TaxTMI 
TaxTMI 
2023 (4) TMI 178
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....all dated 15.10.2019, passed in case nos. NSK/CIT(A)-1/681/2018-19, NSK/CIT(A)-1/677/2018-19 and NSK/CIT(A)-1/675/2018-19 [taxpayer-wise], respectively, involving proceedings us/143(3) of the Income Tax Act, 1961 (in short "the Act"). 2. Heard all these three assessees represented by Shri Sanket Joshi (AR) and the department through Shri M.G. Jasnani (DR). Case files perused. 3. We notice during the course of hearing that the sole substantive issue which arises for our apt adjudication in all these six cross appeals is that of correctness of the CIT(A)'s action partly upholding the Assessing Officer's corresponding findings making sec.56(2)(vii)(b) addition(s) of Rs.2,29,67,640/- and Rs.2,10,53,670/- each, assessee wise, respectively, as per the following detailed discussion : These CIT(A)'s foregoing detailed findings partly upholding section 56(2)(vii)(b) addition in light of agreement dt 12.08.1997 leaves all these three assessees' as well as the department aggrieved. Learned counsel's precise case as per the assessees' corresponding substantive grounds is that both the lower authorities have erred in law and on facts in invoking the impugned addition which dese....
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....le family on 12.08.1997 which was regularized by the stamp authorities as on 06.02.2016 in the relevant previous year, the consequential exclusive share never devolved on them so as to attract the statutory provision in issue. Mr. Joshi, inter alia, submitted that these assessees' had in fact executed the purchase agreement way back on 12.08.1997 followed by un-registered possession receipt on 25.01.2021, payment of additional compensation on 04.10.2014, unregistered final payment receipt [Bharna Pavati] dated 09.09.2015, their application before the Collector, stamps seeking registration of the foregoing agreement on 27.01.2016 and the final decision by him u/secs.33 with 39 of the Bombay Stamp Act, 1958; respectively. He further stated that detailing of all these facts forms sufficient material to hold that the land in question was never actually "received" in the assessment year before us i.e., 2016-17. 5.2 These assessees arguments are found to be without any merit. It emerges during the course of hearing that these assessees' are engaged in the land development business wherein no books or records have been produced for the period starting from the year 1997 to 2014 which c....
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....y regarding veracity of the aforesaid agreement is concerned. 5.4. There is one more clinching aspect of the matter regarding the applicability of "The Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation and Re-settlement Act, 2013". A combined perusal of secs. 61 and 63 thereof suggests that all proceedings before the prescribed authority(ies) are judicial proceedings wherein jurisdiction of a civil court is also barred. Learned counsel could not dispute in light of these clinching provisions that once the three taxpayers before us had received the statutory compensation of the land strictly to the extent of their respective share acquired by the National Highways Authority of India "NHAI" as per the above statute, they can very well be presumed to have also "received" the corresponding right or title in the land itself so as to attract sec.56(2)(vii)(b) of the Act. Mr. Joshi could not throw any light as to how these assessees could receive compensation qua their exact share of 12% and 11% (supra) despite the alleged revenue entries having gone against them. Nor has he placed on record the assessee's corresponding compensation applications / petition....
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....same time that these assessees' has indeed made payment of the alleged additional compensation as well as sale price on 04.10.2014 which has not been found to have been factually disputed even on 09.09.2015 (Bharna Pavati) as well as 06.02.2016 [registration of the alleged agreement dated 12.08.1997], respectively. This is also not the Revenue's case that these assessees' or their co-vendees had not made the said payments as on 04.10.2014 by way of compensation of Rs.42 lakhs by prescribed mode. Faced with the situation, we direct the learned Assessing Officer to adopt stamp price of the land in issue in S.No.883/1/1, Nashik as on 04.10.2014 as the actual sale price in light of sec.56(2)(vii)(b) read with 1st and 2nd proviso therein than taking the fair market value as per the ready reckoner in issue (supra) as on 06.02.2016 and calculate the impugned addition as per these assessees' respective share of 12% and 11% each (supra) is assessee's case, respectively. The Assessing Officer may thereafter re-compute the impugned addition after referring the issue to the DVO u/s 56(2)(vii) 3rd proviso as per law preferably within three effective opportunities of hearing. 7. Learned couns....
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....ion as the value of the consideration fixed in the year 1997 and paid to the AT 2010-17 0/3 193(3) extent of 27,00,000/- on much later date has substantially decreased. The purchasers have paid the impugned additional consideration considering the inflation and to avoid litigation in the years 2014 & 2015 by account payee cheques. 5.1 The AO has however, not allowed the benefit of provisions to section 56(2)(vii)(b) to the appellant raising the contentions which are dealt with as under: 5.1.1 The first contention of the AO is that the agreement to purchase dated 12/08/1997 is not registered agreement and the sellers were not absolute owners of the impugned land. In this regard it has been noticed that the provisions of section 56(2)(vii)(b) do not require that the agreement entered into on earlier date prior to entering into registered document should also be registered. Further if, the intention of the legislature would have been such then, the legislature would not have prescribed the condition of payment by account payee cheque or demand draft on or prior to the date of the agreement. It is the practice in real estate market,....
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....ntion of the AO that the impugned consideration was fixed in F.Y. 2015-16, cannot be accepted as the value of the land in this year as per Sub-Registrar was 19,85,97,000 /- and in the absence of agreement to purchase dated 12/08/1997 and price fixed on that date, the sellers would not have determined the price in the year 2015-16 at 72,00,000/-. The Hon'ble Mumbai ITAT, in the case of Ms. Maitri Morarji Vs. I.T.O. Ward- 4(1), Mumbai, ITA No. 3864/Mum/2016, vide order dated 05/12/2018 has decided the issue of payment made by purchaser of the property in addition to the price fixed as per earlier agreement to purchase. In this case the purchaser THPCL has agreed to purchase the land from the appellant and other co-owners for consideration of 34,937/-, as per agreement dated 10/03/1971. The 10% of consideration was payable on the date of agreement, 50% was payable upon handing over of formal possession and the balance 40% was payable upon completion of sale. The assessee & other co-owners have given possession of the property within 4 months from the date of agreement as per the possession rec....
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....nals. It has been submitted by the appellant, vide letter dated 10/10/2019 that, the assessments in the case of two co-owners i.e. Pravinchandra W. Shah and Shailesh R. Shah was completed u/s. 143(3) and the AO has not made any addition u/s. 56(2)(vii)(b) while assessing the income of the above two co-owners in scrutiny assessment. The appellant has filed copies of the assessment orders u/s 143(3) of the above co-owners. In order to decide the above contention, the provision of section 56(2) (vii)(b) is to be considered and hence, the same is reproduced below: AY 2016-17 u/s 143(3) "56(2)- In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from Other Sources", namely:- (vii)- Where an individual or Hindu Undivided Family, receives, in any previous year, from any person or persons on or after the 1st day of October, 2009- (a).. (b) any immovable property- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property. (ii) For a cons....
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....30,00,000/- mentioned in the agreement to purchase dated 12/08/1997. Therefore, the addition U/s. 56(2)(vii)(b) in the hands of the co-purchasers including the appellant is justified to the extent of 33,88,000/- in their proportion of ownership in the impugned land purchased as under: Percentage Name of the co-owner of ownership Amount taxable u/s. 56(2)(vii)(b) Vinod K. Manwani 11% 3,72,680/- Dinesh K. Manwani 11% 3,72,680/- Kanhaiyalal Manwani 12% 4,06,560/- Pravinchandra W. shah 37.5% 12,70,500/- अपील) ne Tax, Rajendra R. Shah 25% 8,47,000/- Shailesh R. Shah Total 3.5% 1,18,580/- 100% 33,88,000/- The AO is directed accordingly. 5.5 It is worth mentioning here that the appellant has paid amount of 42,00,000/- as additional consideration after passage of substantial period which is to be considered as compensation and not part of consideration for purchase of the impugned land. This preposition of law is supported by ratio laid down by Hon'ble ITAT, Mumbai in the case of Ms. Maitri Morarji Vs. I.T.O. 4(1), Mumbai, ITA No. 3864/Mum/2016, v....
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....servation placed by Nashik Municipal Corporation. on the land as on 1997 was lifted in future to make it a freehold land, then the right to sell/ transfer the land and enjoy sale proceeds therefrom was left with the original owners/ vendors even after the Agreement dated 12.08.1997. This fact would be evident upon reading of the terms stated in the Agreement dated 12.08.1997 enclosed on pages 42-49 of Paper Book. This fact would also be evident from copy of 7/12 extract of the said land dated 26.09.2017 [enclosed at page 132 of Supplementary Paper Book] wherein the name of the assessee has never been mentioned in the 'Owners' column but the same finds place only under the Other Rights' column. In this regard, reliance is placed on the following decisions wherein it has been held that the legal title/ absolute ownership in immovable property is transferred only by way of conveyance deed and not by way of agreement to sale/ development agreement/ General Power of Attorney etc. which only result into transfer of certain rights in property - 1. Suraj Lamps & Industries Pvt. Ltd. [340 ITR 1 (SC)]- Refer para 11 & 12. 2. M/s. Triad Resor....
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.... provisions of section 56(2)(vii)(b) could not be applied during A.Y.2016-17- 2.1] Even if it is held that mere entering into Agreement dated 12.08.1997 (registered on 06.02.2016) would result into the assessee having 'received' the land as contemplated u/s 56(2)(vii)(b), still it is to be noted that as per the provisions of section 47 of the Registration Act, a registered document becomes operative from the date of its execution and not from the date of its registration. This proposition is supported by following decisions - 1. Fort Properties Pvt. Ltd. v. CIT [208 ITR 232 (Bombay H.C.)] 2. Beena S. Chaudhari [216 TTJ 888 (Pune)] dated 17.02.2022. 2.2] Accordingly, it is to be noted that the said land will be contemplated to be received on 12.08.1997 itself and not during A.Y.2016 - 17. Therefore, no addition u/s 56(2)(vii)(b) could be made in the year of registration of the agreement i.e. A.Y.2016 - 17. 2.3] Even otherwise, it is submitted that Agreement dated 12.08.1997 was executed prior to 24.09.2001 and hence, the registration of the said Agreement was not compulsory as per the provisions of section 17 of the Registration Act, 1....
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....ssessee especially considering the fact that the assessee is engaged in the business of land dealing. Therefore, in view of the law laid down by Hon'ble Jurisdictional H.C., the said rights acquired in the said land vide Agreement dated 12.08.1997 are in the nature of Stock in Trade and not in nature of Capital Asset. 3.2] It is settled law that section 56(2)(vii)(b) is only attracted in case of receipt of land in the nature of capital asset and not in respect of land held as stock in trade. Reliance in this regard is placed on following decisions - 4] 1. Hon'ble Rajasthan High Court in the case of PCIT v. Ashok Agarwal HUF ID.B. ITA No.4/2021] dated 16.11.2021 affirming CIT v. Ashok Agarwal (HUF) [(2020) 207 TTJ 608 (Jaipur)] 2. Mubarak Gafur Korabu v. ITO [ITA No.752/PUNE/2018] dated 05.04.2019 3. Yogesh Maheshwari v. DCIT [(2020) 187 ITD 618 (Jaipur)] 4. Sowmya Sathan v. ITO [(2021) 187 ITD 149 (Bangalore)] Without prejudice, section 56(2)(vii)(b) clearly mandates that Stamp Duty Value means the value adopted/ assessed by Stamp Duty Authorities which in the instant case was Rs.63,88,000/-, hence, the A.O. is not justified in ....
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....2020) 187 ITD 618 (Jaipur)] 4. Sowmya Sathan v. ITO [(2021) 187 ITD 149 (Bangalore)] 4] Without prejudice, section 56(2)(vii)(b) clearly mandates that Stamp Duty Value means the value adopted/ assessed by Stamp Duty Authorities which in the instant case was Rs.63,88,000/-, hence, the A.O. is not justified in substituting the said value with a different value of Rs.19.86 Crs. which according to the A.O. should have been adopted by the Stamp Duty Authorities for levy of stamp duty- 4.1] The assessee submits that the said land has been received by the assessee vide agreement dated 12.08.1997 registered on 06.02.2016. This is the only registered document in respect of transfer of the above land and the Dept. has invoked the provisions of section 56(2)(vii)(b) on the basis of the said agreement registered on 06.02.2016. The A.O. has held that the govt. valuation of the land as on 06.02.2016 (as per information obtained from Stamp Valuation Authority) was Rs.19,85,97,000/- and therefore, the A.O. has adopted this value as stamp duty value for the purposes of section 56(2)(vii)(b) of the Act, which is directly contrary to the provisions of t....
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.... challenged before a Competent Court. Therefore, even the contents of the said registered agreement, clearly establish the purchase consideration for acquisition of this land was fixed only at Rs.30 lakhs in the year 1997 itself which was also affirmed by purchasers as well as the sellers while registering the said document on 06.02.2016. Accordingly, the balance amount of Rs.42 lakhs paid in 2014 and 2015 was only in the nature of compensation paid towards passage of time, in order to avoid protracted litigation. 5.5] It is to be appreciated that if at all, the purchase consideration was negotiated and finalized by the sellers in 2015 as contended by the Dept., then there was no reason why the sellers would have settled for an amount of Rs.72 lakhs as against the govt. valuation of the said property in 2015 of Rs.19.86 Crs. This clearly establishes the fact that the purchase consideration was finalized in 1997 itself as per the market price prevailing at the time of executing the agreement dated 12.08.1997. Accordingly, it is to be noted that the impugned land was received by way of agreement dated 12.08.1997, which came to be regist....
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.... way of endorsement on the Agreement dated 12.08.1997 that proper stamp duty together with penalty has been paid in respect of the said Document. As per the provisions of section 41(2) of the Bombay Stamp Act, 1958, every instrument so endorsed by the Collector u/s 41(1) of the B.S. Act shall be admissible in evidence and may be registered and acted upon and authenticated as if it is duly stamped. The above facts clearly prove that the agreement dated 12.08.1997 was actually entered in the year 1997, by affixing stamp dated 12.08.1997 and upon payment of part consideration through banking channel and considering the veracity of these facts, the said agreement also came to be impounded and registered by the Collector of Stamps, Nashik after payment of stamp duty and penalty on 06.02.2016. 5.7] It is also a well settled law as also laid down by Hon'ble Supreme Court in the case of Vimal Chand Ghevarchand Jain v. Ramakant Eknath Jajoo [(2009) 5 SCC 713] and various other decisions, that contents of a registered documents cannot be doubted except upon being challenged before Competent Court. Since the Agreement dated 12.08.1997 is a duly ....