TaxTMI 
TaxTMI 
2021 (4) TMI 540
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....ition made by the AO for Rs. 16,67,49,036/- under the head capital gain. 3. Briefly stated facts are that the assessee in the present case is a private limited company and engaged in the finance business. The assessee was the owner of 2 plots bearing number 548 and 549 admeasuring 33,612 Sq. mtrs. which were purchased dated 24-08-2007 for a consideration of Rs. 1,45,30,560/- only. 3.1 The assessee subsequently entered into a Banakhat dated 12-03-2008 for the sale of both the plots to M/s SJ Securities Limited (in short 'SJSL') at a consideration of Rs. 2,02,08,750/-. Accordingly, the assessee in its income tax return declared short term capital gain of Rs. 37,18,594/- onlyin the year under consideration with respect to both the sale of plots. 3.2 However, the AO found that there was the search dated 26-10-2012 in the case of 'SJSL' under section 132 of the Act being the buyer of the property against the Banakaht. During the search it was found out that the buyer of the property namely SJSL has sold the aforesaid plots after converting them into small plots for the total consideration of Rs. 14,86,83,000/- during the period November 2009 to March 2010. Out of total sale val....
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....ssee. Furthermore, no prudent businessman will transfer the land at a lower price by shifting its profit to another party. Accordingly the AO disregarded the contention of the assessee by observing as under: "9. The reply of the assessee is not acceptable. As per section 50C, 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 for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed (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. 10. The key features of the above provision are as under:- a. This section is applicable to transfer of a capital asset. The banakhat does not denote transfer of a capital asset. b. This section stipulates value for the purpose of payment of stamp duty. The actual transfer took place during the year viz., as per new jantri rate of transfer, the value for the payment of stamp du....
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...., whereas the assessee has transferred the land at Rs. 598 per Sq. Mtr. which is much more than the value declared for the purpose of stamp duty. 3.10 However, the AO disregarded the contention of the assessee by observing that the Banakhat is not a transfer of the property. As such the provisions of section 50C of the Act deals with the transfer of the property which has taken place in the case on hand during November 2009 to March 2010 and the stamp duty at that relevant point of time stands at Rs. 5,500 per Sq. Mtr. Accordingly, the AO was of the view that the stamp value should be taken as the sale consideration for the purpose of working out the capital gain as provided under the provisions of section 50C of the Act. Thus the AO made an addition of 16,67,49,036/- to the total income of the assessee. 4. Aggrieved assessee preferred an appeal to the learned CIT (A). 4.1 The assessee before the learned CIT (A) submitted that by virtue of Banakhat dated 12-03-2008 all right and title vested in the property got transferred to 'SJSL' along with possession or right for the enjoyment of property. The SJSL subsequently divided the plot into 23 sub plot for the purpose of re....
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....ore the date of search. Accordingly, the assessee contended that, without having any incriminating material belonging to assessee, unabated year cannot be reopened for making assessment under section 153C of the Act. 4.4 The learned CIT(A) after considering the fact in totality deleted the addition made by the AO on legal ground and as well as on merits by observing as under: "From verification of the assessment order, the AO has not identified any of the incriminating seized material found during the course of search proceedings in the case of S.J. Securities Ltd and also not referred to any of the statements of the directors of S.J. Securities Ltd or any other relevant person that the sales consideration of 23 plots sold by S.J. Securities Ltd and received the aggregate sales consideration of Rs, 13,52,35,250/- from actual buyers has been remitted transferred back to the appellant company in cheque or in cash. Therefore, as theregular assessment proceedings for A.Y. 2010-11 has already been completed in the case of the appellant company before the search took place in the case of S.J. Securities Ltd on 04.09.2013 and there was no incriminating material found during th....
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....om appellant company for its business purpose and the said land was sub-divided into 23 plots which has been subsequently sold by SJ Securities Ltd to the actual buyers and realized the sales consideration of the said 23 plots and shown in the audited Profit & Loss Account as its trading receipts, therefore, the question of showing the said amount in fixed assets in the balance sheet of SJ l Securities Ltd does not arise at all. As it was agreed upon between the appellant company and SJ Securities Ltd in the agreement to sale dated 12.03.2008 that SJ Securities enjoyment of said land for its business purpose, which SJ Securities Ltd has exercised its rights by sub-dividing the said land into 23 sub- plots and sold to the actual buyers and directed the appellant company to execute the conveyance deed in favour of actual buyers wherein, SJ Securities Ltd as a developer has become the confirming party and received the amount of sales consideration of 23 sub-plots by SJ Securities Ltd from the actual buyers! On the basis of the facts as discussed above and the evidences available on record, the observation made by the AO in the assessment order in Para 11 that Jantri prevailing at the ....
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....ssed above, the appellant's case is found covered by the order of the Hon'ble ITAT, Ahmedabad. The additions made by the A.O in this cae u/s.50C are not sustainable, therefore, deleted. This ground of appeal is allowed. 5. Being aggrieved by the order of the ld. CIT-A, the Revenue is in appeal before us. 6. The ld. DR before us contended that the assessee has carried out the transaction for the sale of the lands in dispute by adopting the colourable device through SJSL and diverted its income under the head capital gain. The learned DR vehemently supported the order of the AO. 7. On the other hand, the ld. AR before us filed a paper book running from pages 1 to 558 and contended that there was no incriminating document found during the search belonging to the assessee and therefore the assessment framed under section 153C of the Act in itself is invalid. Furthermore, the regular assessment was framed under section 143(3) of the Act wherein all the details for the sale of the properties were duly disclosed which were admitted by the AO. The learned AR also contended that the AO has not afforded the opportunity of the cross-examination to the assessee of the statements re....
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....e reference of "other person" in the documents is not enough to hold them as belonging to him. Therefore, "record maintained by a person for his own purpose, though referable to the assessee, cannot be said to be belonging to the assessee within the meaning of s. 153C of the Act. For example any document is prepared by the PS for his own record would not mean that such document belong OP, even though it may contain the name of OP. In the case of hand, on perusal of the assessment order, it was found that the AO has made reference to the documents found during the search by observing as under: 4.1 On perusal of the seized (seized from the office of Sarang Chemicals Limited) profit and loss accounts of one M/s.S.J. Securities Ltd (SJSL), tally books of "SJSL (mayank)" was found which showed that M/s. SJSL had earned profit on sale of land aggregating to Rs. 14,27,69,950/-. No land was purchased by it during the relevant year no was any land recorded in its fixed assets in its balance sheet. 8.2 From the above, we note that it was the document of 'SJSL' wherein it has shown the transactions of sales of the lands which was purchased in the earlier assessment year through....
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....rks made by such director to the effect that material/document seized during the search does not belong to the PS i.e. 'SJSL', or belong to the assessee company. In this regard, we also note that there were no incriminating material against OP was found in the search. Further section 153C emphasize that there should be material or document seized which belong to the OP. As such statement recorded during search is not a material or document found and seized. Therefore the statement recorded under section 132(4) cannot be construed as material/document for invoking proceeding under section 153C of the Act specially, in the circumstances where no material of incriminating in nature found belonging to OP. In this regard we find support and guidance from the order Mumbai Tribunal in case of DCIT vs. National Standard India Ltd. reported in 85 taxmann.com 87 where it was held as under: Further, the Statement of 'AL' recorded under section 132(4) in the course of search and seizure proceedings conducted in the case of 'L' group cannot be construed as a 'seized document', therefore, the reliance placed by the Assessing Officer on the same to justify the val....
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....d 'incriminating material'. Practically stating it can be stated that the 'incriminating material' can be in any form such as a document, content of any document, entry in the books of accounts, an asset etc. 8.6 In short, any fact/evidence which could suggest that the documents/transactions claimed or submitted in any earlier proceedings were not genuine, being only a device/make belief based on non-existent facts or suppressed/misrepresented facts, fulfilling the ingredients of undisclosed income, would constitute an 'incriminating material' sufficient to make assessment for the purposes of the Act. 8.7 In the light of the above stated discussion, the question that arises for our adjudication whether the document in the form of tally and balance sheet found during the course of search is an incriminating document in nature. In our considered view such document are not an incriminating material, as such those documents are part of the books of account maintained by the 'SJSL' wherethe transactions for the purchase and sales of the lands were duly disclosed. Likewise, the corresponding entries in the books of accounts of the assessee and corresponding ....
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....In this regard, we find pertinent to refer the provisions of section 50C(1) of the Act which reads as under: 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 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 : The above provisions requires to take the sale consideration not less than the value declared for the purpose of Stamp duty on transfer of the property being land or building or both. What relevant here is the date of transfer of the property in order to determine the sale consideration not less than the value declared for the purpose of the stamp duty. Now the question arises on which date the property in dispute got transferred in pursuance to the provision of the Act? Whether the date of agr....
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.... any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. The above provisions provides that the word transfer in relation to capital asset includes any transaction by way of agreement which has the effect of transferring or enabling the enjoyment of any property. Indeed, the buyer of the property is enjoying the property in the given facts and circumstances. Thus in our considered view the conditions as specified under clause (vi) of the section 2(47) of the Act has been satisfied. Thus the property was transferred on 28-03-2008. Accordingly in such circumstances the value of the stamp duty as applicable on the date of agreement i.e. 12-03-2008 shall be taken as the sale consideration for working out the capital gain. We also note that the right of the assessee got extinguished by virtue of agreement to sale with respect to the property in dispute. After entering into the agreement of sale a right in personam has been created in favour of the buyer and the assessee was bound to execute the conveyance deed as per the direction of the buyer i.e. SJSL, therefore such agreement of sale should be treated as the da....
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....irness, the guideline value prevailed in the relevant assessment year to be considered as a consideration so as to bring the capital gains into taxation. Since there is no dispute regarding the fact that the agreement for sale of flats were entered into the financial years 2006-2007 and 2007-2008, right over such flat has been transferred from the assessee to the respective purchasers. The only pending was the actual registration of sale deed. In other words, by way of sale agreement, the right in persona is created in favour of the purchaser. When such a right is created in favour of the purchaser and the assessee is refrained from selling such flats to someone else because the purchaser of the flat in whose favour right in persona is created, has legitimate right to enforce such specific performance on the agreement if the assessee-vendor have some reason or other reason has not executed the sale deed. Thus, by virtue of agreement to sale, the same right is given to the respective buyers by the assessee, being the vendor. There is encumbrance created over the flats in favour of the respective flat purchasers. Since there is a gap between the date of execution of sale agreement an....