TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1113
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....eassessment proceedings Ld. A.O observed that there is a transaction of sale of land situated at Khajrana, District, Indore. As per the sale deed dated 31.3.2010 sale consideration of Rs. 14 crores is received by the assessee and the market value of the plot as per the Stamp Valuation Authority was Rs. 16,17,50,000/-. This plot of land was purchased at the cost of Rs. 2,95,98,275/- vide registered deed dated 12.7.2007. As per the Ld. A.O the alleged transaction needs to be taxed under the head Short Term Capital Gain in Assessment Year 2010-11 since the property was owned for less than three years. When the assessee was confronted it was submitted that the alleged transaction is a part of its business activity and it has been duly shown in the return of income for Assessment Year 2011-12 and the net profit from the sale of land at Rs. 8,75,86,752/- have been shown. It was contended that the assessment for Assessment Year 2011-12 stands completed u/s 143(3) of the Act vide order dated 31.1.2014 accepting the alleged profit of sale of subject plot thereby accepting the genuineness of transaction and its is taxability. Ld. A.O however was not convinced and in his view the transaction ....
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....session was also given on that date.. Hence, 'holding period of the property is. Not more than 36 month further, the registration of sale took place in F.Y. 2009~10. Therefore, it should be taxed as STCG in A.Y. 2010-1l. 5.1.2 The sale deed or agreement has been produced to support the claim mentions that, the registration of plot pas taken place on 31/03/20 O. Further, it is seen that during the course of assessment and appellate proceedings agreement has been produced to establish the terms .and conditions of' the sale or rather the arrangement between the appellant and M/s Media Savy India Ltd. The sale of land or the appellant is specified and the appellant has been-paid the. Money on the basis of agreement Further as pointed out by the AO it is . ascertainable that the land has been sold by the appellant. It is further seen that while working out the capital gain the appellant has treated that the capital gain is to be taxable in the A.Y. 2011-12. 5.1.3 The same plots were purchased on 12/0712007 which is clearly mentioned in the registered sale deed of purchase of plots at page no. 3 as well as in the registered sale dated 31-03-2010 of sale of' plots as page No . 3 at ....
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....sment year i.e. A.Y. 2011-12, under s.143(3) of the Act, there was no escapement of any income chargeable to tax giving rise to invocation of the provisions ofs.148 of the Act." 2. That, without prejudice to the above, both the authorities below have grossly erred in holding that the property transferred by the appellant was held by him as a short-term capital asset whereas having purchased the property on 31-03- 2007 and sold the same on 31-03-2010, even if re-characterization of income from business income to capital gain was warranted, it ought to have been regarded as transfer of a long-term capital asset held by the appellant for a period of more than 36 months in accordance with the provisions of s.2(29A) read with s.2( 42A) of the IncomeTax Act, 1961." 3.That, without prejudice to the above, both the authorities below have grossly erred in invoking the provisions of s.50C of the Act in the appellant's case, by substituting the actual sales consideration of Rs. 14,00,00,000/- with the value adopted by the Stamp Valuation Authority at Rs. 16, 17,50,000/- without first making a reference to the Valuation Officer in accordance with the provisions of sub-section (2) of se....
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....ome Tax Act, 1961." In this regard, it is submitted as under: 1.01 That, during the previous year relevant to A.Y. 2007-08, the appellant had purchased certain pieces of plots of diverted land admeasuring 69643.08 sq. ft. situated at Survey Nos. 211, 2/2, 2/3, 2/4, 2/5, 2/6, 217 & 2/8, village Khajrana, Tehsil & District Indore, for a total purchase consideration of Rs. 2,95,98,275/- from M/s. City Square Builder & Developers Pvt. Ltd., under a registered purchase deed duly executed between both the parties on 31-03-2007. The purchase deed so executed on 31-03-2007 was duly got registered before the Sub-Registrar of Properties on 12-07-2007. A copy of the purchase deed is placed at page no. 20 to 29 of our Paper Book. 1.02 The entire consideration for purchase of the plots was paid by the appellant through account payee cheques up till 26-03- 2007. As per the clause (2) of internal page no. 4 (kindly refer PB Page No. 23) of the purchase deed dated 31-03-2007, the appellant had obtained the possession of the entire plots land on 26-03-2007 itself. 1.03 That, on 31-03-2010, the aforesaid plots of diverted land were sold by the appellant for a total sales consideration of Rs.....
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....ld by him only as investment and not as stock-in- trade. 2.02 That, the learned AO, for the purpose of taxability of the capital gain, was of the view that the subject plots were held by the appellant for a period of less than 36 months and therefore, the same would be treated as a short-term capital asset and consequently, any gain arising from transfer of such capital asset would be a short-term capital gain. 3.01 It is submitted that the learned AO, for classifying the plots as 'short-term capital assets', has adopted the date of purchase of plots as 12-07-2007 and date of sale as 31-03-2010. It is submitted that as far as date of sale is concerned, the learned AO has rightly taken the date as 31-03-2010 being the date of execution of the sale deed as well as the date of handing over of the possession by the appellant to the purchasers as per the clause (4) of the sale deed [kindly refer PB Page No. 37]. However, the date of purchase taken by the Id. AO as 12-07-2007 is not factually correct. It is submitted that such date of 12-07-2007 is the date when the purchase deed was got registered. However, in the instant case, the appellant had obtained the physical possess....
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....ts was taken by the appellant under the registered purchase deed on 26-03-2007 and the purchase deed was duly executed on 31-03-2007. Undisputedly, as per the registered sale deed, the incidence of handing over of the possession and execution of the sale deed took place on 31-03-2010. Thus, the holding period of the plots by the appellant would start from 26-03-2007. It is submitted that the date when the Deed is finally released from the office of the Sub Registrar of Properties is of no relevance for computing the date of transfer. For such proposition, reliance is placed on the decision of the Hon'ble Delhi High Court in the case of Bharti Gupta Ramola vs. CIT (2012) 72 DTR 387 (Del). 3.05 Likewise, on the same analogy, the date of sale of the plots by the appellant would be adopted as 31-03-2010. In such circumstances, the holding period of the plots under the provisions of s.2( 42A) of the Act would be reckoned from 26-03- 2007 to 31-03- 2010 which will be 36 months and 5 Days. Resultantly, the subject capital asset being the plots would be a long-term capital asset under the provisions of s.2(29A) r.w.s. 2(42A) of the Act. 3.06 In the instant case, having made the....
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....appellant for a total sales consideration of Rs.l4,00,00,000/-.. Such fact is clearly evident from internal page no. 4 to 6 [PB Page No. 33 to 35] of the registered sale deed wherein the details of the payments aggregating to a sum of Rs. 14,00,00,0001- made by the buyers to the appellant have been given. 1.02 That, during the course of the assessment proceedings, the appellant claimed that the subject plots were actually sold for a total consideration of Rs.l4,00,00,000/- only. 1.03 That, despite the aforesaid position, the learned AO invoked the provisions of s.50C of the Act by adopting the deemed value of Rs. 16,17,50,000/- as given by Stamp Valuation Authority for the purpose of computing the stamp duty value of the plots sold. 1.04 Since the appellant has shown its income under the head 'income from business' and not as capital gain, there does not arise any question of invoking the provisions of s.50C by the learned AO. However, even if for the sake of argument, it is presumed that the learned AO has rightly invoked the provisions of s.50C of the Act in the appellant's case, then the learned Assessing Officer, in terms of sub-section (2) of section 50C, was....
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....al Motors Pvt. Ltd. vs. ACIT (2016) 27 ITJ 264 (Trib.- Indore) iii) ITO vs. Girish Kumar Jain (2015) 26 ITJ 515 (Trib.-Indore) Since, in the instant case, the learned AO has invoked the provisions of section 50C without first satisfying the mandatory condition enjoined in the section itself and therefore, the addition so made by the learned AO deserves to be deleted on this count too. (iii) ADDITIONAL GROUND NO. 4 "That, without prejudice to the above, both the authorities below have grossly erred in computing the short-term capital gain of the appellant at Rs. 13,21,51,725/- without granting the legitimate deductions under s.48(i) of the Act in respect of payments of stamp duty & registration expenses and brokerage on sale, respectively at Rs.l,72,67,070/- and Rs. 28,00,000/-, genuinely made by the appellant in connection with the transfer of the property." In this regard, it is submitted as under: 1.01 That, the learned AO has computed the short-term capital gain of the appellant at Rs. 13,21,51,725/- [Deemed Sales Consideration as per Stamp Valuation Authority at Rs. 16,17,50,000/- less Cost of Acquisition of the plots at Rs. 2,95,98,275/-]. 1.02 That, the learned ....
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....hat for effecting the sale of subject plots, the appellant availed the services of some property brokers, who not only identified and searched the prospective buyers of the properties but also played a significant role in the negotiation process, payment process and ultimate completion of the sale deal. In consideration of rendering the services, which obviously related to the transaction of transfer of property by the appellant, the appellant was required to pay a brokerage of Rs. 28,00,000/-, i.e. @2% of the actual sales consideration of Rs. 14,00,00,000/-, to six persons. It shall be pertinent to note that the payment of brokerage has also been made through banking channels only. It is submitted that the details of the brokerage paid by the appellant have been given through a separate statement placed at page no. 71 of our Paper Book. Further, in evidence of the payments of brokerage, the copies of confirmation letters and PAN cards of the brokers are also placed at page no. 72 to 82 of our Paper Book. 3.02 Your Honours, alike stamp duty & registration expenses of Rs.l,72,67,070/-, the brokerage expenses of Rs. 28,00,000/- were also claimed by the appellant as expenses in his ....
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....ct as the capital gain derived by the appellant from transfer of the capital asset was in the nature of a long-term capital gain." In this context, it is submitted as under: 1.00 That, in the preceding grounds, we have fully demonstrated beyond all doubts that the subject plots were factually held by the appellant as long-term capital assets only. 2.00 That, since subject plots were in the nature of long-term capital asset and further since, the capital gain accrued to the appellant from transfer of capital asset was in the nature of longterm capital gain, the appellant was eligible for grant of benefit of indexation of cost of acquisition in accordance with the second proviso to section 48 of the Act, which has not been so granted to the appellant by the learned AO. 3.00 Once the appellant is granted the due legitimate benefit for claim of expenses under sA8 in respect of expenses in connection with transfer of capital asset aggregating to Rs. 2,00,67,070/- and as also in respect of indexed cost of acquisition at Rs. 3,60,42,601/-, the resultant long-term capital gain to the appellant would be worked out at Rs. 10,56,40,329/- only. For such purpose, the appellant has prepa....
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....f the aforesaid statement of computation of capital gain [kindly refer PB Page No. 70], it shall be observed that if the approach of the AO is adopted, there would arise a long-term capital gain of Rs.I0,56,40,329/- to the appellant. It shall further be observed by Your Honours that on such capital gain, the appellant would be required to make the payment of tax liability of Rs. 2,17,61,908/- for the relevant assessment year. 2.02 It shall be appreciated that as against the aforesaid tax liability of Rs. 2,17,61,908/-, since the appellant has already made a tax payment of Rs. 2,85,13,935/- in his return of income filed for A.Y. 2011-12 in respect of the same transaction, an appropriate credit for such tax already paid by the appellant in respect of the subject capital gain, in the subsequent assessment year, is required to be given for the assessment year under consideration from the date of making of such payment. 2.03 It is submitted that if in case, a transaction has been taxed in one assessment year, then the corresponding relief has to be granted to the assessee in other assessment year in which he has already been assessed. It would be appreciated that having already paid....
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....the sale deed was signed by both the parties on 31.3.2010 but the transaction should be taxed under the head "Long Term Capital Gain" as the purchase deed was signed on 31.3.2007 and the possession of the plots was received by the assessee on 26.3.2007. Thus the period of holding of the plots of land by the assessee was for more than three years and therefore it should be taxed under the head "Long Term Capital Gain". He also submitted that the expenses incurred for carrying out these transaction of sale of plot of land i.e. stamp duty registration charges as well as brokerage expenses should be allowed against the sale consideration and direction may be given to give the credit of tax paid by the assessee in Assessment Year 2011-12 on the profit shown from the sale of plots of land against the tax liability arising for Assessment Year 2010-11 on account of "Long Term Capital Gain" if taxed in Assessment Year 2010-11. 7. Per contra Ld. Departmental Representative vehemently argued supporting the findings of both the lower authorities and submitted that the assessee is consistently changing his stand. During the reassessment proceedings he claimed the alleged gain as business incom....
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....s raised by the assessee needs to be addressed. (1) Whether the alleged transaction is to be taxed as business income or capital gain. (2) If the transaction is to be taxed as capital gain whether it is to be taxed in Assessment Year 2010-11 or Assessment year 2011-12 as Short Term Capital Gain or Long Term Capital Gain. (3) Whether the Ld. A.O was justified in applying the value of property as per Section 50C of the Act without referring it to the Valuation. (4) Whether the assessee is eligible to get the claim of expenses for stamp duty, registration and brokerage by computing income of Assessment Year 2010-11 even though the amount have been incurred during Assessment Year 2011-12. (5) Whether the assessee is eligible to get the benefit of tax credited during the year 2010-11 on the tax paid for the income from alleged transaction shown in Assessment Year 2011-12. 11. Now we will first take up the issue "Whether the alleged transaction is to be taxed as business income or capital gain". 12. From perusal of the record we observe that the assessee has shown the transaction of sale of land to have been carried out in the course of business and profit derived there from ....
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....parties. Though the document has been registered subsequently during the financial year 2010-11 but the sale deed has been signed by both the parties on 31.03.2010. In the course of hearing when the Ld. Counsel for the assessee was confronted with this aspect, he was fair enough to accept that 31.03.2010 may be taken as the date of sale of the plots of land. In these given facts and circumstances, we are of the view that the sale transaction was completed on 31.03.2010 and thus the incidence of tax falls in Assessment Year 2010-11. 16. Now in order to examine whether the gain from the transaction from sale of land is to be taxed as Short Term Capital Gain or Long Term Capital Gain during Assessment Year 2010-11 the relevant dates of purchase and sale of land and the handing over of the possession will be crucial. As far as the date of sale is concerned the date of sale is 31.03.2010 and in the sale deed itself the handing over of the possession is on 31.03.2010 has been accepted by the seller and buyer. So the date of handing over of the possession and the date executing the sale deed is 31.03.2010 and part of the sale consideration was received by the assessee on and before thes....
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....plicable. But now since we have decided the issue by treating the gain from alleged transaction as Long Term Capital Gain, this plea of the assessee that Section 50C of the Act is not applicable on the alleged transaction, will not have legs to stand for. In the course of hearing Ld. Counsel for the assessee has challenged the fair market value adopted by the Ld. A.O at Rs. 16,17,50,000/- to be higher and has pleaded that sale consideration of Rs. 14 crores should be adopted to compute the capital gain. 20. Section 50C of the Act reads as follows:- 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed 86[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section ....
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....ation before the lower authorities, we being fair to both the parties and in the interest of justice set aside this issue to the file of Ld. A.O with the direction that necessary reference may be made to the Departmental Valuation Officer for valuation of the impugned capital asset and if the same is less than alleged fair market value then apply the same for computation of Long Term Capital Gain. 22. Needless to mention that reasonable opportunity of being heard should be given to the assessee. In the result this issue raised by the assessee in additional Ground No.3 is allowed for statistical purpose. 23. Now we take up the fourth issue. Whether the assessee is eligible to get the claim of expenses for stamp duty, registration and brokerage by computing income of Assessment Year 2010-11 even though the amount have been incurred during Assessment Year 2011-12. 24. We observe that the assessee has claimed to have incurred registration and stamp duty charges of Rs. 1,72,67,070/- and brokerage expenses of Rs. 28 lakhs. Genuineness of both these expenses have not been disputed before us. These expenses were claimed as business expenditure during Assessment Year 2011-12 which were a....