TaxTMI 
TaxTMI 
2019 (6) TMI 654
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.... the Income Tax Act by the Additional Commissioner of Income Tax, Ahmedabad Range 14, Ahmedabad, which are prejudicial to the appellant assessee and such direction has been issued without affording the appellant assessee an opportunity of being heard, Therefore, the assessment order under appeal which has been passed in contravention of the principles of natural justice, is perverse and is liable to be quashed. 1.2 In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals), Ahmedabad-5, Ahmedabad has grossly erred in holding that the direction u/s. 144A of the I.T. Act issued by the Additional Commissioner of Income Tax, to the AO to finalize the assessment by applying a particular judgment of Supreme Court is not prejudicial to the interest of the assessee and that the directions are in the nature of what line of investigation is to be made and therefore requirement of providing an opportunity to the assessee is not necessary. 1.3 It is therefore prayed that the addition made in the assessment order as per the direction issued u/s. 144A by the Additional CIT, which has been issued in contravention of the provisi....
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....erefore has no applicability to the facts of the appellant's case. 4.2 It is therefore prayed that the impugned addition made by the AO may please be deleted. 5.1 Without prejudice to the grounds 1 to 4 above, and in the alternative, it is stated that the learned CIT(A) and the Assessing Officer had grossly erred in law and on facts of the case in making the impugned addition, without appreciating the fact that the appellant has entered into the transaction of purchase of agricultural land not in his personal capacity but as an agent and representative of Abellon Clean Energy Private Limited and Abellon Properties Private Limited to whom the properties had ultimately been transferred. The entire amount of consideration for purchase of the land from the agriculturist and also the expenditure on account of development of the land, land filling, registration fees and other related expenses, etc. were fully paid & borne by the above said companies and the role of the appellant assessee in the entire transaction was that of an agent/representative of the company. Therefore, on the facts & circumstances of the case, which the AO has failed to recognize, understand &....
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.... Modasa Gokharva 197 26507 sq. Me 14-02-2011 / Rs. 5965000 Ablon Clean Energy Ltd. 506/ 15-02-2011 Sub Registrar, Modasa Sabarkantha Modasa Gokharva 213 23472 28-12-2010 / Rs. 5285000 Ablon Properties Pvt. Ltd. 3662/ 31-12-2010 Sub Registrar, Modasa The details of purchase of these property were as under: Dist/ Taluka/ Village Block/ survey no. Area Date of purchase / cost of purchase Name of the party from whom purchased Registration no. and date of deed Name of Sub Registrar Sabarkantha Modasa Gokharva 197 26507 sq. Me 20-09-2008 / Rs. 1383003 Patel Sudhir Kantilal, Village Gokharva 2558/ 20-09-2008 Sub Registrar, Modasa Sabarkantha Modasa Gokharva 213 23472 28-12-2010/ Rs. 1224652 Patel Maganbhai karsanbhai villabe Gokharva 2589/ 20-09-2008 Sub Registrar, Modasa 3(iii) During the assessment proceedings the assessee also furnished "agreement to sale" dated 15-01-2009 and 31-03-2009 in respect of land bearing survey no. 197 and Rs. 213. The complete details of these agreement to sale are as under: Dist/ Taluka/ Village Block/ survey No. Area Date of agreeme....
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....of the group companies as discussed. He purchased the said properties on behalf of the companies and accordingly the group companies paid all the related payment such as registration charges, land filling charges and expenses for conversion to agriculture into non-agriculture. 3.5 However, the AO as per the AIR information observed that the assessee during the year under consideration had sold two immovable properties amounting to Rs. 52,85,000/- and Rs. 59,65,000/- dated 31-12-2010 and 15- 02-2011 respectively. The AO accordingly disagreed with the submissions of the assessee as the sale deed reveals that the said lands were non-agricultural lands which are covered under the definition of capital assets. Accordingly, the AO was of the view that the same shall be charged to tax under the head capital gain u/s 45 of the Income Tax Act. 3.6 The AO further observed that the details and mode of payment were not mentioned in the sale deed and also the assessee not received any advance/part payment in respect of agreement to sell executed. 3.7 The AO further conducted inquiries u/s 133(6) from the companies and found that there was a huge time gap between the agreement to sale a....
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....CIT (A) is in appeal before us: 5. The Ld. AR before us filed a paper book running from pages 1 to 199 and submitted as under: "The AO made addition of Rs. 85,00,658/- being alleged Short Term Capital Gain ("STCG'' for short) on sale of two pieces of land and the same came to be confirmed by CIT (A) as well. Both, AO and Ld. CIT (A), failed to appreciate facts in its entirety. Assessee purchased two pieces of land bearing Revenue Survey Nos.197 and 213, situated at village Modasa, vide purchase deeds dated 20.09.08. Thereafter, assessee entered into ''Agreement to sale'' ("ATS" for short) w.r.t such two pieces of lands as follows: Survey No. Date of ATS Purchaser Pgs. P/B 197 15.01.09 (i.e AY 09-10) Abellon Clean Energy Ltd. 33-40 (Gujarati) 129-142(English) 213 31.03.09 (i.e Y 09-10) Abellon Properties Pvt. Ltd 74-82 (Gujarati) 164-178 (English) Possession was handed over to purchasers at the time of entering into ATS (Pgs.129-142 @ 133 of P/B and Pgs.164-178 @ 169 of P/B) It was categorically mentioned in ATS that duration of such ATS ....
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....ession is handed over, transfer has taken place. Relevant extract is reproduced herein for ready reference: "41. In the present case, we find that the assessee had, in part performance of the agreement to sell the land in question, was given possession thereof and had also carried out the construction work for development of the housing project. Combined reading of Section 2(47)(v) and Section 53A of the Transfer of Property Act would lead to a situation where the land would he for the purpose of Income Tax Act deemed to have been transferred to !he assessee. XXX... " The AR submitted that in assessee's case, ATS were entered into in AY 09-10 and also possession of land was handed over to prospective buyers at that point in time. Thus, as per S.2(47)(v), lands were transferred in AY 09-10. Hence, no capital gain can be charged to tax during the year under consideration i.e. AY 11-12. As regards AO's reference to sale deed which contains a clause that possession is handed over while executing sale deed, it is submitted that such words were part of the standard format of the sale deed. From the ATS, it absolutely clear that possess....
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....ncorporation, entered into a contract for the purposes of the company and such contract is warranted by the terms of incorporation, specific performance of such contract may be obtained by the company. Relevant extract of Specific Relief Act is annexed at Annex. "B". Further, COI in the case of "Abellon Cleanenergy Ltd." was dated 07.07.08 (Pg.9 of Asst. Order) i.e. prior to ATS dated 15.02.11. AO as well as CIT (A) conveniently chose not to comment on the same at all Pg.l9 of Asst. Order and Pg.23 of CIT (A)'s order]. Thus, there is no reason for doubting at least ATS dated 15.02.11. Thus, "transfer" very well took place in AY 09-10 and not in AY 11-12. Hence, impugned addition deserves to be deleted. 5.3 Agricultural land" is not a "capital asset" in terms of S.2(14)(iii); Hence, no capital gain can be charged to tax: As per S.45, capital gain arising on transfer of "capital asset" can be charged to tax. The term "capital asset" is defined u/s 2(14). As per such definition, "agricultural land" is excluded from the ambit of "capital asset". Hence, gain on transfer of "agricultural land" is not chargeable to tax. In assessee's ca....
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....nds in question. Assessee has not received a single penny towards either of the above transactions, including the final sale deeds; In light of the above, followings are certain undisputed facts: 1. Purchase consideration for land was paid by Abellon group; 2. Soon after purchasing the lands, ATS were entered into with the Abellon group and possession was handed over to it; 3. Abellon group incurred expenditure on development of such lands; 4. No sale consideration has actually flown to the assessee; The above aspects are also clear from assessee's statement recorded by AO u/s 131 (Pgs.7-9 of Asst. Order) as well relevant ledgers in the books of the Abellon group (Pgs.57-59, 98-100, 110-115 of P/B). Thus, in reality, assessee was merely acting as "agent" and "representative" of the Abellon group for effecting the final transaction of purchase of lands in order to meet the requirements of the revenue laws. In such a scenario, no tax liability, emanating from such transactions can be fastened upon the assessee. Hence, impugned addition must be deleted. 5.6 Alternatively, deduction of "cost of improvement" in ....
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....see in the instant case has purchased 2 pieces of agricultural lands out of the money advanced by M/s Abellon Agrisciences Ltd (for short AAL) in the A.Y. 2009-10. As such M/s AAL directly paid the money to the landowners but the same was registered in the name of the assessee dated 20-09-2008. It is because the impugned lands were the agricultural lands and it can be registered only in the name of the agriculturist. 7.1 The assessee in the same A.Y. has transferred the lands to the group companies namely M/s Abellon Properties Pvt Ltd (for short APPL) and M/s Abellon Cleanenrgy Pvt Ltd. (for short ACPL) through an agreement dated 15-01-2009 and 31-03-2009 respectively. However, the assessee executed the sale deed in the name of the above companies in the A.Y. 2011-12 after the conversion of agriculture land into non-agriculture land. The AO accordingly treated the transfer of land by the assessee to these two companies as a transfer in the year under consideration. 7.2 Thus the AO worked out the short-term capital gain on the transfer of the lands amounting to Rs. 85,00,658/-only. The Ld. CIT (A) subsequently confirmed the view taken by the AO. Now the following questions....
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....able property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract : Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof." 7.5 ....
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....ctly or indirectly as the case may be. Thus from the above discussion, it is transpired that the assessee was never the real owner for the impugned lands and the entire transaction was carried by AAL and its group company to acquire the lands through the involvement of the assessee being an agriculturist. Thus the assessee was just a name lender in the entire deal of the transactions, and at all the time the AAL & its group companies were the beneficial owners of the impugned land right from the inception of the deal. 7.6 Thus in the given facts and circumstances and after considering the question no. 2 as discussed above, we feel that the assessee did not have any occasion to receive any consideration on the transfer of such lands on the agreement to sell. It is because the assessee has not incurred any cost on the purchase of the land, registration of the land, conversion of the land and the development of the land. Thus the assessee being a representative of AAL had no occasion to receive the consideration on the transfer of the land either at the time of agreement to sell or registration of sale deed. Therefore we are of the view that the provisions of section 53A of the ....