TaxTMI 
TaxTMI 
2019 (5) TMI 537
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.... case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the receipt of Rs. 1,95,00,000/- on account of transfer of right or interest in property as Long Term Capital Gain, without considering the facts and circumstances of the case and allowing deduction u/s 54F of the I.T. Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the assessee was not the owner of the land and hence question of transferring of right does not arise. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that the order of the AO be restored. The appellant craves leave to amend or alter any ground or add new ground, which may be necessary." 2. Briefly stated, the assessee had e-filed his return of income for A.Y. 2013-14 on 30.07.2013, declaring total income of Rs. 45,20,540/- The return of income filed by the assessee was processed as such under Sec.143(1) of the I.T Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2). 3. During the course of the assessment proceedin....
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....ide a conveyance deed dated 07.09.2012 sold his undivided share in the land for which the assessee viz. Sh. Prem Ashok Bhatia along with his mother and brother had given their "No Objection Certificate" (hereinafter referred to as 'NOC‟). Accordingly, the aforesaid conveyance deed dated 07.09.2012 was executed between viz. (i). Sh. Kishore B. Dalal (Vendor) (ii). Mrs. Kavita Ashok Bhatia and S/sh. Prem Ashok Bhatia (assessee) and Gaurav Bhatia (jointly referred to as 'First confirming party‟) (iii). Sh. Abrar ('Second confirming party‟) AND (iv). Sh. Rajesh Singh, Sh. Omprakash Kumawat, Sh. Harinarayan Singh and Sh. Joseph Mudliyar (jointly referred to as 'Purchasers‟). (v) As per the conveyance deed the aforementioned purchasers had acquired 50% undivided share, interest and title in the land belonging to Sh. Kishore B. Dalal for a consideration of Rs. 8,00,00,000/-. The purchase consideration as per the registered conveyance deed was shared between the parties, as under : Name of Party Amount Paid Sh. Kishore B. Dalal Rs. 89,00,000/- Mrs. Kavita Ashok Bhatia and S/sh. Prem Ashok Bhatia (assessee) and Gaurav Bhatia, L/heirs of Late S....
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.... 1,95,00,000/- towards his 1/3rd share of consideration for transfer of his "Possessory Rights" of the land under consideration, thus the same was rightly offered for tax under the head "Capital Gains". It was submitted by the assessee that the fact as regards holding of the possessory rights by him along with Smt. Kavita Ashok Bhatia (mother) and Sh. Gaurav Bhatia (brother) was acknowledged in the registered conveyance deed, dated 07.09.2012 in order to avoid any kind of litigation between the vendor i.e. Sh. Kishore B. Dalal and the purchasers on the one hand AND the first confirming party i.e. the assessee viz. Sh. Prem Ashok Bhatia, Smt. Kavita Ashok Bhatia (mother) and Sh. Gaurav Bhatia (brother) on the other hand. In sum and substance, it was the claim of the assessee that as the exclusive possessory rights of the land were collectively held by him along with his mother and brother, hence it was mutually agreed to pay consideration to them which was substantially more than the amount that was being paid to the vendor viz. Sh. Kishore B. Dalal. In the backdrop of the aforesaid facts, it was submitted by the assessee that he along with his mother and brother by collectively ent....
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....d 31.01.1984 Sh. Kishore B. Dalal and Sh. Ashok Bhatia were the purchasers, wherein both of them had equal 50% undivided share, title, right and interest in the land inclusive of the possession of the land. Insofar the details of payment were concerned, it was noticed by the A.O that the same were not submitted by the assessee. (ii) On a perusal of Clause 37(e) of the 'MOU‟, dated 29.03.2008 that was entered between Sh. Kishore B. Dalal and Sh. Abrar, it was stated that Sh. Kishore B. Dalal was in joint use, occupation and possession of the property as a co-owner. Apart there from, as per Clause 37(k) of the 'MOU‟, dated 29.03.2008, it was stated that Sh. Kishore B. Dalal was in full right, power and absolute authority to sell, assign or transfer to the purchasers his 50% undivided share, right, title and interest in the property, and that he had not done or committed or omitted to do any act, deed, matter or thing whereby his ownership and possession or transfer of ownership, possession and/or occupation of the said property to the purchasers may be rendered illegal and/or unauthorised for any reason on any account. On the basis of the aforesaid contents of th....
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....rt there from, it was observed by the A.O that Clause 36 of the 'MOU‟ dated 29.03.2008 in no way established that the possession of the land had exclusively remained with Sh. Ashok Bhatia. Insofar Clause 38 of the 'MOU‟ dated 29.03.2008 was concerned, it was observed by the A.O that the same did not establish that the land under consideration was in exclusive possession of Sh. Ashok Bhatia. It was also observed by the A.O that Clause 15 of the conveyance deed, dated 07.09.2012 stated that the 'MOU‟, dated 29.03.2008 and the irrevocable general power of attorneys dated 29.03.2008, 01.04.2010 and 07.04.2010 were still valid and binding and subsisting between the parties and neither Sh. Kishore B. Dalal nor any person had raised any objection, complaint or protest against the said 'MOU‟ and the said three irrevocable general power of attorneys. It was thus observed by the A.O that all the participants of the conveyance deed had agreed that the terms of 'MOU‟ and irrevocable general power of attorneys were valid. On the basis of his aforesaid deliberations, it was observed by the A.O that the fact that the land was never in exclusive possession of Sh. Asho....
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....ailed the assessment framed by the A.O in appeal before the CIT(A). The CIT(A) after deliberating at length on the contentions advanced by the assessee was persuaded to subscribe to the same. The CIT(A) was of the view that the amount of Rs. 1,95,00,000/- received by the assessee on account of transfer of rights or interest in the property was rightly shown by him as taxable under the head LTCG. On the basis of his aforesaid view the CIT(A) allowed the appeal. 9. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Ld. Departmental representative (for short 'D.R‟) took us through the facts of the case as were discernible from the orders of the lower authorities. It was submitted by the Ld. D.R that the assessee had received an amount of Rs. 1,95,00,000/- without transfer of any right which could be construed and brought within the definition of a 'capital asset‟. It was further submitted by him that as the assessee was not vested with any possessory rights as regards the property under consideration, therefore, there could have been no occasion for him to have received any consideration for transfer of such rights. ....
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....12 wherein it was stated that the possession of the entire land had during the life time of late Sh. Ashok Bhatia remained with him and after his death had passed over to his legal heirs, submitted that as the same was without any basis or evidence, hence the same was of no relevance. Further, the Ld. D.R rebutting the contents of sub-clauses (a) to (c) of Clause 36 of the MOU, dated 29.03.2008 submitted that the same in no way established that the possession of land was exclusively with Sh. Ashok Bhatia. In fact, the Ld. D.R took support of Clause 15 of the conveyance deed, dated 07.09.2012. It was submitted by the Ld. D.R that in the aforesaid clause it was specifically stated that MOU dated 09.03.2008 and the irrevocable general power of attorneys dated 29.03.2008, 01.04.2010 and 07.04.2010 were still valid and binding between the parties thereto and Sh. Kishore B Dalal and no person had raised any objection, complaint or protest against the said MOU or the aforementioned three irrevocable general power of attorneys. It was thus the claim of the Ld. D.R that the participants of the conveyance deed had agreed that the terms of the MOU and irrevocable general power of attorneys we....
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....the land which remained with the legal heirs of late Sh. Ashok Bhatia that the purchasers had agreed with the consent of the vendor i.e. Sh. Kishore B Dalal to pay more consideration to them i.e. a sum of Rs. 5,85,00,000/-, in lieu whereof the said legal heirs pursuant to such arrangement had delivered the actual and physical possession of the property to them. In sum and substance, it was averred by the Ld. A.R that now when the fact that the physical and actual use, occupation and possession of the property under consideration was transferred by the legal heirs of late Sh. Ashok Bhatia to the purchasers was duly acknowledged by all the concerned partie and formed part of the registered conveyance deed, therefore, there remained no occasion for drawing of any doubts as regards the said factual position. Insofar the MOU, dated 29.03.2008 and the general power of attorneys, dated 29.03.2008, 01.04.2010 and 07.04.2010 entered into and drawn by Sh. Kishore B Dalal in favour of Sh. Abrar were concerned, it was submitted by the Ld. A.R that the arrangements referred in the said documents were entered into by Sh. Kishore B Dalal at the back of Sh. Ashok Bhatia who remained absolutely una....
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....n the basis of Clause 10 of the conveyance deed, dated 07.09.2012 submitted that the same in no way dislodged the claim of the assessee that he along with the other legal heirs of late Sh. Ashok Bhatia had the exclusive possession of the property under consideration. In fact, it was submitted by him that the said fact was also recognized in the MOU Para 36(a) and (f) by both S/sh. Kishore B Dalal and Abrar Ahmed. In sum and substance, it was the contention of the Ld. A.R that now when the fact that the assessee along with the other legal heirs had transferred their exclusive possessory rights of the property for an aggregate consideration of Rs. 5,85,00,000/- was duly acknowledged by all the parties and was borne from the registered conveyance deed dated 07.09.2012, hence the same could not be dislodged or doubted by taking support of the contents of certain unregistered documents to which the assessee was not a party. It was thus the claim of the Ld. A.R that the CIT(A) duly appreciating the facts in the backdrop of the settled position of law had rightly concluded that the amount of Rs. 1,95,00,000/- received by the assessee towards his share on account of transfer of the possess....
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....n, giving up of right to claim specific performance by the assessee to get conveyance of immovable property in lieu of specified consideration resulted in extinguishment of right in property, thereby attracting the provisions of s. 2(14) rws 2(47) of the I.T. Act. In other words, the action on the part of assessee in giving up his right over the property and accepting the money compensation is a clear case of relinquishment of a right in the property resulting in transfer as defined in s. 2(47) of the Act. 2. In this context, if the facts of this case is analysed, it is found from the conveyance deed that the purchasers i.e. Mr. Rajesh J Singh, Mr Omprakash H Kumawat, Mr. Harinarayan L Singh, Mr. Joseph Mudaliyar have independently agreed to purchase undivided half share of Mr Kishore B Dalal through Mr. Abrar Hussain. The AO has raised the objection that Mr Kishore B Dalal is the owner of the property and he was also holding possession of the said property, being sold. In such circumstances, if the argument of the AO is accepted, there was no reason to taking "no objection certificate" (NOC) from the appellant alongwith his mother and brother who are owners of other part ....
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....yer or purchaser party must have considered this right vested with the appellant being of greater importance, higher consideration was paid to the appellant & his family members. In this regard, I had agreed with the Ld. AR of the appellant that such rights of interest in the property will be of capital in nature as held in a no. of landmark judgments. 5. It is found that the AO solely relied upon the MOU between Shri Kishor B Dalal and Shri Abrar Hussain which states that Shri Kishore B Dalal is in joint use, occupation and possession of the property as co-owners. He has also referred to the power of attorney given by Shri Kishore B Dalal to Shri Abrar Hussain which states that Shri Kishore B Dalal is in possession and occupation of the said undivided share in property. It is also noticed that the AO has referred to the clause 15 of the deed of conveyance dated 07.09.2012, which states that the MOU and POA are still valid and binding on the parties therein and Shr. Kishore B Dalal or any other has not raised any objection, complain or protest against the said MOU and POA. Based on this clause, the AO has concluded that all the parties to the deed of conveyance have agreed....
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....s clearly laid down the principal of taxability of such receipts as capital gain in nature. Considering the totality of the facts and circumstances of the issue involved, in my considered opinion, the said receipts of Rs. 1,95,00,000/- by the appellant on account of transfer of rights or interest in the property is taxable under the head Long Term Capital Gain. Accordingly, the grounds of appeal no. 1, 2 and 3 are allowed. 8.2 Since facts of the instant case in identical to the facts of Shri Gaurav Ashok Bhatia for A.Y. 2013-14 decided in ITA no. CIT(A)-41/IT/455/2015-16 dated 31.10.2017, it is held that the receipt of Rs. 1,95,00,000/- by the appellant and not as income Other Sources, as held by the A.O on account of transfer of rights or interest in the property is taxable under the head Long Term Capital Gain and not as income from other sources, as held by A.O. Hence, the grounds of appeal Nos. 1, 2 and 3 are allowed. 9. Regarding ground No.4 about not granting of deduction of cost of acquisition against sale proceeds, since the appellant has failed to produce evidence of payment of such cost either during the assessment proceedings or during the appellate pro....
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....shok Bhatia during his lifetime and thereafter with his legal heirs is concerned, we find substantial force in the contention advanced by the Ld. A.R that as the said respective documents were unregistered documents to which the assessee was not a party, therefore, the same would not have any superseding or overriding effect over the contents of the registered conveyance deed. In sum and substance, the contents of the aforementioned unregistered documents will have to give way to the contents of the registered conveyance deed. Our aforesaid view is fortified by the judgment of the Hon‟ble Supreme Court in the case of CIT Vs. Charanjit Singh Atwal (SLP No. 1565 of 2016), wherein it has been held that after amendment of Registration Act, 2001 an unregistered document will have no evidentiary value. On a similar footing the validity of the general POA‟s dated 29.03.2008, 01.04.2010 and 07.04.2010 and the contents thereof in context of the purported transfer that was sought to be effected can also safely be gathered in the backdrop of the judgment of the Hon‟ble Supreme Court in the case of Suraj Lamp and Industries P. Ltd. Vs. State of Haryana [SLP(C) No. 13917 of 20....
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....ty under consideration to the purchasers who had agreed to pay the said amount to the legal heirs after obtaining the consent of the vendor i.e. Sh. Kishore B Dalal. In our considered view, it would be relevant to cull out Clause 19 of the registered conveyance deed which contemplates the reason for making of the payment of Rs. 5,85,00,000/- by the purchasers of the property to the legal heirs of late Sh. Ashok Bhatia, as under :- "19. Taking into consideration the actual and physical possession of the said plot and since the date of purchase it was initially with the deceased Ashok Bhatia and thereafter it is with the heirs of the deceased Ashok Bhatia, and with an intend to avoid the litigation by and between the Vendor and the Purchasers on the one hand and the First Confirming Party on the other hand, it has been mutually agreed that considering the factual aspect of physical and actual use, occupation and possession of the plot of land the purchasers have agreed with the consent of the Vendor to pay more consideration to the First Confirming Party i.e. the sum of Rs. 5,85,00,000/- (Rupees Five Crores Eighty Five Lakhs only), in lieu thereof the First Confirming party ....