TaxTMI 
TaxTMI 
2019 (4) TMI 1479
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....wners of the property consisting of 5375 sq.yds. of land, MTC tiled, ACC structures situated at Kothapet, Guntur. The purchase consideration was agreed upon at Rs. 5,22,50,000/-, out of which, the assessee has paid an amount of Rs. 4,62,50,000/- during the F.Y. 2005-06 and the remaining balance amount of Rs. 60,00,000/- was paid during the F.Y. 2009-10. Even after paying the entire consideration, the owners of the land were not coming forward for registration of the property in favour of the assessee as the land price has been steeply increased subsequent to the agreement. The assessee filed a suit in O.S.No.308/2011 on 11/11/2011 for specific performance of oral agreement of sale. The dispute was settled by the Lok Adalat, Guntur vide award passed on 02/07/2012 wherein assessee has been directed to pay a further sum of Rs. 15,00,000/- and also bear expenses relating to the execution of registration of sale deed. The land owners were directed to register the property in favour of the assessee either by execution of sale deed or sale-cum-GPA. Accordingly, the assessee got executed a sale-cum-GPA on 12/07/2012 for the entire property for a consideration of Rs. 5,37,50,000/-. Immedi....
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....ng with tiled and ACC structures there in for Rs. 5,22,00,000/ on 16-072012. But SRO value as on the date of registration of sale deed is Rs. 7,72,08,000/-. Since SRO value is more than actual consideration, SRO value is to be adopted for calculation of capital gains as per provisions of Sec. 50C of the IT Act, 1961. The proportionate cost of property sold is Rs. 3,98,11,152/- and development expenses are Rs. 80,93,023/-. The balance property of 1895 sq.yards site along with tiled structures herein was registered in the name of the assessee as regular sale deed on 16-07-2012 by the assessee himself since the agreement of sale-cum-general power of attorney is in his own name. Copies of the purchase and sale deeds are already submitted. The property is purchased in the year 2005-06. But due to some dispute the property was registered on 12-07-2012 as per award of the Lok Adalat. Hence, gains on sale of property of 3480s q.yards site along with tiled and ACC structures on 16-07-2012 shall be treated as long term capita! gains. The assessee by over sight has not offered the long term capital gainsl on sale of property of 3480 sq.yards site along with tiled and ACC structures therei....
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....e this Tribunal. 6. Ld. Departmental Representative strongly supported the order passed by the Assessing Officer and placed reliance on the ground of appeal. 7. On the other hand, ld. counsel for the assessee has submitted that the assessee had entered into an oral agreement in the F.Y. 2005-06 and substantial amount was paid which is more than 80% and therefore, the assessee is having a right on the property, therefore his case has to be considered as a long term capital gain and not as a short term capital gain. He also submitted that when the vendors are not ready to execute the sale deed, he filed a suit in O.S.No. 308/2011 on 11/11/2011 for specific performance of oral agreement of sale and the same is referred to Lok Adalat, Guntur wherein award was passed. Subsequently, on 02/07/2012 as per the direction of the Court, the assessee paid an amount of Rs. 15.00 lakhs and the vendors have executed the sale-cum-GPA. Under these facts and circumstances of the case, the case of the assessee has to be considered as a long term capital gain. He also relied on the following case laws:- i) Amarjeet Thapar Vs. ITO & Ors. [(2019) 173 DTR (Bom.) 305] ii) Ms. Nita A. Pater Vs. ITO [....
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....'short term capital gain' for the reason that the assessee has paid only Rs. 5,22,50,000/- out of Rs. 5,37,50,000/-, therefore it is only a part performance of contract on the part of the assessee. He has not paid full consideration. According to the Assessing Officer, the assessee has not paid an amount of Rs. 15.00 lakhs to the vendors-defendant No.8 Sri Boorugu Ramesh Babu and it was paid only after directions given by the Lok Adalat. We find that the assessee has already paid more than 80% of sale consideration in the F.Y. 2005-06 and subsequently, he paid the remaining balance amount and therefore the assessee has paid full consideration. The assessee is already having interest on the property therefore the amount paid as per the directions of the Lok Adalat cannot be considered that the assessee only performed part performance. On that count alone, it cannot be treated that the sale consideration received by the assessee is a short term capital gain. The Assessing Officer further pointed out that the assessee has not taken the possession of the property and received only on 12/07/2012. The case of the assessee is that subsequent to the payment of the entire amount, the asse....
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....e assessee has already paid more than 80% of the sale consideration, it cannot be find fault with the assessee as the assessee has performed his duty by paying almost all the sale consideration. It is the duty of the vendors to have executed the sale deed. Under these facts and circumstances of the case, we are of the opinion that the judgment of the Hon'ble Bombay High Court squarely applies to the facts of the present case. 10. In the case of Ms. Nita A. Patel (supra), the ITAT, Mumbai 'I' Bench has observed that the property was purchased by the assessee by way of agreement on 27/12/1990 and assessee obtained certificate u/s. 269UL(3) as early as 13/02/1991. The Assessing Officer held that since the assessee got possession of the flat after paying Rs. 18.00 lakhs to the tenant only on 06/01/1992, she held the property from that date and accordingly calculated the indexed cost of acquisition from that date not justified. Word 'held' used in Explanation to section 48 refers to ownership rights only and not physical ownership or physical possession of the property. The assessee was holding the rights on the property from 27/12/1990 and accordingly the indexation has to be allo....
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....ssed in favour of the assessee for a certain sum. The assessee's right to have the immovable property conveyed to him was a property. Having given up the right to claim specific performance by conveyance to him of the immovable property was a relinquishment of capital asset. There was, therefore a transfer of capital asset. Payment of earnest money under the agreement for sale was the cost of acquisition of capital asset. The ITO was therefore justified in brining to tax the amount received by assessee under the consent decree. 14. From the above judgments, it is very clear that when the assessee is having a right over the property it is not a mere right to sue, a right of conveyance also. In the present case, the assessee is having interest or right conveyance in the matter. When the assessee has paid substantial amount which is more than 80% in the F.Y. 2005-06, therefore, the sale of land executed by the assessee has to be considered for the purpose of capital gains and indexation cost has to be granted from the date of payment of substantial amount. 15. In the case of Tata Services Ltd. (supra), the Hon'ble Bombay High Court has observed that the word 'property' used in....
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....Guntur on 14-11-2011 for Specific performance and before the above SUIT came up for hearing, both the Vendors and the appellant negotiated a settlement and thus the same was referred to Lok Adalat and they filed compromise petition on 02-07-2012 whereby the Vendors agreed to register the property for Rs. 5,37,50,000/- as agreed to earlier. The Lok Adalath passed an AWARD under Sec.21 of the Legal Services Authority Act, 1987, on 2nd day of July, 2012 in case No.1309/2012 (in S.No. 308/2011 on the file of the Judge, Family Court, Guntur) and the operative part of its Award is recorded INFRA for ready reference. "The defendants agreed to sell the schedule property of 5375 Sq. Yds. @ Rs. 10,000/- per sq. yard to the Plaintiff for a total consideration of Rs. 5,37,50,000/- (Rupees Five Crores Thirty Seven lakhs and fifty thousand only). The payments of Rs. 5,22,50,000/- paid commencing from 18-05-2005 on wards and on other dates advanced by the Plaintiff to the Defendants is adjusted towards the total sale consideration payable by the plaintiff to the defendants. The balance amount of Rs. 15,00,000/- payable to defendant No.8, Boorugu Ramesh Babu shall be paid at the time of executio....
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....al payment of Rs. 4,62,50,000/- was paid on 02-11-2005 and that date should be construed to be the date of Agreement; that due to the failure of the Vendor to register the property, Civil Suit was filed in the Court at Guntur on 14-11-2011 for specific performance that ultimately, Registration of the same could be effected to as per the award of Lok Adalath cited Supra; that by oversight the capital gain arising out of sale of a part of the above site admeasuring about 3480 sq. yds. along with a part of the tiled and ACC structures referred to above for Rs. 5,22,00,000/- of which the SRO's value was Rs. 7,72,08,000/-; was not accounted for earlier, and that with reference to the above Sale deed, the Long Term Capital Gains would work out to Rs. 65,33,033/- and that he is agreeable for making addition to the above extent towards Long Term Capital Gains for the aforesaid assessment year while completing the Regular assessment under Sec. 143(3) of the Act. It is to pertinent to mention the following court judgments. The Hon'ble Supreme Court of India in the case of COOPER (RC) Vs. UNION OF INDIA AIR 1970 it was held that "in its normal connotation property means the highes....
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....53A of T.P. Act read with Sec. 2(47)(v) of the I.T. Act, 1961. Hon'ble ITAT, Delhi Bench in the case of ITO V. Balaram Bhasim (2006) 154 Taxman (118)(Del) wherein it is held "that even if property in question had not been registered in the name of the assessee, but because of agreement, ownership rights to the extent of one-half of property vested with father of assessee and his legal heir, i.e., assessee inasmuch as he had right to possession and enjoyment of property and such rights were in the nature of capital assets for purposes of Sec45 and, therefore, consideration received by assessee for transfer of his rights in property was liable to be treated as long term capital gains". Hon'ble ITAT, Mumbai in the case of Girish C. Bathiza Vs. ITO (2008) 113 TTJ 521 wherein it is held "that where the assessee entered into an agreement for purchasing a FLAT on 15-02-1992 of which possession was given by builder on 16.11.1997, however, prior to obtaining possession by assessee flat was sold on 06.10.1997, it was held that nature of asset which is transferred is only certain rights in a FLAT for which the date of acquisition should necessarily be the date of entering into an ....