TaxTMI 
TaxTMI 
2015 (10) TMI 1082
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....residential houses. 3. The facts of the case as emerging from the documents on record are : The assessee is an HUF. The assessee filed its return of income for the assessment year 2008-09 on 31-03-2009 declaring total income of Rs. 85,810/-. The case of the assessee was selected for scrutiny. Accordingly, notice u/s. 143(2) was issued to the assessee on 10-05-2010. An AIR information in the case of assessee was received in respect of sale of immovable property. During the course of scrutiny assessment, it was found that the assessee had sold a property situated at Balgandharva Chowk, Shivajinagar, Pune for a consideration of Rs. 2.75 Crores. As per the contentions of the assessee the property was occupied by several tenants/occupants and the litigation with tenants/occupants was pending in various courts. The assessee entered into a development agreement with M/s. Chandan Ventures on 03-04-2007 with respect to the said property. The Developer in lieu of transfer of development rights together with a covenant to assign, transfer and convey all rights, title, interest and claims by the owners, agreed to pay an amount of Rs. 2,75,00,000/- as consideration in a phased manner startin....
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....uded that the amount of Rs. 1.25 Crores was paid to the tenants/occupants on behalf of the assessee to vacate the premises. Thus, the same should be allowed as expenditure from the total sale consideration. The Commissioner of Income Tax (Appeals) further accepted the claim of the assessee in respect of deduction u/s. 54 on both the flats. Against these findings of the Commissioner of Income Tax (Appeals), the Revenue is in appeal before the Tribunal. 5. Shri B.C. Malakar representing the Department submitted that a perusal of development agreement and sale deed would clearly show that the sale consideration in respect of property sold by assessee was fixed at Rs. 2.75 Crores. In Clause (3)(a) of the sale deed it has been clearly stated that the assessee has given the possession of premises occupied by the tenants/occupants to the purchaser. The assessee has also handedover the physical possession of 6 units/rooms on various floors which are in their possession to the purchaser. While referring to Clause (5)(g) of the development agreement the ld. DR submitted that the fact that premises is occupied by the tenants/occupants and liability to get the premises vacated from the t....
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....as registered on 08-12-2010. The ld. AR of the assessee submitted that it is a well settled law that the rectification deed relates back to the date of execution the original registered document. The ld. AR further submitted that after the execution of registered Sale Deed, subsequent events should also be considered that have bearing on the originally registered document. In support of his submissions the ld. AR placed reliance on the following decisions: i. Sunil Kumar Roy Vs. M/s. Bhowra Kankanee Collieries Ltd. & Others, 1970 SCC (3) 565; ii. CIT Vs. Shakuntala Kantilal, 190 ITR 56 (Bom); iii. Sushila Shantilal Thaveri Vs. Union of India and Another, 286 ITR 428 (Bom); and iv. Hira Lal Ram Dayal Vs. CIT, 122 ITR 461 (P&H). 6.1 In respect of exemption u/s. 54 claimed by the assessee, the ld. AR submitted that from the capital gain arising from the sale of building, two residential flats were purchased by the assessee in the same building. The Commissioner of Income Tax (Appeals) has given categoric findings that the two flats purchased by the assessee i.e. Flat No. 103 in Wing B1 and 107 in Wing B2 are in the same building. The ld. AR submitted that there are seve....
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....consideration of Rs. 2,75,00,000/- (two crore seventy five lakh) to the Vendor as follows: Amount (Rs.) Particulars 0,05,00,000/- Paid by duly drawn crossed cheque No. 240460, dated 12.12.2006, on the Pune Peoples Co-operative Bank Ltd., Market yard Branch, Pune: 411037, to and in favuor of the Owner No.1, receipt of the amount whereof is hereby acknowledged by the Owner No.1 0,05,00,000/- Paid by duly drawn crossed cheque No. 240505, dated 02.04.2007, on the Pune Peoples Co-operative Bank Ltd., Market yard Branch, Pune: 411037, to and in favuor of the Owner No.1, receipt of the amount whereof is hereby acknowledged by the Owner No.1. 0,45,,00,000/- Paid by duly drawn crossed cheque No. 240515, dated 05.06.2007, on the Pune Peoples Co-operative Bank Ltd., Market yard Branch, Pune: 411037, to and in favuor of the Owner No.1, receipt of the amount whereof is hereby acknowledged by the Owner No.1. 0,25,00,000/- Paid by Demand Draft No. 295304, dated 9/10/07, on the State Bank of Mysore, Gokhalenagar Branch, Pune:411016, to and in favour of the Owner No.1, receipt of the amount whereof is hereby acknowledged by the Owner No.1. 1,25,00,000/- Payable b....
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.... Thus, it is evident that it was a conscious decision on the part of both the parties to the agreement and sale deed to fix the sale consideration at Rs. 2.75 Crores after making allowances for the expenditure to be incurred for getting the premises vacated from the tenants/occupants of the building. A conjoint reading of the development agreement and sale deed would make it clear that the responsibility and obligation to get the premises vacated from the tenants/occupants or the occupants were on the developer/purchaser. The assessee had handed over legal possession of the property to the purchaser at the time of execution of sale deed. 11. The ld. AR of the assessee during the course of submissions referred to the affidavit executed by the assessee and other co-owners on 10-08-2007. As per the contentions of the ld. AR, after the execution of sale deed the owners realized that they would not be able to get the premises vacated and thus, they agreed to reduce the sale consideration from Rs. 2.75 Crores to Rs. 1.50 Crores and made allowances of Rs. 1.25 Crores for payment to the tenants/occupants and occupants of the building. The purchaser also executed affidavit on similar lin....
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....hat has been reduced from the sale consideration was at all paid to any of the tenants/occupants of the building. Except for self serving documents, there is no other document on record that can substantiate the contentions of the assessee. Mere fact that the Rectification Deed is registered it would not mean that its contents are sacrosanct and have to be taken on face value. 13.1 The ld. AR of the assessee in support of his submissions has placed reliance on the decision of Hon'ble Punjab and Haryana High Court rendered in the case of Hira Lal Ram Dayal Vs. CIT (supra). In the said case a registered sale deed was executed by assessee in favour of a Co-operative Society purporting to sell the assessee's factory. During the assessment proceedings the assessee contended that the sale deed was a sham transaction and no capital gain accrued to the assessee. The Assessing Officer rejected the contention of the assessee. In the first appeal, the findings of Assessing Officer were confirmed. On further appeal, the Tribunal held that the registered sale deed was a sacrosanct document and refused to look into other material produced by the assessee to substantiate its claim that the....
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....e registration of an agreement is necessary which reduces the rent of an existing registered lease. The law laid down by the Hon'ble Supreme Court of India is well accepted and we respectfully follow the same. There is no second opinion that the subsequent document which substantially amends the terms and conditions of the registered document has to be registered. In the present case, no doubt the amendment to sale deed has been made by execution of registered Rectification Deed, however, it is the surrounding circumstances that raises an eye of suspicion on the motive of creating such document. 13.3 The ld. AR has also placed reliance on the decision of Hon'ble Bombay High Court rendered in the case of Sushila Shantilal Jhaveri Vs. Union of India and Another (supra). In the said case the Hon'ble High Court held that the subsequent events or developments occurring pendent lite can be considered if they have the effect of overshadowing the case found by the court below. The Hon'ble High Court further held that in view of the impact of the subsequent events on the operative part of the order under challenge, which had completely changed the colour of the original f....
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.... settled law that while determining capital gains both additions as well as deduction from the apparent value have to be given effect. In the present case, the assessee has not placed any document on record to substantiate the expenditure incurred towards the transfer of property in question. So far as Rs. 1.25 Crores allegedly utilized for payment to tenants/occupants of building is concerned, no evidence, whatsoever has been furnished by assessee except self serving affidavits and Deed of Rectification. Moreover, a perusal of Development agreement and Sale Deed would show that the liability to settle the claim of the tenants/occupants of building is of the developer/purchaser and not that of the assessee or the other co-owners. 14. Thus, in view of our above detailed findings the ground Nos. 1 to 3 raised by the Revenue in appeal are allowed. 15. The second issue raised by the Revenue in appeal is with regard to claim of exemption u/s. 54 of the Act. The Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in allowing exemption u/s. 54 in respect of two residential houses. The ld. DR has submitted that the expression used in section 54 is 'a residential....