section 2(47)(v) of the Act would have to be ignored in all cases where Chapter XXC is applicable unless and until assessee obtains an NOC under Section 269UL or the time specified under Section 269UD of the Act has expired. In my opinion, NOC given by Appropriate Authority under Section 269UL of the Act, cannot be equated with a conveyancing. In other words, if the interpretation given by the learned D.R. is accepted, the transfer can be deemed as to have been effected only when the registration of the conveyance deed is done by the Registration Officer appointed under Registration Act, 1908, on the assessee producing an NOC under Section 269UL of the Act. Definition of "transfer" insofar as it covers part performance mentioned under clause (v) of Section 2(47) of the Act would thus become otiose in every case where Chapter XXC is applicable. If interpretations give rise to a....
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....nsferee stood already created in terms of Section 53A of T.P. Act, 1882. All these decisions would clearly show that the purpose of insertion of Chapter XXC was to prevent understatement in consideration for transfer of property and making it mandatory for the registration authority to obtain an NOC issued under Section 269UL of the Act before effecting a registration. This would not, in my opinion, any way affect operation of transfer as defined under Section 2(47)(v) of the Act for the purpose of assessing capital gains. Thus, I am of the opinion that even though the No Objection for restated agreement was given by the appropriate authority only on 21.2.2000, the transfer has to be deemed as effected on 28.11.99 since the conditions specified under Section 53A of T.P. Act, 1882 stood satisfied and thereby the transaction automatically came within the purview of Section 2(47)(v) of the Act. This being so, investment made by the assessee on 9.12.98 in the residential property at Bangalore was well within the time period mentioned for availing deduction under Section 54/54F of the Act. Therefore, I confirm the order of CIT (Appeals) that assessee was eligible for availing exemption ....
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....ntitled for the deduction available under section 54/54F, as he had made the investment in the Bangalore property within a period of one year prior to the date of sale of the old property. The Commissioner of Income-tax (Appeals) held that the transfer actually did take place on 28-11-1999, when the possession of the property was handed over to the buyers and the consideration was received by the assessee in terms of section 2(47)(vi) of the Income-tax Act, 1961 and section 53A of the Transfer of Property Act. He accordingly allowed the appeal. The first appellate order was passed by the Commissioner of Income-tax (Appeals) at Tiruchirapalli, on 22-9-2009. 3. The above first appellate order came before the Tribunal in second appeal filed by the Revenue in ITA No. 1830 (Mds)/2009. While deciding the said appeal filed by the Revenue, the learned Judicial Member held that the reopening of the original assessment was validly done by the Assessing Officer and the income escaping assessment is valid and also the assessee was not entitled for the exemption provided under section 54/54F of the Act, as the investment in the Bangalore property was made beyond a period of one year prior to....
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....ed Members and also the orders of the lower authorities and all other relevant materials available on record. The facts and circumstances leading to the dispute have already been discussed in detail in the order of the Commissioner of Income-tax (Appeals), in the order passed by the learned Judicial Member and more explicitly in the order of the learned Accountant Member. Therefore, all those things are not repeated again. 7. The short question to be considered in the present case is this. The assessee had sold his property in Chennai and utilized the sale proceeds in making investment in a residential property in Bangalore. The investment in the Bangalore property was made on 9-12-1998. According to the assessee, the transfer of the old property was made within a period of one year from that date of 9-12-1998. Therefore, he is entitled for the deduction under section 54/54F of the Act. But, according to the Revenue, the assessee could have transferred the old property only after 21-2-2000. This is because the NOC was issued by the Appropriate Authority only on that date of 21-2-2000. The date of 21-2-2000 itself is beyond a period of one year from the date of purchase of the Ba....
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....ning of section 53A of the Transfer of Property Act. Therefore, it is clear that the transfer of property in this case has taken place on 28-11-1999 itself. If that date is taken as the date of transfer of the property, it is to be seen that the assessee had invested the sale proceeds in his Bangalore property within a period of one year prior to the date of transfer. The assessee has made the investment in his Bangalore property on 9-12-1998. 10. Now, the question is as to when the final and binding NOC was issued by the Appropriate Authority in the present case. The final NOC was issued on 21-2-2000. The Revenue is clinching on this date to show that the NOC was issued on 21-2-2000 and, therefore, the transfer could have been taken place only after that date and never before that date and particularly on 28-11-1999. This argument of the Revenue is highly technical. The Revenue has overlooked the sequence of events preceded the issue of final NOC by the Appropriate Authority on 21-2-2000. To repeat again, the original agreement of sale was executed on 28-6-1996. The Appropriate Authority had issued the NOC on the basis of that agreement on 8-10-1996 itself. Thereafter the circu....