Referred Sections:
Section 147 of the I.T. Act.,
Sections 234A, 234B and 234C of the I.T. Act, 1961.
Section 148 of the I.T. Act.
Section 54 of the IT Act, 1961
Section 45 of the I.T. Act
Section 2(47)(v) of the I.T.
Section 53A
Section 47 of the Registration Act, 1908
Referred Cases / Judgments:
The Hon’ble Supreme Court in the case of CIT vs. Balbir Singh Maini [2017] 398 ITR 531
maxim is contained in Coastal Paper Limited v. Commissioner of Central Excise, Visakhapatnam, (2015) 10 SCC 664 at 677,
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "E": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA.No.2310/Del./2019
Assessment Year 2010-2011
Smt. Madhu Gangwani,
New Delhi 110 048. The ACIT,
PAN ADYPG0306Q
C/o. M/s. RRA TAXINDIA vs., Circle 30 (1),
D-28, South Extension,
Part-I, New Delhi. New Delhi.
PIN 110 049.
(Appellant) (Respondent)
Shri Rakesh Gupta, And
For Assessee : Shri Somil Aggarwal,
Advocates.
For Revenue : Shri K. Hauthang, Sr. D.R.
Date of Hearing : 23.09.2019
Date of Pronouncement : 01.10.2019
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed
against the Order of the Ld. CIT(A)-10, New Delhi, Dated
12.02.2019 for the A.Y. 2010-2011, challenging the
reopening of the assessment under section 147 of the I.T.
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
Act, challenging the Order of Ld. CIT(A) on the reason that
capital gain is not subjected to tax in assessment year
under appeal, challenging the addition of Rs.30 lakhs and
Rs.3,58,067/- and interest under sections 234A, 234B and
234C of the I.T. Act, 1961.
2. Briefly the facts of the case are that return of
income in this case was filed on 14.09.2010 declaring
income of Rs.43,41,970/-. The return was revised declaring
income of Rs.41,72,080/-. The assessment was reopened
under section 148 of the I.T. Act. In this case information
was received from ADIT, Investigation that in the course of
investigation of suspicious transaction report in the case of
Shri Ranish Karki, it came to light that assessee had signed
a sale agreement with Shri Rajnish Karki for the sale of
property L-1/13, Hauz Khas Enclave, New Delhi for
Rs.3,25,00,000/- . During investigation, it was also seen
that assessee had 50% ownership in this property and Shri
Roop Chand had the remaining 50% share in the property.
On 07.08.2008, Sh Roop Chand released the ownership of
his 50% share in favour of assessee for Rs.29,00,000/-.
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
Therefore, assessee became the full owner of the property in
question. The property was sold to Shri Rajnish Kharki on
31.03.2009 for a consideration of Rs.3.25 crores. It was also
submitted that transfer of property was registered on
01.04.2009 through registered sale deed. The assessee did
not showed the capital gain on transfer of this property
in A.Y. 2009-10. The assessee has showed the capital
gain in the computation of income for assessment year
under appeal i.e., 2010-2011 and claimed deduction
under section 54 of the IT Act, 1961 of Rs.2,17,12,940/-
The computation of capital gain is reproduced in the
assessment order. The assessee was asked to explain why
the benefit of indexation should not be restricted to the land
and building purchased during F.Y. 2005-2006 as 50%
share in the property has been purchased during F.Y. 2008-
2009. The assessee furnished complete details and agreed
with the view of the Department. The capital gain of 50%
share in the property will be treated as long term capital
gains and remaining 50% will be treated as short term
capital gain. Computation of which is noted in the
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
assessment order. The computation of the assessee was
therefore, not found correct. Further computation was
made. It was also found from calculation of short term
capital gain of assessee, she deducted an amount of Rs.60
lakhs under the Head "Furniture and Fittings", in support of
which, copy of Agreement was filed. It was found that the
expenditure is related to the period before the acquisition of
the property was made. From the submission of the
assessee. it was seen that expenditure made by the assessee
was in two parts i.e., Rs.30 lakhs in 2006 and Rs.30 lakhs
in 2008. Show cause notice was issued to assessee that
furniture and fixture was not allowable deduction. The A.O.
ultimately made addition of Rs.30 lakhs. Further, it was
found that some expenses were made in the property in the
period prior to the date of acquisition for which
Rs.3,58,067/- were disallowed. The assessee challenged the
reopening of the assessment and the aforesaid additions
before the Ld. CIT(A). However, the appeal of assessee has
been dismissed.
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
3. We have heard the Learned Representative of
both the parties and perused the material available on
record.
4. The first and foremost question raised by the
Learned Counsel for the Assessee had been that the transfer
of property did not take place in assessment year under
appeal, therefore, no capital gain is chargeable in
assessment year under appeal. Reassessment is invalid and
bad in Law.
5. Section 45 of the I.T. Act provides that any profits
and gains arising for transfer of a capital asset effected in
the previous year shall, save as otherwise provided in
Section 54 etc., be chargeable to Income Tax under the
Head "Capital Gains" and shall be deemed to be the income
of the previous year in which the transfer took place.
Section 2(47)(v) of the I.T. Act provides the definition of
"Transfer" Transfer in relation to capital asset includes
any transfer involving the allowing on new possession of any
immovable property to be taken or retained in part
performance of a contract of the nature referred to in
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
Section 53A of Transfer of Property Act, 1982. It is,
therefore, clear that for levy of capital gains tax, there
should be a transfer of capital asset in the previous year
relevant to assessment year under appeal. Section 2(47)(v)
of the I.T. Act provides transfer of capital asset which
includes the transactions involving the allowing of
possession of any immovable property to be taken or
retained in part performance of contract of the nature
referred to in Section 53A of the Transfer of Property Act.
Learned Counsel for the Assessee has filed copy of the
Registered Agreement to Sell Dated 16.01.2009 in support
of the aforesaid property whereby the assessee has agreed to
sell the property to the purchaser Shri Rajnish Karki,
subject to part payment and part possession have been
handed over to the purchaser. This agreement to sell is
registered with the Sub Registrar. Thus, conditions of
Section 2(47)(v) of the I.T. Act are satisfied in the sense that
there is a transfer of immovable property on execution of the
registered agreement to sell whereby part possession is of
the property in question have been handed over to the
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
purchaser, subject to part payment. The remaining
conditions have been satisfied by handing over the entire
possession of the property in question subject to remaining
payment on execution of the sale deed dated 31.03.2009.
Thus, the transfer of capital asset is completed in previous
year relevant to preceding A.Y. 2009-2010. The Revenue has
however been relying upon the fact that the sale deed dated
31.03.2009 since registered on 01.04.2009, therefore, the
transaction of transfer of capital asset took place in A.Y.
2010-2011 in appeal. We do not agree with the view of the
Revenue. Section 47 of the Registration Act, 1908 provides
as under:
"47. Time from which registered document
operates. -- A registered document shall operate from
the time from which it would have commenced to
operate if no registration thereof had been required or
made, and not from the time of its registration."
5.1. The Hon'ble Supreme Court in the case of CIT vs.
Balbir Singh Maini [2017] 398 ITR 531 held as under :
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
"The object of Section 2(47)(vi) appears to be to bring
within the tax net a de facto transfer of any immovable
property. The expression "enabling the enjoyment of"
takes color from the earlier expression "transferring", so
that it was dear that any transaction which enables the
enjoyment of immovable property must be enjoyment as
a purported owner thereof, the maxim "noscitur a sociis"
has been repeatedly applied by Supreme Court. A
recent application of the maxim is contained in Coastal
Paper Limited v. Commissioner of Central Excise,
Visakhapatnam, (2015) 10 SCC 664 at 677, para 25.
This maxim is best explained as birds of a feather
flocking together. The maxim only means that a word is
to be judged by the company it keeps. The idea was to
bring within the tax net, transactions, where, though
title may not be transferred in law, there was, in
substance, a transfer of title in fact."
5.2. Considering the facts of the case in the light of
above discussion, it is clear that agreement to sell was
executed and registered on 16.01.2009 whereby the part
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
possession of the property in question have been handed
over to the purchaser subjected to part payment. Therefore,
transfer of capital asset completes in preceding A.Y. 2009-
2010. This fact is further strengthened by the fact that
registered sale deed was executed between the parties on
31.03.2009 whereby the entire terms and conditions are
satisfied. The full sale consideration have been paid and
possession of the property have been handed over to the
purchaser. This fact is further strengthened by Section 47 of
the Registration Act whereby it is provided that registered
document shall operate from the date of its execution. In
these circumstances, we hold that transfer of capital asset
had taken place in preceding A.Y. 2009-2010. Therefore,
capital gain tax would not be chargeable in assessment year
under appeal i.e., 2010-2011. The initiation of re-
assessment proceedings are illegal and beyond jurisdiction
of A.O. We, therefore, set aside the Orders of the authorities
below and delete the entire addition. In this view of the
matter, there is no need to decide the other issues involved
in the present appeal. Before parting with the Order, we
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ITA.No.2310/Del./2019
Smt. Madhu Gangwani, New Delhi.
would like to make it clear that since assessee has declared
capital gain in the return of income filed for assessment
year under appeal and paid self assessment taxes, therefore,
assessee would not be entitled to retract from the statement
so made in the return of income. In this view of the matter,
we allow the appeal of assessee.
6. In the result, appeal of Assessee allowed.
Order pronounced in the open Court.
Sd/- Sd/-
(O.P. KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 01st October, 2019
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "E" Bench
6. Guard File
// BY Order //
Asst. Registrar : ITAT Delhi Benches : Delhi.
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