TaxTMI 
TaxTMI 
2014 (4) TMI 349
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....ion of submissions made by G Srinivas Reddy, the buyer of the property during the course of assessment proceedings. 7. The CIT(A) has erred in upholding the demand of Rs. 86,72,524 raised by the assessing officer. 8. The CIT(A) has erred in not giving a finding on the allowability of claim of indexation while computing long term capital gains on sale of Jubilee Hills property. 9. The CIT(A) has erred in not giving a finding for the claim of set off long term capital loss on sale of Sundale property against the long term gains from Jubilee Hills property. 10. The CIT(A) has erred in upholding the penalty proceedings initiated by the assessing officer u/s 271(1)( c ) 3. The crux of the above grounds is with regard to taxability of capital gain on transfer of property situated at Jubilee Hills, Hyderabad by invoking the provisions of section 50C of the Act. 4. There is only one issue in appeal before us and that relates to invoking of provisions of section 50C with respect to the property in Jubilee Hills and the resulting computation of long term capital gains at Rs. 2,54,58,000. The facts are that the assessee filed her return of income for A.Y. 2008-09 on 31.7.2008 admitting ....
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....ety in the year 2006 and filed for municipal permissions. (v) Further, if the story of the assessee is to be taken as true, then the moment the plot was registered in her name, it could immediately have been sold and registered in the name of Smt. Neeraja Reddy. However, it took a long time and ultimately the plot was registered in the name of Sri G. Srinivasa Reddy. (vi) It is also difficult to understand that when the sale was supposed to have been made to Smt. Neeraja Reddy, how the ultimate registration got done in the name of Sri G. Srinivasa Reddy. He is in no way related to Smt. Neeraja Reddy. (vii) The assessee stated that Rs. 74.20 lakhs were received from Sri Srinivasa Reddy towards payment of capital gains under section 50C. It is difficult to understand why Sri Srinivasa Reddy would pay this amount in the first place. Moreover, when no capital gains arose in the hands of the assessee, why was the capital gains tax paid? (viii) The assessee got an NOC issued for construction of a building and submitted blueprints of the proposed plan, the building and produced sworn affidavits and certificates from the architects regarding her proposal to build a property on the land....
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....application made by Geetha Lakshmi, the plot was transferred in favour of the assessee by the Society by letter dated 9.12.1991. The assessee paid Rs. 92,000 as consideration. The assessee was made a member of the Society and acquired rights over the plot. Transfer of plot was done by Society from Geetha Lakshmi to assessee on submission of letter/affidavit and request for transfer and without an agreement to sell. This was accepted practice for transfer of plots. Assessee sold the plot to Smt. Neeraja Reddy on 20.4.1994 for a consideration of Rs. 1 lakh. She received the entire sale consideration and handed over possession of the plot at the same time. She had no taxable income in 1994 and so did not file returns showing this income of Rs. 8000. Regarding transfer of the plot in 1994 the AR submitted that transfer letter/ application addressed to Society handed over to Smt. Neeraja Reddy on April 20, 1994 which Smt. Neeraja Reddy submitted to Society on 22/11/1997 under acknowledgment. Reasons for delay in submission to Society by Neeraja Reddy were probably procedural, but inconsequential to the assessee. Special Power Of Attorney given to G. Yeshwanth Reddy, brother-in-law of Sm....
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....the Collector cum District Registrar as the delay in execution of the document and registration was beyond the control of the assessee. This puts the case of the assessee in the exception provided in section 50C(2)(b) and outside the ambit of sec 50C. Smt. Neeraja Reddy had borne all expenses after 1994 and none were borne by the assessee, nor has the AO found any evidence to the contrary. All efforts to clear hurdles were done by Smt. Neeraja Reddy, not assessee. This is evidence of Smt. Neeraja Reddy acting as owner. Sri G. Srinivas Reddy made following statements to the AO on 29.12.2010, when an enquiry was made (page 18-19 of assessment order): He purchased the plot from Neeraja Reddy for Rs. 100000 and paid the amounts in two instalments to Smt. Neeraja Reddy . He pursued the matter for 8 years and got it out from litigation. He paid Rs. 74.20 lakhs to Smt. Bhavya Anant Udeshi. He paid stamp duty of Rs. 20.80 lakhs, transfer duty to Society of Rs. 1,26,826, building permission fees of Rs. 1,27,750 10. The AR submitted that in these private enquiries the AO made with Sri Srinivas Reddy, important evidence in favour of the assessee comes out. There is no evidence to hold fa....
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....h was acquired by her in the year 1992 within two years for a consideration of Rs. 1 lakh to Smt. Neeraja Reddy by executing Special Power of Attorney in favour of nominee of Smt. Neeraja Reddy in the year 1994. Being so, there is no capital gain to be assessable in A.Y. 2008- 09. As a proof of this the assessee placed on record a copy of Special Power of Attorney executed in favour of Smt. Neeraja Reddy on 22.4.1994. The AR also submitted that Smt. Neeraja Reddy has paid an amount of Rs. 1 lakh towards sale consideration but there is no evidence of whatsoever to suggest that there was exchange of sale consideration of Rs. 1 lakh between the parties herein. It was also submitted that the assessee extinguished her right over the property in favour of Smt. Neeraja Reddy in the year 1994. On perusal of the Special Power of Attorney we find there was no extinguishment of any right by the assessee in favour of Smt. Neeraja Reddy. For clarity we extract the contents of the Special Power of Attorney executed in favour of Smt. Neeraja Reddy herein below: "SPECIAL POWER OF ATTORNEY TO ALL TO WHOM THESE PRESENTS SHALL COME I, SMT. BHAVYA UDESHI (wife of Anant Udeshi - Aged 31 years) of 8-2....
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.... Jubilee hills Cooperative House Building Society Ltd., Jubilee Hills, Hyderabad. AND I hereby agreed that all acknowledgements, deeds and things done shall be construed as acts, deeds and things done by me and I undertake to rectify and confirm by virtue of the power hereby given. SCHEDULE OF PROPERTY ALL that plot of land bearing No. 212K, Phase-III bearing Survey No. 403/1 (Old) and 120(1) (New) of Shaikpet and 102/1 of Hakimpet Village of Hyderabad Urban Taluk, Hyderabad in Phase III of Jubilee Hills Co-operative House Building Society Ltd., Jubilee Hills, Hyderabad-24, bound by: North: 30 feet wide road East: Plot No. 222 South: Plot No. 212L West: Plot No. 212J IN WITNESS WHEREOF I have signed this Special Power and to two others of the same tenor and date with my own will and consent before the witnesses on this Twelfth (12) day of April. One Thousand Nine Hundred Ninety Four (1994)." 14. Further, it was submitted by the AR that possession of the property was handed over to Smt. Neeraja Reddy on 22.4.1994 by the above Special Power of Attorney. As seen from the contents of the Special Power of Attorney, there is no handing over of possession of property to Smt. Neer....
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....n 2(47)(v) and section 53A of Incometax Act, 1961 are as under: Section 2 (47) of the IT Act: As per the definition n transfer in relation to a capital asset includes (i) ------------ (ii) ------------ (iii) ------------ (iv) ------------ (iva) ------------ (v) Any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the transfer of property Act 1882. Section 53A of Transfer of Property Act 1882 In order to attract 53 A of T.P. Act 1882 the following conditions are to be fulfilled (i) There should be a contract for consideration (ii) It should be in writing (iii) The contract should be signed by the transferor (iv) It should pertain to transfer of immovable property (v) The transferee should have taken possession of the property (vi) The transferee should be ready and willing to perform his part of the contract. 15. In the present case, there is no evidence regarding payment of consideration by the transferee and also taking possession of the impugned immovable property immediately after the execution of the agreement. The transferor had at....