Income Tax Appellate Tribunal – Indore
Shri Raja Ram Patidar, Bhopal vs The Ito 1(2), Bhopal on 28 September, 2018Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 आयकर अपील
य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.371/Ind/2015 Assessment Year:2010-11 Shri Raja Ram Patidar, ITO 1(2),
H.No.112, Near Ram बनाम/ Bhopal
Lila Maidan, Ward Vs.
No.52-53, Misord,
Bhopal (Appellant ) (Revenue)
P.A. No.BKAPP7594R Appellant by Shri M.K. Sharma CA
Revenue by Shri Lal Chand, Sr. CIT
Date of Hearing: 31.07.2018
Date of Pronouncement: 28.09.2018 आदे श / O R D E R PER MANISH BORAD, A.M: The appeal filed by the assessee pertaining to A.Ys. 2010-11 is
directed against the order of Ld. Commissioner of Income
Tax(Appeals)-I, Bhopal,(in short ‘CIT(A)’), vide appeal No.
CIT(A)_I/BPL/IT-291/13-14 order dated 23.03.2015 which is
arising out of the order u/s 143(3) of the Income Tax Act Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 1961(hereinafter called as the ‘Act’) framed on 25.03.2013 by ITO-
1(2), Bhopal. 2. Assessee has raised following grounds of appeal; 1. The Learned C.LT. (Appeal) has erred on fact and in law in confirming the addition of Rs 3,83,79,019/- on account of long term Capital gains. 1.1 The Learned C.LT. (Appeal) has erred in confirming the consideration for sale of land as Rs 3,97,79,240/- to arrive at capital gain of Rs 3,83,79,019/-, ignoring the consideration shown in documents of transfer of land by the assessee dated 20/03/2009, being agreement to sale, under which possession was granted to buyer from time to time. 1.2 The learned A.O. has erred in treating Cost of Acquisition of land to be Rs 27,580/-, for the purpose of computation of long term Capital gains. 1.3 The Learned CIT(A) has erred on facts and in law, in treating appellant as seller of land, ignoring the fact that the appellant sold the land to Shri R.K Lalwani, who has taken the possession of land and thereafter he sold the land to various customers in small pieces. Also ignored the fact that transaction between appellant and Shri R.K. Lalwani was on the stamp value determined by stamp value authority. 2. The learned A.O. has erred in denying the exemption u/s 54B to the appellant for land purchased in name of his dependent son and daughter.” 3. The appellant reserves the right to add, amend or alter grounds of appeal at any time before the appeal is decided. 3. The brief facts of the case are that the appellant is an individual earning income from other sources and agricultural income. The appellant had filed his return of income for A.Y. 2010-11 on 2 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 12.12.2011 declaring total income of Rs. 1,00,000/- on account of rent received from tractor and agricultural income of Rs.75,000/-. The case was selected for scrutiny by issuing notice u/s 143(2) of the Act duly served on 5.9.2012. During assessment proceedings, the Assessing Officer (the A.O.) noticed from the AIR information that the appellant had sold immovable property during the year under consideration but had not offered any income under the head Short/Long Term Capital Gains. When the appellant was asked to furnish details of sale of immovable properties, it was submitted that the appellant had filed a revised return on 07.11.2012 declaring total taxable income of Rs.5,92,030/-. In this return, the appellant disclosed Long Term Capital Gains of Rs.3,85,256/- and income from other sources amounting to Rs.1,06,772/- in addition to income on account of rent received from the tractor of Rs.1,00,000/- offered in the original return. It was claimed that the income under the head ‘Long Term Capital Gains’ was not offered by his previous counsel, under the impression that after claiming deduction u/s 54B of the Act for investment in agricultural land, the appellant was not having any taxable income under the head Capital Gains. The appellant also furnished computation of Long 3 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 Term Capital Gains. It was claimed that the appellant had sold 1.647 hectares of agricultural land vide agreement to sale dated 20.03.2009 and had given possession on 20.03.2010. The appellant had claimed cost of acquisition of the land as on 01.04.1981 as per fair market value on that date at Rs.5,00,000/- per hectare. Thus, the appellant had computed cost of acquisition of 1.647 hectares of land at Rs.8,23,500/- and indexed cost of acquisition at Rs.12,81,901/-. The appellant had shown total sale consideration at Rs. 1,68,90,500/- and accordingly computed Long Term Capital Gains at Rs. 1,56,08,598/-. He had further claimed exemption u/s 54B of the Act amounting to Rs. l,52,23,340/- on account of investment in agricultural land during the financial years 2009-10 and 2010-11 (till the due date of filing of return i.e. 31.07.2010) and had shown Long Term Capital Gains chargeable to tax at Rs.3,85,258/-. The A.O. asked the appellant to furnish copies of sale deeds/agreements in respect of sale and .purchase of property. He was also asked to furnish evidences regarding fair market value of his land as on 01.04.1981 adopted at Rs.5,00,000/- per hectare as claimed by the appellant. The appellant was also asked to substantiate his claim regarding deduction u/s 54B of the Act. The 4 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 appellant submitted copy of agreement dated 20.03.2009 with Shri R.K. Lalwani, K-4/4, Windsor Hills, Chuna Bhatti, Bhopal. It was stated that the appellant had agreed to sell his land admeasuring 1.647 hectares for a total consideration of Rs. 1,68,90,500/- to Shri R.K. Lalwani. It was claimed that the appellant, after receiving the total consideration gave the possession of the land to Shri R.K. Lalwani on 20.3.10. It was, thus, contended before the A.O. that the appellant had transferred the land to Shri R.K. Lalwani for Rs. 1,68,90,500/- and in view of provisions of Section 2(47)(v) of the Act, there was transfer of the land in favour of Shri R.K. Lalwani on 20.03.2010. It was also informed that Shri Lalwani had sold the land into smaller pieces to various persons during the F.Yrs. 2009- 10 & 2010-11 relevant to the A.Yrs. 2010-11 & 2011-12. In the registered sale deeds, the appellant had signed the documents as agreed with Shri R.K. Lalwani. But the Ld. A.O. was of the view that the appellant had in fact sold the land in smaller pieces through registered sale deeds to different persons The appellant had executed the following sale deeds during the period under consideration:- 5 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11
S.No. Name of Purchaser Area of plot Date of registration Market value (Rs.) Sale consideration (in (s1.ft.) Rs.)
1 2 3 4 5 6
1 Shri Mukesh Kumar. LIG-17. Saraswati Nagar, 5000 29.10.2009 20,91,060/- 4,00,000/- Jawahar Chowk, Bhopal
2 Madhulika Jain, D/o Dr. V.K. Jain, Hat Road, 5000 29.10.2009 20,91,060/- 4,00,000/- Guna
3 Anju Singh D/o Shri Vijay Singh, 121 Deepak 5000 29.10.2009 20,91,060/- 4,00,000/- Society, Chunna Bhatti, Kolar Road, Bhopal
4 Shri Nandlal Bhagtani & Smt. Rashi Bhagtani, 50094 (1.15 16.01.2009 1,04,82,500/- 55,00,000/- 117/451, Kakadev Kanpur (UP) acres)
5 Smt. Indra Gogiya W/o Dr. Pitamber Das 5000 16.12.2009 20,91,100/- 7,00,000/- Gogiya, 1/1, Doctor Enclave, Idgah Kothi, Campus, Bhopal
6 Smt. Jaya Gogiya W/o Pankaj Gogiya, 1/1, 5000 16.12.2009 20,91,100/- 7,00,000/- Doctor Enclave, Idgah Kothi, Campus, Bhopal
7 Smt. Anju Sengar W/o Shri V.S. Sengar, A-2 5000 22.01.2010 20,92,100/- 4,00,000/- Vivek Colony, Guna
8 Smt. Surjeet Rani W/o Shri Madan Lal 5000 04/02.2010 20,91,100/- 5,00,000/- Mehdiratta, E-3/68, Arera Colony, Bhopal
9 Shri Naresh Sharma S/o Shri Jaikishan 5000 04/02.2010 20,91,100/- 5,00,000/- Sharma, H.No.15/49, Sector 17-C Gurgaon
10 Shri Vinay Saggi S/o Shri Yashpal Saggi, 11 10000 04.02.2010 41,82,200/- 10,00,000/- Varun Surendra Palace, Hoshangabad Road, Bhopal
11 Sharda Chaturvedi & Smt. Shivangi Chaturvedi, 7000 15.02.2010 29,27,150/- 7,00,000/- G-2/255, Gulmohan Col.ony, Bhopal
12 Smt. Ratna Rai & Shri Arun Kumar Rai, C- 7050 30.03.2010 29,48,420/- 8,81,000/- 5/203 Paras Hermitage, Hoshangabad Road, Bhopal
13 Smt. Sarla Singh & Shri B.R. Singh, E-7/237, 6000 31.03.2010 25,09,290/- 6,00,000/- Arera Colony, Bhopal 4. In view of the above, it was observed that out of total land of 1.647 hectares (4.07 acres), the appellant had sold land admeasuring 1,20,144 sq. ft. (2.758 acres) in smaller pieces to various persons during the period relevant to the A. Y. 20 I 0-11 and the fair market value as determined by the Stamp Valuation 6 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 Authority was Rs.3,97,79,240/-, as against the sale consideration shown in the registered sale deeds at Rs.I,26,81,000/-. The appellant was asked to explain why the transfer of such pieces of land should not be treated as sale by the assessee in view of registered sale deed signed by assessee in favour of these persons and why not the full value of consideration should be adopted in view of Section 50C of the Act as per fair market value determined by the Stamp Valuation Authority. 5. The appellant contended that the land was sold by the ‘agreement of sale’ executed between the appellant and Shri R.K. Lalwani on 20.03.2009 @ Rs. 41,50,000/- per acre for a total consideration of Rs. 1,68,90,500/- and the consideration was received by the appellant in cash/post dated cheques. As per guidelines of the Collector (Zila Panjiyak and Sanyojak), the prevailing rates at that time were Rs. 40,48,582/- per acre. The appellant also furnished a copy of guidelines issued by the Zila Moolyankan Samiti, Bhopal for F.Y. 2009-10. It was, thus, contended that the sale consideration of Rs.l,68,90,500/- shown by the appellant was in excess of the market price assessable as per guidelines of the Collector as on the date of transfer. It was contended by the 7 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 appellant that he had sold the land in acres and not in small pieces. 6. During the course of assessment proceedings, the statement of Shri R.K. Lalwani was also recorded and he stated on oath the facts as stated by the appellant. It was, thus, contended before the A.O. that the value assessable for stamp duty purposes on the date of transfer of agricultural land by appellant to Shri R.K. Lalwani was less than the sale consideration of Rs. 1,68,90,500/- shown by the appellant and, hence, there was no case for adopting the sale consideration at Rs. 3,97,79,240/- as proposed by the A.O. in view of Section 50C of the Act. But the A.O. did not accept the submission of the appellant. The A.O. noticed that ‘agreement to sale’ dated 20.03.2009 entered with Shri R.K. Lalwani was not registered under the Registration Act. In view of Section 17(lA) of the Registration Act. 1908, it is made clear that with effect from 24.09.2001, if an agreement for transfer of an immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purposes of Section 53A of the Transfer of Property Act. Hence, the contention of the appellant regarding transfer of agricultural land to Shri R.K. Lalwani through agreement was not accepted. It was also observed by the A.O. that as per the 8 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 sale deeds, the possession of the pieces of land was handed over by the appellant to various purchasers on the date of registration on sale deeds in their favour. Therefore, the A.O. held that there was no transfer of agricultural land in favour of Shri R.K. Lalwani and the land was in fact transferred in small pieces to various purchasers only on the date of sale deeds registered. Hence, the fair market value as assessed by the Stamp Valuation Authority on the date of transfer was to be adopted as full value of consideration for the sale of pieces of land during the year under consideration at Rs.3,97,79,240/-. 7. As regards cost of acquisition, the A.O. stated that the appellant had claimed fair market value of agricultural Ian d as on 01.04.1981 at Rs.5,00,000/- per hectares. As it was the claim of the appellant, the onus to prove the correctness of such claim was with him only, which Was not discharged by him. The A.O. noticed that there were two registered sale deeds in respect of sale of agricultural land situated in Village Raslakhcdi as under:- (1) Smt. Mewa Bai and Shri Kamta Prasad have sold agricultural land admeasuring 22.86 acres to Shri Babu Lal Agrawal through registered sale deed dated 25.07.1985 for a 9 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 total consideration of Rs. 2,26,9001-. The land has been sold at the rate of less than Rs. 10,000/- per acre. (2) Sh. Aizaz Ahmed and Sh. Ashfaq Ahmed have sold agricultural land admeasuring 3.87 acres to Shri Babu Lal Agrawal through registered sale deed dated 31.07.1985 for a total consideration of Rs. 40,0001-. The land has been sold at the rate of slightly more than Rs. 10,000/- per acre. 8. The A.O stated that sale instances of the land mentioned above were not in respect of the land which was in the same village where the land of the appellant was situated but they show a fair rate of sale of the land in the vicinity of Bhopal city prevailing in the financial year 1985-86. Even if it is accepted that the land sold by the appellant was situated at a place having a higher value, such an increase in rate will have to be adjusted towards lower side in view of the fact that comparative sale instances relate to financial year 1985-86, whereas the fair market value to be estimated was for 01.04.1981. Considering these facts, the A.O. adopted fair market value of agricultural land as on 0l.04.1981 at Rs. 10,000/- per acre. Since the appellant had sold 2.758 acres of land during the relevant period for A. Y. 2010-11, the cost of acquisition of the land was 10 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 worked at Rs. 27,580/-. Since the Stamp Valuation Authority had valued fair market value of pieces of land sold at Rs. 3,97,79,240/-, the A.O. treated the same as deemed full value of sale consideration in accordance with provisions of Section 50C of the LT. Act. Accordingly, the A.O. computed the Long Term Capital Gains as under: _ Sale consideration u/s 50C Rs. 3,97,79,240/- Cost of acquisition Rs. 27,580/- Year of acquisition 1981-82 Year of sale 2009-10 Indexed cost of acquisition Rs.27580X632/100 Rs. 1.74,306/- Long Term Capital Gain Rs. 3,96,04,934/- 9. Thus, the A.O. assessed the Long Term Capital Gains at Rs.3,96,04,934/- in the hands of the appellant for A.Y. 2010-11 and did not entertained the revised return and thus no exemption was allowed u/s 54B of the Act. 10. Subsequently, the assessee filed an appeal before the Ld. CIT(A) and partly succeeded. The findings of Ld.CIT(A) is reproduced below; 11 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 “3.4 I have carefully considered the submission of the appellant and facts of the case. The issue involved is regarding the transfer of capital asset sold by the appellant. As per the appellant, he had transferred the total agricultural land measuring 4.07 acres to Shri R.K. Lalwani, as per agreement to sale dated 20.03.2009 entered, on the date of giving possession to him of the land on 20.03.2010. Whereas as per the A.O, the appellant had transferred the piece of land directly to the various customers by registered sale deeds in their favour and handing over the possession to them on that date only. Therefore, the full value of sale consideration shall be deemed to be the fair market value as assessed by the Stamp Valuation Authority for the purposes of stamp duty on the date of transfer of the land to such purchasers. Thus, the issue involved is whether there was a transfer of the land in favour of Shri R.K. Lalwani in accordance with provisions of Section 2(47)(v) of, the Act on 20.03.2010 or the transfer of land had taken place on the dates of sale deed registered in the name of purchasers. 3.4.1 It would be fruitful to reproduce the provisions of Section 2(47)(v) of the Act, which read as under: – “(47) “transfer”, in relation to a capital asset. includes.- (i)…… (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) : or” From the above provisions, it can be seen that two conditions should be fulfilled to hold that the transfer of the capital asset has taken place i.e.: The following of the possession of immovable property to be taken or retained; In part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 3.4.2 Now, in this case, on verification of the facts, it is noticed that the 12 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 appellant had directly given possession of the pieces of land to the various purchasers on the date of registration of the sale deeds. This fact is clearly mentioned in each sale deed registered. All the sale deeds are identical. It will be relevant to refer the relevant portion of sale deed in favour of Shri Mukesh Kumar for the sale of a piece of land for Rs.4,00,000/- vide sale deed registered on 29.10.2009, which reads as under:- ” नाम व ेता : ी राजाराम पाट दार आ मज ी मदनलाल पाट दार, आयु-वय क, जा त गज ु राती (गैर-आ”दवासी) नवासी %ाम – ‘मसरोद भोपाल, तहसील- हुजरू , िजला- भोपाल, म-य.दे श । नाम ेता : ी मुकेश कुमार आ मज ी महावीर .साद, आयु -45 वष4, नवासी आई.जी-17, सर वती नगर, जवाहर चौक, भोपाल, तहसील- हुजूर, िजला- भोपाल, म-य.दे श । ……………..

………………

उपरो<त व=ण4त व य ?कया जा रहा फाम4 लैAड का कुल CेDफल-5000 वग4फFट अथा4त 464.68 वग4मीटर है उपरो<त व=ण4त ?कया जा रहा अ वक’सत आवासीय फाम4 लैAड भोपाल शहर से दरू होकर मK ु य माग4 से अंदर ि थत है उ<त फाम4 लैAड को इस व य पD के साथ संलNन न<शO मO लाल रं ग के घेरे मO पूण4 ववरण के साथ दशा4या गया है , जो न<शा इस द तावेज का एक मह वपूण4 अंश /भाग रहेगा । यह ?क उ<त व=ण4त फाम4 लैAड को शासन ने अRध%”हत, अRध%हण व अ तशेष घो षत नह ं कF है अथा4त उ<त फाम4 लैAड पूणत 4 ः व ेता के कUजे व दखल मा’लकाना मO चला आ रहा है , िजसे व य करने के व ेता को वैधा नक अRधकार .ाWत है , िजसका भ-ू अRधकार Xण पुि तका मांक -082481 है ।
13
Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 …………………

………………..

4. यह ?क उपरो<त व=ण4त व य ?कया जा रहा फाम4 लेAड पर उपरो<त ेता को कUजा व दखल मा’लकाना दे “दया गया है और आज से उ<त ेता उपरो<त व य ?कया जा रहा फाम4 लैAड के मा’लक व वामी हो चक ु े है और उपरो<त व य ?कया जा रहा फाम4 लैAड पर व ेता व व ेता के उ तराRधकार , भागीदार, “हतधार , वारसान इ या”द का कोई व व, वा’म व, हक, दखल, मा’लकाना एवं अRधकार शेष नह ं रहा है । य”द कोई भी [यि<त, सं था, फम4 उ<त व य ?कया जा रहा फाम4 लैAड के संबंध मO दावा, झगड़ा या अ_य कोई _यायालयीन काय4वाह करता है , तो वे अस य एवं अवैधा नक माना जावे । ”
From the above sale deed registered, it is evidently clear that till the date of sale deed registered on 29. 10.2009, the said piece of land was in possession of the appellant. The possession of this piece of land was handed over to the purchaser, Shri Mukesh Kumar, on 29.10.2009 as mentioned in Para 4 above, wherein it is clearly mentioned that possession of the land was handed over to the purchaser on that date. Similarly, other pieces of land were also handed over to the respective purchasers on the date of respective sale deed registered. It is also pertinent to note that the appellant claimed to have handed over the possession to Shri R.K. Lalwani on 20.03.2010 and furnished in his support a documents titled …………..but on perusal of the sale deed registered, it is. noticed that the appellant had already given possession of these pieces of land to most of the purchasers on the dates of sale deed registered before 20.03.2010, the date of the said document. When the appellant had already handed over the possession to the respective purchaser, it is unconceivable that the 14 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 appellant could again hand over the possession to Shri.R.K. Lalwani on 20.03.2010. Hence, this document furnished by the appellant is not reliable. Further, it is a well known principle that the document duly registered under the Registration Act is a better evidence than an unregistered document. In this case, all the sale deeds registered clearly specify that the appellant had handed over possession directly to the purchaser on the date the respective sale deed was registered. Hence, it is established that the appellant had not handed over the possession of the impugned land to Shri R.K. Lalwani and, hence, there was no transfer of the agricultural land in favour of Shri R.K. Lalwni as per provisions of Section 2(47)(v) of the Act.
3.4.3 The second factor to be noted is that the agreement to sale dated 20.032009 purported to-be entered by the appellant and Shri R.K. Lalwani was not registered under the Registration Act, 1908 Sub section ( 1A) was introduced in section 17 of the Registration Act, 1908, by the Registration &other Related laws (Amendment Act, 2001) w.e.f. 24.01.2001, which reads as under:
“(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, they shall have no effect for the purposes of the said section 53A. ”

Thus, as per the plain and unambiguous provision of Section 17(1A) of the Registration Act, 1908, if after 24.01.2001 an agreement for transfer of immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purpose of Section 53A of the Transfer of Property Act. In the instant case, the agreement to sale dated 20.03.2009 entered with Shri R.K. Lalwani was not registered under the Registration Act, 1908. Hence, in view of Section 17(1A) of the Registration Act, the transaction was not of the nature referred to in Section 53A of the Transfer of Property Act, 1882. Thus, there was no 15 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 transfer of land in favour of Shri R.K. Lalwani as envisaged in Section 2( 47(v) of the Act.
3.4.4 The Hon’ble ITAT, ‘F’ Bench, Mumbai had an occasion to consider the issue regarding “Transfer” as per Section 2(47(v) of the Act in a recent decision in the case of Mr. Fardeen Khan Vs. ACIT, Mumbai in ITA No. 1588/Mum/2013 A.Y. 2008-09 order dated 25.02.2015. The Hon’ble ITAT held that if the agreement to transfer the immovable property is not registered under the Registration Act, such transaction cannot be considered as a Transfer as per Section 2(47(v) / (vi) of the Act. The relevant portion of the decision of the Hon’ble ITAT is reproduced as under:

“18. Now we deal with the contention of A.O. that there was transfer of land within the provisions of section 2(47)(v) and section 2(47)(vi) of the Act. We find that the Assessing Officer had held that land was ‘capital asset’ and therefore, there .is transfer within the meaning of Section 2(47)(v) of the Income-tax Act,1961 (‘Act’) which provides that ‘any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882. The Assessing Officer has mainly relied on the decision of the Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (2003) 260 ITR 491 to support his conclusion. As per our considered view for application of section 2(47)(v) of the Act, it is essential that land should be a ‘capital asset’. However, in the instant case the land no longer remained ‘capital asset’ as the series of activities undertaken by the assessee discussed hereinabove clearly show that the land had been converted into’ stock-in-trade’ in the year 2005 itself and not in the previous year relevant to A. Y.200B-09. Thus the Assessing Officer and the CIT(A) have failed to correctly and truly appreciate the series of activities undertaken by the assessee and wrongly held that the assessee have converted land in the previous year relevant to A. Y.2008-09.

19. We have carefully gone through the clauses of Development Agreement and find that [under Clause 6 dealing with ‘RIGHTS AND OBLIGATIONS OF THE DEVELOPER: it has been specifically provided that the Developer (i.e. GPL) was granted mere ‘licence’ to enter upon the property and that by itself should not be construed as part performance of an agreement under 16 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 Transfer of Property Act, 1882 or u1s 2(47)(v) of Income-tax Act, 1961. The DA also provides under Clause 14 (b) that the Owners (i.e. assessee) shall continue to be in possession of entire property to be developed In this respect, reliance can be placed on the order of the Tribunal, Chennai Bench, in the case of R. Gopinath (HUF) v ACIT 133 TTJ 595. We also find that the A.O. has wrongly invoked provisions of section 2(47))v) of the Act because it deals with contracts of part performance referred to in section 53A of the Transfer of Property Act.
20. Section 53A of the TOPA prescribes following cumulative conditions to be satisfied/or application of doctrine of ‘part performance’:-
a) there should be a written contract for consideration,. the contract should be signed by the transferor;
b) the contract should pertain to transfer of immoveable property;
c) the transferee should have taken possession of the property; d) as per clause no 1 4 (b) possession continued with Appellant
e) the transferee should be ready and willing to perform his part of contract and
f) the contract should be registered as per the provisions of The Registration Act, 1908 (this condition has been introduced with effect from September 2001). This part has been elaborated below. Section 17 (1A) of the Registration Act, provides as under: “The documents containing contracts to transfer for consideration, any immovable property for the purposes of Section 53A of Transfer of Property Act, 1882 (hereinafter referred to as “TOP A”) shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered they shall have no effect for the purposes of said Section 53A.”
21. Amendment made in section 53A in 2001 is also relevant wherein an additional condition for registration of the written agreement was introduced as a result of which if the agreement between transferor and transferee is not registered, the transferor can dispossess the transferee
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ITA No.371/Ind/2015 A.Y. 2010-11 from the property. Simultaneously, a consequential amendment was also been made in The Registration Act, 1908 to provide that unless the documents containing contracts to transfer any immoveable property for the purpose of section 53A of the TOPA is registered, it shall not have effect for the purposes of section 53A of the TOPA. A perusal of the Section reveals that registration of document is a sine qua non for applicability of section 53A of TOPA which entitles the transferee to remain in possession of the property.
In the instant case, Development Agreement was executed on stamp paper of Rs.100/- find the same was not registered, hence, provisions of section 2(47)(v) of the Act are not applicable since the conditions stipulated in section 53A of TOPA are fulfilled.
23. With respect to the decision of the Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia, we found that the said decision is not applicable because the said decision was in the context of transfer of capital asset. Although the said decision was rendered in February 2003 the assessment year under its consideration was A. Y.1996- 97. Further for the purpose of assessment of capital gains in the said case, 01/ the conditions specified in Section 53A of the TOPA were satisfied. Hence, the judgment Was delivered qua the law prevailing in the year of the transaction. Accordingly, the Hon’ble Bombay High Court has discussed al/ the conditions required to be complied under Section 53A of the TOP A, other than the condition of registration, since the law provided only five conditions at the time. Thus the case of Chaturbhuj Dwarkadas Kapadia (supra) is of no help to Revenue to bring the transaction within the purview of section 53A of the Act. As provisions of section 53A was amended in 2001 by which additional condition of registration of the written agreement was introduced and since in the instant case the agreement was not registered, the decision rendered by Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra) with respect to relevant
18 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 provisions of section 53A’ applicable in A. Y. 1996-97 will not he applicable to the facts of instant case. We can therefore safely conclude that the conditions stipulated in section 53A of TOPA are not satisfied the case of assessee as discussed above, there is no transfer as per the provisions of section 2(47) of the Act.”
3.4.5 Therefore, considering the totality of facts and circumstances of the case as well as position of law on the issue, it is held that the appellant had transferred the pieces of land to various Customers on the date of registration of the respective sale deeds as mentioned in the assessment order, as per Section 2(47) of the Act. There was no transfer of the said capital asset by the appellant in favour of Shri R.K. Lalwani as envisaged u/s 2(47)( v) of the Act. Thus, the A.O. was justified in treating the transfer of the respective pieces of land sold by the appellant on the dates of registration of the respective sale deeds in the favour of purchasers. 3.4.6 The next issue is regarding the deemed full value of consideration as per Section 5OC of the Act. It would be fruitful to reproduce Section 5OC of the Act as under:
“Special provision for full value of consideration in certain cases. 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 purchases of section-48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. ”
From the above provisions, it is clear that value assessed by any authority of a State Government for the purpose of payment of stamp duty shall, for the purpose of Section 48, be deemed to be full value of consideration received as a result of such transfer. There is.no dispute on the issue that
19 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 the value of the pieces of land assessed by the Stamp Valuation Authority was Rs.3,97,79,240/- on the transfer of 13 pieces of land during the relevant previous year. Therefore, the contention of the appellant that these pieces of land were assessable at a lower rate as per the guidelines issued cannot be accepted. The A.O. had rightly adopted the full value of consideration at Rs.3,97,79,240/– for the transfer of 13 pieces of land by the appellant during the year under consideration.
3.4.7 As regards cost of acquisition, the appellant had not adduced any evidence in his support to adopt the same as on 01.04.1981 at Rs.5,00,000/- per hectare, whereas the A.O. had based the estimation of fair market value as on 01.04.1981 on the two instances of sale deeds to the nearby villages in F. Y. 1985-86. There, no interference is warranted in the action of the A.O. adopting the fair market value of the land sold by the appellant as or 01.04.1981 at Rs.10,000/- per acre. 3.4.8 However, the alternate submission of the appellant, without prejudice, that the amount retained by Shri R.K. Lalwani was cost incurred by the appellant for transfer of capital assets is reasonable and acceptable. It is an admitted fact that Shri R.K Lalwani had made payment to the appellant. He had found the customers and received the payments from the customers. Therefore, the difference in the sale price given to the appellant by Shri· R.K. Lalwani and the sale consideration received from various customers by Shri R.K. Lalwani was retained by him, which was nothing but service charges for the services rendered by him and is to be considered as cost of transfer. Therefore, the A.O. is directed to allow the cost of transfer of Rs.12,25,9I5/- in A.Y. 20 10-11, the amount paid/retained by Shri R.K. Lalwani in respect of transfer of these 13 pieces of land.
3.4.9 In view of the above, the computation of Long Term Capital Gains would work out as under: –
Sale consideration u/s 50C Rs. 3,97,79,240/- Cost of acquisition Rs. 27,580/-
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ITA No.371/Ind/2015 A.Y. 2010-11 Year of acquisition 1981-82 Year of sale 2009-10 Indexed cost of acquisition Rs. 27580X632/100 Rs. 1,74,306/ Long Term Capital Gain Rs. 3,96,04,934/- as worked out by the A. 0. Less: Cost of transfer paid to/retained by Rs.12,25,915/- Shri R.K. Lalwani Long Term Capital Gain Rs. 3,83,79,019/- Therefore, the AO is directed to compute Long Term Capital Gains on the transfer of these 13 pieces of land for A.Y. 2010-11 at Rs. 3,83,79,019/- 4.4 I have carefully considered the submission of the appellant and facts of the case. The first issue involved in this case is that even if an assessee has not made a claim of deduction before the Assessing Officer by filing a revised return, can he make such claim before the CIT(A) in the appeal filed against the assessment order. Now, in this case, the admitted facts are that the appellant had filed his original return of income for A.Y. 2010- 11 u/s 139(4) of the Act on 12.12.2011 i.c. after a lapse of considerable time from the due date of filing of return as specified u/s 139(1) of the Act. Therefore, the appellant could not have filed legally a revised return. Hence, the revised return filed by the appellant on 07.l1.2012 was not a valid return. Therefore, the A.O., in view of decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 284ITR 323 (SC), was right in holding that such claim of exemption u/s 54B of the Act could not have been made without, filing revised return before the Assessing Officer. However, the fact remains that appellant had furnished all the documents before the Assessing Officer for making claim u/s 54B of the Act. Now, the question involved is whether the appellant’s claim for exempti8on u/s 54B of the Act can be considered at the appellate stage. This issue has been elaborately discussed by Hon’ble High Court of Gujarat in the case of CIT Vs. Mithlesh Impex(2014) 46 Taxmann.com 30
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ITA No.371/Ind/2015 A.Y. 2010-11 (Guj). The relevant portion of the decision of this issue is reproduced as under: _ “30. In what manner and to what extent, a ground, a legal contention or a fresh claim can be made at an appellate stage are vexed questions and have occupied the minds of the Courts in numerous occasions.
31. In the case of Jute Corpn. of India Ltd. v. CIT /1991J 187 ITR 688 the Supreme Court noted with approval observation of the Court in the case of CIT v. Kanpur Coal Syndicate [1964) 53 ITR 225 to the effect that “The Appellate Assistant Commissioner, therefore, has plenary powers in disposing of appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do. It was observed that there was no reason why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. The Act does not place any restriction or limitation on the exercise of appellate power. It was observed that:-
“The above observations are squarely applicable to the interpretation of section 251 (l)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the Income-tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the statutory provisions. In the absence of any statutory provision of the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to
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ITA No.371/Ind/2015 A.Y. 2010-11 justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer.
32. In case of National Thermal Power Co. Ltd. v. CIT [1998J 229 ITR 383 (SC) when the question of law was raised for the first time before the Tribunal though facts were already on record, the Supreme Court observed that there is no reason why the assessee should be prevented from raising such a question before the Tribunal for the first time so long as the relevant facts are on record in respect of the item concerned. There is no reason to restrict the power of the Tribunal in such appeal only to decide the grounds which arise from the order of Commissioner (Appeals). The Tribunal should not be prevented from considering the questions of law arising in assessment proceedings although not raised earlier.
33. In case of Goetze (India) Ltd. (supra) the Supreme Court distinguished the judgment in the case of National Thermal Power Co. Ltd. (supra) on the ground that the same pertained to the power of the Tribunal under section 254 of the Act to entertain a point of law for the first time and commented that such decision does not relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the process the Supreme Court recognized that a new claim could not be entertained by the assessing officer without the assessee revising the return. While doing so it was clarified that:-
“4 … However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961. There shall be no order as to costs”
34. In the case of CIT v. Jai Parabolic Springs Ltd. /2008J 306 ITR 421172 Taxman 258 (Delhi), the Delhi High Court held that there is no prohibition on the powers of the Tribunal to entertain an additional ground which according to the Tribunal arose in the matter and for just decision of the case.
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35. In case of CIT v. Pruthvi Brokers &Shareholders (P.) Ltd. [2012] 349 ITR 336/208 Taxman 498/23 taxmann.com 23 (Bom.) the Bombay High Court considered the issue at considerable length and held that Commissioner (Appeals) as well as the Tribunal have the jurisdiction to consider the additional claim and not merely additional legal submissions. The appellate authorities have discretion to permit such additional claims. Such claims need not be those which became available on account of change of circumstances of law but which were even available when the return was filed.
36. The Delhi High Court once again in recent judgment in the case of CIT v. Sam Global Securities Ltd. [2014J 360 ITR 6821/2013J 38 taxmann.com 129 observed that the Courts have taken a pragmatic view and not a technical one as to what is required to be determined in taxable income. In that sense assessment proceedings are not adversarial in nature. With these observations Court confirmed the view of the Tribunal reversing the decision of the assessing officer rejecting the claim of the assessee on the ground that no revised return was filed.
37. In case of CIT v. Cellulose Products of-India Ltd./1985J ITR 499 (Guj.), Full Bench of this Court held that merely because a ground has not been raised though it could have been raised in support of the relief sought in the appeal, it cannot be said that such ground cannot be raised before the Tribunal. Such ground can be raised provided it falls within the contours of the subject matter of the appeal.
38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze India) Ltd (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. (supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction
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ITA No.371/Ind/2015 A.Y. 2010-11 to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first time though not made before the assessing officer. Income-tax proceedings are not strictly speaking adversarial in nature and the intention of the Revenue would be to tax real income.
39. This is primarily on the premise that if a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the assessing officer.
40. Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what has happened in the present case. The Appellate Commissioner and the Tribunal did not need to nor did they travel beyond the materials already on record, in order to examine the claims of the assessees for deductions under sections 80-IB and 80HHC of the Act.
41. In the decisions that we have noted above, the Courts have considered such questions when a legal contention or a claim was based on material already on record but raised at an appellate stage. On such premise we wholeheartedly agree that the appellate authority and the Tribunal would have the power to entertain any such new ground, legal contention or claim. However, it is only the Bombay High Court in the case of CIT V.
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ITA No.371/Ind/2015 A.Y. 2010-11 Pruthvi Brokers &Shareholders (P.) Ltd (supra), which has travelled a little beyond this preposition and come to the conclusion that even if facts necessary to examine such a claim are not placed before the assessing officer and, therefore, not on record, there would be no impediment in the Commissioner (Appeals) entertaining such a claim. Such an issue does not arise in these appeals. We would, therefore, reserve our opinion on this limited aspect of the matter if and when in future the question presents before us in such form. For the present, we answer Questions (3) and (4) against the Revenue and in favour of the assessees in manner described above. ”
Thus, the Hon ‘ble High Court held that any legal claim raised even for the first time before the Appellate Authority without revising the return before the Assessing Officer has to be considered. Therefore, the issue regarding exemption u/s 54B of the Act claimed by the appellant is considered in the case of the appellant.
4.5 The appellant made claim of exemption uls54B of the Act of Rs.l,56,O1,610/- during appellate proceedings as against the claim of Rs.l,52,23,340/- in the revised return after considering the expenses incurred on stamp value and registration fee paid in respect of some agricultural land. The appellant had made claim in respect of purchase of agricultural land in the name of himself, wife, son and daughter. The details of such claim are as under: –
(a) In the name of the appellant, Shri Raja Ram Patidar S.No. Name of F.Y Date of Area Cost of Stamp Registration Total Purchaser registration Purchase Value Fee (Rs.) Cost Rs.) (Rs.) (Rs.) Shri Raja Ram 2009- 13.01.2012 9.092 1653455 0 0 1653455
Patidar 10 Shri Raja Ram 2011- 03.10.2011 3.927 954000 59625 9810 1023435
Patidar 12 Shri Raja Ram 2011- 10.10.2011 10.25 2490000 155630 22095 2667725
Patidar 12 Shri Raja Ram 2010- 06.08.2010 5.562 1126275 0 0 1126275
Patidar 11 Total 6223730 215255 31905 6470890 26 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 (b) In the name of the appellant’s wife, Smt. Lalitha Patidar S.No. Name of F.Y Date of Area Cost of Stamp Registration Total Purchaser registration Purchase Value Fee (Rs.) Cost Rs.) (Rs.) (Rs.) Smt. 2009- 09.03.2010 8.932 963240 0 0 963240 LalithaPatidar 10 Smt. 2010- 09.08.2010 9.732 1931220 0 0 1931220 LalithaPatidar 11 Total 2894460 0 0 2894460 (c) In the name of the appellant’s son, Shri Umesh Patidar S.No. Name of Purchaser F.Y Date of Area Cost of Stamp Registration Total registration Purchase Value Fee (Rs.) Cost Rs.) (Rs.) (Rs.) ShriUmeshPatidar 2009- 03.12.2010 0.677 125000 11100 1175 137275
10 ShriUmeshPatidar 2009- 06.01.2010 11.74 2133385 0 0 2133385
10 ShriUmeshPatidar 2009- 06.01.2010 3.08 413025 0 0 413025
10 ShriUmeshPatidar 2009- 13.01.2010 2.366 432115 0 0 432115
10 ShriUmeshPatidar 2009- 13.01.2010 1.549 172065 0 0 172065
10 ShriUmeshPatidar 2009- 13.01.2010 2.329 423185 0 0 423185
10 ShriUmeshPatidar 2011- 03.12.2010 1.885 457800 28620 5840 492260
12 ShriUmeshPatidar 2010- 06.08.2010 3.863 782775 0 0 782775
11 Total 4939350 7015 4986085 (d) In the name of appellant’s daughter, Ms. Seema Patidar
S.No. Name of F.Y Date of Area Cost of Stamp Registration Total Purchaser registration Purchase Value Fee (Rs.) Cost Rs.) (Rs.) (Rs.) Ms. 2011- 29.09.2011 4.799 1165800 72870 11505 1250175 SeemaPatidar 12 Total 1165800 72870 11505 1250175 The appellant claimed that the agricultural land purchased by the appellant in the name of his wife, son and daughter were also eligible for exemption u/s 54B of the Act as all these lands were purchased by the appellant from the funds received on sale of agricultural land. He had also relied on the following decisions:-
(i) CIT Vs. Gurnam singh (2008) ITO Taxmann 160 (P&H) 27 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11
(ii) CIT Vs. Kamal Wahal (2013) 30 Taxmann.com 34 (Delhi) It was also pointed out that the agricultural land sold by the appellant was regularly being used for agricultural purposes for number of years by the appellant. He had furnished Form P-II to, evidence that land was used for agricultural purpose. He had also furnished copies of sale deeds for the purchase of new agricultural lands. It was, thus, prayed that the appellant may please be allowed exemption u/s 54B of the Act of Rs.l,56,01,610/- 4.6 I have carefully considered the submission of the appellant and facts of the case. On reading of provisions of Section 54B of the Act, it can be observed that an assessee has to satisfy the following conditions in order to claim the benefit of Section 54B of the Act: –
The capital gain arises on the transfer of a capital asset, being agricultural land, by the assessee;
(b) Such land was being used by the assessee or his parent for agricultural purposes for last two years immediately preceding date of transfer; and
(c) The assessee has within a period of two years after the date of transfer, purchased any other land being used for agricultural purposes. In the instant case, there is no dispute about the fact that the capital gains had arisen on the transfer of agricultural land, which was used by the appellant for agricultural purposes for many years preceding the date of transfer and, thus, conditions (a) &(b) were satisfied. However, the issue involved is regarding condition (c) as to whether the appellant was entitled to claim the benefit of Section 54B of the Act in respect of agricultural land purchased in other names, other than himself. It may be noted that the courts have held that in a case where agricultural land (new asset) is purchased in the name of the wife, the assessee is entitled for deduction uls54 B or u/s54 F of the Act. This issue came up for consideration initially before Hon’ble Madras High Court in the case of CIT Vs. Natarajan (2006) 287ITR 271 (Mad). In this case, the assessee owned a house property at 28 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 Bangalore and he purchased a property at Madras in the name of his wife, ·Smt Meera, out of money obtained by him by sale of the property at Bangalore.
The Hon ‘ble High Court observed that the assessee had purchased a house in the name of his wife. But the same was assessed in the hands of the assessee. Hence, he was entitled to exemption uls 54 of the Act. This view was followed by Hon’ble Delhi High Court in the case of CIT Vs. Kamal Wahal (2013) 30 Taxmann.com 34 (Delhi), the case relied upon by the appellant. Thus, in the case of his wife, since the asset was purchased from the sources of the husband, the income arisen from that asset is liable to be assessed in the hands of the husband. Hence, the courts have allowed benefit uls54, uls54B &uls 54F of the Act if the new asset is purchased in the name of the wife. Therefore, considering the consistent view of the courts, it is held that the appellant is entitled to benefit of Section 54B in respect of agricultural land purchased in the name of his wife also.
4.6.1 However, in respect of agricultural lands purchased in the name of his son, Shri Umesh Patidar and his daughter, Ms. Seema Patidar, it is noticed that Shri Umesh Paditar was aged 22 years at the time of purchase of agricultural land and Ms. Seema Patidar was aged 20 years, as mentioned in the sale deeds registered. Thus, both son and daughter of the appellant were major at the time of the purchase of the properties. It is also found that both of them were independent. Shri Umesh Patidar was assessed to tax having PAN No. BMTPP8298K and he had furnished return of income for A.Y. 2010-11 declaring taxable income of Rs.l,27,000/– and for A.Y. 2011-12 declaring income of Rs.l,50,000/– Similarly, Ms. Seema Patidar is having PAN No. BSMPP2583G. It is important to note that the asset or income from such asset purchased in the name of major son or major daughter is not clubbed in the hands of the assessee for computing his wealth or income. It has been held by various courts that assessee cannot claim benefit of Section 54B or 54 F of the Act
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ITA No.371/Ind/2015 A.Y. 2010-11 if he makes investment in the name of any other person such as his son or grandson, his daughter-in-law or married daughters. Some of the decisions of courts are discussed herein under:
4.6.2 In the case of Prakash v. Income Tax Officer, Ward No. 1(5) [2008} 173 Taxman 311 (Bom), the Hon’ble High Court of Bombay, Nagpur Bench held as under (head notes):
“Section 54F of the Income-tax Act, 1961 – Capital gains – Exemption of, in case of investment in residential house – Assessment year 1983-84 – Whether for qualifying for exemption under section 54F, it is necessary and obligatory to have investment made in residential house in name of assessee only and not in name of any other person – Held, yes – Whether investment of sale proceeds of agricultural land by assessee in purchasing plot and constructing residential house thereon in name of his only adopted son would qualify for exemption under section 54F _ Held, no” 4.6.3 The Hon’ble Punjab and Haryana High Court had an occasion to examine this issue in the case of JAI NARAYAN v. INCOME-TAX OFFICER/2008] 306 ITR 335 (P&H). The High court observed that the following conditions are to be satisfied for an assessee to claim the benefit of section 54B of the Income-tax Act, 1961 : (i) a capital gain arises from the transfer of a capital asset being land by the assessee, (ii) such land was being used by the assessee or a parent of his for
agricultural purposes in the two years immediately preceding the date of the transfer, and the assessee has within a period of two years after the date of transfer, purchased any other land for being used for agricultural purposes.
The word “assessee” occurring in section 54B of the Act must be interpreted in such a manner as to accord with the context and subject of its usage. A reading of section 54B of the Act nowhere suggests that the Legislature intended to advance the benefit of the section to the assessee who purchased the agricultural land even in the name of the third person.
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ITA No.371/Ind/2015 A.Y. 2010-11 The term “assessee” is qualified by the expression “purchased any other land for being used for agricultural purposes “, which necessarily means that the new asset which is purchased has to be in the name of the assessee himself for seeking exemption under section 54B of the Act. In this case, the Assessing Officer while computing the income under the head “Capital gains” for A. Y 1996-97 did not allow the deduction under section 54B of the Act for the purchase of land as it had been purchased by the assessee in the name of his son and grandson. The appeal filed by the assessee was allowed by the Commissioner (Appeals) holding that the assessee was entitled to deduction under section 54B of the Act for the agricultural land purchased by him in the name of his son and grandson and directed the Assessing Officer to recompute the income. On appeal by the Revenue, the Tribunal set aside the order of the Commissioner (Appeals) holding that the assessee on utilising the capital gain arising from the transfer of capital asset being agricultural land in purchasing other land in the name of his son and grandson disentitled himself from deduction under section 54B of the Act. On appeal by the assessee, the High Court held as under:
“Held, dismissing the appeal, that the assessee having purchased agricultural land in the name of his son or grandson could not be held entitled for exemption under section 54B of the Act.” 4.6.4 The Hon’ble Rajasthan High Court in the case of Kalya v. Commissioner of Income-tax [2012] 22 taxmann.com 67(Raj.) also held as under:
“Section54B of the Income-tax Act, 1961 – Capital gains – Transfer of land used for agricultural land – Whether word ‘assessee’ used in Income- tax Act needs to be given a legal interpretation and not a liberal interpretation and, consequently, an assessee would not be entitled to get exemption under section 54B for land purchased by him in name of his son and daughter-in-law – Held, yes [In favour of revenue) ” 4.6.5 In a recent decision, in the case of Ganta Vijaya Lakshmi v. Income-
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ITA No.371/Ind/2015 A.Y. 2010-11 tax Officer, Vijayawada [2015] 54 taxmann.com 301 (A.P.), the Hon’ble High Court of Andhra Pradesh observed that the assessee will not be entitled to capital gains exemption under sections 54B and 54F on properties purchased in name of assessee’s married daughters. It is held in this case as under (head notes):
“Section 54B, read with section 54F of the Income-tax Act, 1961 – Capital gain – Transfer of land used for agricultural purposes not to be charged in certain cases (Assessee, connotation oj) – Assessment year 2008-09 – Whether language of sections 54B and 54F is very clear that it relates to unmarried daughters – Held, yes – Whether where properties were acquired in name of assessee’s married daughters, would not be entitled to capital gains exemptions under sections 54F and 54B – Held, yes [Para 4] [In favour of revenue} ”
4.6.6 The facts in the case of CIT Vs. Gurnam Singh (2008) 170 Taxman 160 (P&H) relied upon by the appellant, were different than the facts involved in the appellant’s case. In this case, the land was purchased by the assessee in the name of his son as co-owner and not independently. Further, there was a peculiar fact that the assessee was an old illiterate person, not having any other source of income. His son was bachelor and was not having any independent source of income. He was dependent upon his father even for livelihood. Whereas in the instant case, the appellant was aged 49 years only at that time and had other sources of income. Similarly, his son was an independent and had filed his own return of income. The agricultural land was also not purchased as co- owner but exclusively in the name of the son and daughter. It may also be not out of place to mention that the earlier decision of the Hon’ble High Court in the case of Jainarayan Vs. ITO (2008) 306 ITR 335 (P&H) was not brought to the notice of the Hon’ble High Court while deciding this case. Therefore, the ratio of the decision in the case of CIT Vs. Gurnam Singh (Supra) is not squarely applicable on the facts of the instant case. 4.6.7 Here it may also be relevant to mention that there was another
32 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 decision of Hon’ble Andhra Pradesh High Court in the case of Late Gulam Ali Khan Vs. CIT (1987) 165 ITR 228 (A.P.) wherein deduction uls54 of the Act was allowed for purchase of residential house in the name of legal heirs. But this decision was given on peculiar facts of the case. In this case” the assessee sold his residence in December, 1975 and immediately thereafter’ he entered into an agreement to purchase another house and paid advance towards the purchase. But he died in April, 1976 after paying the earnest money. The purchase was completed by the representative within one year of the sale of the original receipts, In these facts, it was decided that sale and purchase were two links in the same chain and the legal representative of the assessee was entitled to exemption u/s 54B of the Act Therefore, the ratio of this case also does not apply to the fact of the instant case of the appellant.
4.6.8 From the above, it is evidently clear that the appellant was not entitled to claim benefit of Section 54B of the Act for the purchase of agricultural lands in the names of his son, Shri Umesh Patidar, and his daughter, Ms. Seema Patidar. Therefore, the appellant is not allowed the benefit of deduction u/s 54B of the Act in respect of purchase of agricultural land in the name of his son, Shri Umesh Patidar, and his daughter, Ms. Seema Patidar. Thus, the appellant is allowed benefit of Section 54B in respect of investment made by the appellant in his own name and in his wife’s name for purchase of agricultural land aggregating to Rs.91, 18, 190/- (Rs.62,23,730 + Rs.28,94,460). Hence, the A.O. is directed to allow benefit of Section 54B of the Act to the appellant at Rs.91,18,190/-.
11. Now the assessee is in appeal before the Tribunal raising
following grounds of appeal;
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ITA No.371/Ind/2015 A.Y. 2010-11
1. The Learned C.LT. (Appeal) has erred on fact and in law in confirming the addition of Rs 3,83,79,019/- on account of long term Capital gains.
1.1 The Learned C.LT. (Appeal) has erred in confirming the consideration for sale of land as Rs 3,97,79,240/- to arrive at capital gain of Rs 3,83,79,019/-, ignoring the consideration shown in documents of transfer of land by the assessee dated 20/03/2009, being agreement to sale, under which possession was granted to buyer from time to time.
1.2. The learned A.O. has erred in treating Cost of Acquisition of land to be Rs 27,580/- , for the purpose of computation of long term Capital gains.
1.3. The Learned CIT(A) has erred on facts and in law, in treating appellant as seller of land, ignoring the fact that the appellant sold the land to Shri R.K Lalwani, who has taken the possession of land and thereafter he sold the land to various customers in small pieces. Also ignored the fact that transaction between appellant and Shri R.K. Lalwani was on the stamp value determined by stamp value authority.
2. The learned A.O. has erred in denying the exemption u/s 54B to the appellant for land purchased in name of his dependent son and daughter”.
3. The appellant reserves the right to add, amend or alter grounds of appeal at any time before the appeal is decided 34 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 12. The Ld. Counsel for the assessee submitted referring to the following written submissions;
A.O/CIT(Appeals) has ignored the fact that Capital gain shall attract on the appellant at the stage of possession being granted to Shri R.K. Lalwani under agreement to sale dated 20.03.2009 in terms of se. 2(47)(v).
A.O/CIT(Appeals) has ignored the fact that, the capital gain on a transaction which has resulted into transfer [by way of transfer of possession u/s 2(47)] is attracted only to the sale which appellant made to Shri R.K. Lalwani under an agreement whereby possession was with Shri R.K. Lalwani.
In the given case, there is no non compliance of sec. 50C as at the time of sale of total chunk of agriculture land to Shri R.K. Lalwani, the consideration for such sale was equal to stamp duty value and this fact was brought before A.O. and the schedule of calculation of Stamp Duty value was filed before the A.O., which is also enclosed vide Page No.9 of the Paper Book. The A.O., for the calculation of capital gain, has taken the rates which are applicable for smaller pieces of land, which are the transactions of further sale by Shri R.K. Lalwani. However, so far as sale transaction (though sale deed was not executed) made by appellant with Shri R.K. Lalwani was for 4.07 acres of land and stamp duty value of sale has to be calculated at a price which is applicable to agriculture land on per hectare basis.
The Learned A.O. and CIT (Appeals) erred in merging two transfers (one between the appellant and Shri R.K. Lalwani and the other between Shri R.K. Lalwani and other buyers). Two independent transfers, duly evidenced by documents like sale agreement and confirmed by “personal statement” on oath by the buyer Shri R.K. Lalwani, cannot be merged together for the reason that transfer deed was executed by the appellant 35 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 and not Shri R.K. Lalwani. Even the affidavit given by Shri R.K. Lalwani confirms that he has sold these properties to the ultimate customers (Page No. 21 of Paper Book). Appellant was merely a signatory to the sale deed and this was an arrangement to avoid two transfers for one land and nothing more, therefore, tax has to be assessed in the hands of the person to whom the income accrued. The purpose of the Income Tax Act is to tax real income in the hands of the person who has earned, and the income cannot be taxed simply on the basis of technical reasons, particularly when there are enough evidences that income was not accruing to the appellant and it is also evident that appellant has sold 4.07 acres of land during the relevant year and later on, Shri R.K. Lalwani (the buyer of 4.07 acres of agriculture land) has further sold that land in small pieces. Therefore, two transactions of sale cannot be merged together on technical grounds to tax the appellant. Your kind attention is drawn to the following citations, where the Honourable Supreme Court has held that the real income is to be taxed, not the hypothetical income Godhra Electricity Co.Ltd. v. Commissioner of Income Tax (1997) 091 Taxmann351 (SC) Commissioner of Income Tax v. ShoorjiVallabhdas&Co. (1962) 46 ITR 144 (SC) A.O./CIT(Appeals) has failed to appreciate that the appellant was not in possession of property on the date of registration of portion of properties made with the Registrar and he was also not the beneficial owner of the said property at the time of physical transfer. This fact has been confirmed by Shri R.K. Lalwani in his statement on oath before the A.O. A.O./CIT(Appeals) ignored the fact that the tentative value of 4.07acres of land on the date of agreement and handover of possession was equal to the consideration for sale received by the appellant. Variation taken by the A.O. is on account of value in piecemeal sale of land by the buyer of land (Shri R.K. Lalwani) to his customers.
36
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ITA No.371/Ind/2015 A.Y. 2010-11 A.O. /CIT(Appeals) has ignored the statement of Shri R.K. Lalwani (Buyer of the land), recorded u/s 131 on oath, in which he has confirmed that he has purchased 4.07acres of land from the appellant for a sum of Rs. 1,68,90,500/- . He even confirmed that he has sold the same land in small pieces to various buyers during the relevant ·period. He has further confirmed that, money from such sale was deposited in his (Shri R.K. Lalwani) bank account, which was also verified by the A.O. It is evident from records and accepted by A.O. that proceeds of further sale made by Shri R.K. Lalwani was collected and held by him only and this was not paid to the appellant and it was not payable to appellant, as his contract was completed earlier.
A.O. has not objected / denied the fact that land was possessed by Shri R.K. Lalwani and that the money from further sale of such land by Shri R.K. Lalwani was held by him only. The A.O. has not denied the fact that possession was handed over to Shri R.K. Lalwani and he merely computed the consideration uls50C for small pieces of land sold by Shri R.K. Lalwani.
In terms of sec. 2(47)(v) of the Income Tax Act, 1961, for the purpose of capital gain, transfer takes place at the time when possession of property is handed over to the recipient, therefore for all practical purposes, possession of property was handed over to Shri R.K. Lalwani himself, on the date of agreement, which is clearly perceived from the agreement and subsequently issued possession letter cum receipt from Shri R.K. Lalwani. Even Shri R.K. Lalwani issued Affidavit to confirm the facts, which is enclosed herewith.
10) The appellant, while entering into agreement, has clearly stated that, registration of property should be done in acres only (not in sq .ft.) and if the buyer of the property Shri R.K. Lalwani sells such land in small pieces, then the responsibility of any difference in value shall be that of Shri R.K. Lalwani, for the purposes of taxes including Income Tax.
11) Therefore, in a nutshell, it is a case where the real owner of the land
37 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 having possession of property after the sale of such land by the appellant, was not taxed and till the conclusion of assessment proceedings or proceedings before CIT (Appeals), no effort was made by the Department to tax the income in the hands of Shri R.K. Lalwani, which was earned by him. On the contrary, Department has literally invoked sec. 50C, ignoring the substance and ignoring the fact, that it involved two transactions, but Department tried to ignore the intervening transaction, evidences on record and statement of Shri R.K. Lalwani, in which he has confirmed the ownership, possession and sale of the property.
12) It is a settled position of law that, real income is to be taxed in the hands of real earner of the income. The income earned by one person cannot be taxed in the hands of other person, when the facts have not been denied by A.O./CIT(AppeaIs), and there are clear evidences to show that the income Which is being taxed, was earned by some other person.
13) In case of Chaturbhuj Dwarkadas Kapadia v. CIT (2003) 260 ITR 491 (Bombay) – High Court has held that ” if the contract, read as a whole indicates passing of, or transferring of complete control Over property in favour of the developer, then the date of contract would be relevant to decide the chargeability”, as a result of which High Court has held that, if the agreement/contract indicates that complete control of property has been transferred, then the capital gain shall be charged at that point – in the given case, the whole reading of contract clearly indicates that the property was sold on the date of agreement itself and cheques were issued to the appellant, and there is a specific mention in the agreement that registration may be done in favour of the buyer (ShriR.K. Lalwani) or any other person. A similar view was taken by Honourable Tribunal in case of Mrs. DurdanaKhatoon v. ACIT (2013) 58 SOT ( ITAT, Hyderabad).
14) It is further submitted that, section 5OC was invoked without referring it to DVO and ignoring the fact that “guideline rate” of the property for complete 4.07acres was almost equal to the actual
38 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 consideration received by the appellant. The A.O. has adopted the “guideline rate” which is applicable for “small pieces” (plots) of land (which is different from the guideline rate for total one piece of land), although appellant has sold the land in one piece. The invocation of section 5OC cannot be made without referring the matter to DVO, particularly so, when the assesee has objected to that, which is evident from the appellant’s reply before the A.O. on 18/03/2013. It is important to note that the A.O. has passed the order on 25/03/2013.
15) During the assessment for A.Y. 2010-11, the same land was referred to DVO to assess the fair market value and DVO has valued this land at an approximate rate of Rs. 89,27,807/- per acre (this valuation is based when “piecemeal sale of land” (plots) are considered). However, the consideration u/s 50C was taken by the A.O. at the rate of Rs. 1,44,23,000/- per acre. The value, even if adopted for A.Y. 2010-11, shall be much less than this valuation.
16)The sole reason for which CIT (Appeals) has not accepted the “Sale Agreement” as a document of transfer is that, the agreement was not a Registered Agreement. He has referred to sec. 17(1A) of the Registration Act, 1908, which says that, “if agreement for transfer of immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purposes of sec. 53A of the Transfer of Property Act, 1882”. CIT (Appeals) has erred in law in assuming that, the transfers which are referred to in sec. 2( 47)( v) are the transfers to which sec. 53A applies. However, the Income Tax Act being a separate independent act, only refers to “part performance of contracts of the nature referred to in sec. 53A of the Transfer of Property Act”, it does not specify the contracts to which sec. 53A “applies”. There is a difference between application of sec. 53A to the contract and contracts of the nature referred to in sec. 53A, both the phrases have different meanings. Sec. 17(1A) of the Registration Act, 1908 shall apply to the contracts to 39 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 which disputes are arisen u/s 53A of the Transfer of Property Act and to which sec. 53A is legally applicable. However, sec. 2( 47)(v) only borrows” nature of contracts” referred to in sec. 53A. It does not in any manner says that it will be invoked to the contracts to which sec. 53A legally applies. Since sec. 17(1A) of the Registration Act, 1908 is purely connected/related with the registration proceedings and it bars the application of sec. 53A for that limited purpose, it shall not apply to sec. 2(47)(v), as sec. 2(47)(v) only refers to the “nature of contracts” and does not refer to the contract to which sec. 53A is legally applicable. The limited purpose of sec. 2(47)( v) is, to identify a particular type of agreement and contract, it does not intend to make sec. 53A legally applicable or invocable u/s 2(47)(v). Therefore, the sole reason of the finding given by the CIT(Appeals) is unsustainable and such interpretation is primarily defeating the objects of sec. 2(47)(v). The A.O. has denied deduction u/s 54B for the sole reason that deduction Was not claimed in the original return and Was claimed in the revised return. However, CIT(Appeals) while Considering facts and evidences, has Partially allowed the deduction u/s 54B, in respect to properties which Were purchased in the name of his son and unmarried daughter. It is submitted that the basic objective of the section is to grant benefit on investment. When there is an investment out of sale proceeds of earlier land and investment was made in the name of son daughter (unmarried), and when all the family members have common and only source of living, substantive benefit should not be denied. Your kind attention is drawn to the following citations:
a) CIT vs. Gurnam Singh (2008) 170 Taxmann 160 (p &H)
b) Jagpal Singh v. ITO( Ward-2), Hisar (2010) 186 Taxmann 26 (ITAT,Delhi)
c) CIT vs. Kamal Wahal (2013) 30 faxmann.com 34 (Delhi)
d) Bant Singh v. ITO (2014) 52 taxmann.com 364 (ITAT, Chandigarh) 40 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11
e) K.S Jain &Sons (HUF) v. ITO (2008) 173 Taxmann114 (ITAT, Delhi) 13. On the other hand the Ld. Departmental Representative vehemently argued and supporting the orders of lower authorities and also place on record the copy of assessment order dated 30.03.2015 framed in the case of Shri R.K. Lalwali (the alleged purchaser of agriculture land from the assessee) framed u/s 144/147 r.w.s. 143(3) of the Act wherein undisclosed income of Rs.6,46,82,000/- has been assessed in the hands of Shri R.K.

Lalwani.
14. We have heard rival contentions, perused the records placed before us and carefully gone through the judgments referred and relied by Ld. Counsel for the assessee as well as those mentioned by both the lower authorities.

15. In the instant appeal the issue is raised on account on the following facts;

(1) The assessed owned 4.07 acres of agriculture land (2) On 20.03.2009 assessee entered into an agreement with Shri R.K. Lalwani for sale of agriculture land @ Rs.41,50,000 per 41 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 acre for total consideration of Rs.1,68,90,500/-

(3) On the date of agreement the prevailing rate as per the guidelines of Collector (Zila Panjiyak and Sanyojak) was Rs.40,48,552/-

(4) The assessee received aggrieved consideration from Shri R.K.

Lalwani through account payee cheques except a cash of Rs.

5,40,500/-.

(5) During the financial year 2009-10 Shri R.K. Lalwani got the agriculture land converted into the residential purposes, divided into plots and sold 13 plots during the financial year.
(6) As per the condition of “agreement to sale” assessee facilitated Shri R.K. Lalwani in transferring the plot of lands through registered sale deeds to various plot buyers.

(7) After receiving total agreed consideration, on 20.3.2010 the possession of unsold area was handed over to Shri R.K.

Lalwani (8) During the course of assessment proceedings, assessee filed revised return claiming exemption u/s 54B of the Act for investment in agriculture land at Rs.1,52,23,340/- in the 42 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 name of self, wife, son and daughter.

(9) Ld.A.O did not entertained the revised return, however Ld.CIT(A) gave the benefit of exemption u/s 54B of the Act for the investment in agriculture land in the name of the assessee and his wife.

(10) Shri R.K. Lalwani stated on oath before the Ld.A.O that he has purchased the agriculture land from the assessee and made payments through account payee cheques/cash and the alleged transactions was undertaken as per the agreement entered into by him i.e. Shri R.K. Lalwani and all the sale considerations from plot owners received by him and the assessee merely signed the sale deeds as agreed in the agreement of sale.

(11) Shri R.K. Lalwani has also been assessed to tax and the alleged receipts from sale of plots on lands was part of the total addition of undisclosed income of Rs.64,68,32,000/-

made by the Ld. ITO Ward-1(3), order dated 30.3.2015.

16. Now we find that the Ld. Assessing Officer made the addition towards Long Term Capital and denied the benefit of Section 54B of the Act by making following observations which are also mentioned 43 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 in seriatim;

1. Agreement for sale dated 20.03.2009 was not given any effect and not accepted to be valid agreement as it was not registered.

2. For the sale of 13 plots by Shri R.K. Lalwani during the period from 1.4.2009 to 31.3.2010, Ld. Assessing Officer computed Long Term Capital Gain after invoking the provision of Section 50C of the Act thereby adopting the sale consideration at Rs.3,97,79,240/- as against Rs.1,26,81,000/- shown in the registered sale deed.
3. No benefit was given u/s 54B of the Act as it was not claimed in the original return and revised return filed by the assessee during the assessment proceedings was not accepted by the Ld.A.O 4. Minor additions were also made on account of cost of acquisition of land.

17. Now coming the findings of Ld.CIT(A) can be bifurcated into following points;
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ITA No.371/Ind/2015 A.Y. 2010-11 1. Ld. CIT(A) confirmed the action of the Ld.A.O to the extent of computing the Long Term Capital Gain on sale of plots of lands made before the date of handing over the possession by the assessee to Shri R.K. Lalwani on 20.03.2010, as a result directions were given to calculate Long Term Capital Gain in relation to 11 plots of lands for which registered sale deeds were executed up to 15.2.2010.

2. Ld.CIT(A) allowed the benefit of section 54B of the Act after accepting the revised return filed by the assessee and gave benefit of investment in agriculture land in the name of assessee and his wife.

3. He also deleted the addition for unexplained cash credit u/s 68 of the Act at Rs.55,00,000/-.

18. From going through the above series of facts and findings of Ld.A.O, Ld.CIT(A) and as accepted by both the parties that the revenue is not in appeal before the Tribunal against the relief given by Ld.CIT(A), we find that following issues needs to be adjudicated.

(i) Whether the agreement for sale entered by the assessee and Shri R.K.Lalwani dated 20.03.2009 can be held as invalid only for the reason that it is not registered.

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ITA No.371/Ind/2015 A.Y. 2010-11 (ii) Whether the lower authorities have rightly calculated the Long Term Capital Gain by invoking the provisions u/s 50C of the Act for the alleged sale of 11 plots of lands.

(iii) Whether the Ld.CIT(A) is justified in denying the benefit of exemption u/s 54B of the Act for investment in agriculture land in the name of son and daughter of the assessee.

(iv) Whether both the lower authorities were justified in limiting the claim of cost of acquisition to Rs. 27,580/-

19. As regards (i) and (ii) issue mentioned above, we find that the assessee entered into an agreement with Shri R.K. Lalwani for sale of agriculture land vide agreement for sale dated 20.03.2009.

Thereafter during the year under appeal the assessee received the consideration from Shri R.K. Lalwani from time to time which are mostly through account payee cheque. During the year assessee acted on the basis of the “agreement to sale” and signed the documents for sale deeds registered in the name of plot owners which were sold by Shri R.K. Lalwani and the consideration for which was also received by Shri R.K. Lalwani. Letter of hading over the possession was given on 20.03.2010 by the assessee to Shri R.K. Lalwani and the agreed sale consideration was received 46 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 towards the agreement of sale of agriculture land. It is a fact that some part of the impugned agriculture land which was converted for use for residential purposes by Shri R.K. Lalwani was sold by Shri R.K. Lalwani to various buyers up to 20.03.2010 was handed over to Shri R.K. Lalwani by the assessee. The transfer of plot of lands through registered sale deed were effected with the signature of the assessee on the basis of terms and conditions mentioned in the “agreement to sale” dated 20.03.2009.
20. The validity of the agreement to sale dated 20.3.2009 has not been accepted by the revenue authorities only for the reason that it was not registered and the Ld.A.O observed that in view of Section 17(1A) of Registration Act, 1908 as the agreement was not registered therefore no benefit for the purpose of section 53A of the transfer of property Act can be given and therefore it cannot be constituted that the transfer took place under the provisions of Section 2(47)(v) of the Act.
21. We find that very same issue about accepting the validity of transaction entered into between two persons through “agreement 47 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 of sale” which was not registered under the Registration Act and whether the same can be accepted to be a genuine document because as per the contract Act both the parties have signed the document and in case any one of the two parties do not comply to the conditions mentioned in the contract Act, the other party is at liberty to sue him in the court of law, came up before Co-ordinate Bench of Ahmedabad in the case of Smt. Sapnaben Dipakbhai Patel V ITO, Ahmedabad in I.T.A No. 2414/Ahd/2013 order dated 13.1.2016 which was co-authored by the author of the instant appeal and while dealing with this issue of the requirement of registration of “agreement to sale” following finding was given;
“23. The first reason assigned by the ld.First Appellate Authority for ignoring the agreement dated 4.4.2008 and 2.3.2009 for holding them invalid and non-genuine is that for harbouring any “transfer” within the meaning of clause (v) of section 2(47), there must be a transaction under which the possession of immovable property is allowed to be taken or allowed to be retained. There is no dispute with regard to the above finding of the ld.CIT(A). We also concur with regard to the observation of the ld.First Appellate Authority that Section 53A of the Transfer of Property Act (TPA), 1982 is not source by which the title to the immovable property can be acquired, but it only served as a shield to defend one’s lawful possession obtained in pursuance to a contract. According to the ld.First Appellate Authority, sections 17 and 49 of the Indian Registration Act have been amended by Act No.2001 whereby it has been laid down that the 48 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 registration of sale agreement/contract for the purpose of section 53A is mandatory. The ld.DR while putting reliance upon the order of the ld.CIT(A) also brought to our notice copy of the Govt. of Gujarat Extraordinary Gazette Notification published on Saturday, February, 2002 whereby amendment of the Indian Registration Act in section 17 of the Registration Act has been published. The ld.CIT(A), while construing the impact of sections 17 and 49 of Indian Registration Act along with section 53A of TPA within the meaning of ITA No.2414/Ahd/2013 section 2(47) of the Income Tax Act has concluded that the “transfer” within the section 2(47) of the Income Tax Act can only be completed, if in part performance of the contract, possession has been handed over as per section 53A of the TPA. Once the agreement was not registered then it will lose its evidentiary value within the meaning of Section 53A of the TPA. In other words, the rights flowing from an agreement can only be recognized if it was duly registered. If the agreement was not registered, then the rights would not accrue to the parties to the agreement. If no rights would accrue, then it will be construed that the possession was not delivered by the assessee vide agreement dated 4.4.2008 and 2.3.2009, meaning thereby, no transfer has taken place. The ld.First Appellate Authority further put reliance upon the judgment of the Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana, 14 taxmann.com
103. 24. On due consideration of the above reasoning, we are of the view that as far as the judgment of the Hon’ble Supreme Court in the case of Suraj Lamp & Industries (supra) is concerned, it is altogether in different context.
There is no dispute with regard to the proposition that transfer of an immovable property having value of more than Rs.100/- can only be completed by way of registered sale deed, as contemplated in section 17 of the Registration Act. This judgment deals with the concept of power of attorney, lease, licence etc. Definition of expression “transfer” provided 49 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 in section 2(47) is more wider than in the general law. As observed earlier, while dealing with the issue no.(ii), the expression “transfer” employed in section 2(47) includes (a) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the TPA, and (b) any transaction entered into in any manner which has the effect of transferring, or enabling the enjoyment of, any immovable property. In these two eventualities, profits on account of capital gains would be taxable in the year ITA No.2414/Ahd/2013 in which such transactions are entered into, even if a transfer of immovable property is not effective or completed under the general law. In the present case, there is a fine distinction which remained un-noticed at the end of the ld. CIT(A). According to the assessee, the rights which have been alienated by her by virtue of agreement dated 4.4.2008 are the rights of capital nature. These rights have been alienated in favour of SDS. The ld.CIT(A) has referred to sections 17 and 49 of the Indian Registration Act, but, failed to notice the proviso appended to section 49 which has been incorporated by way of amendment subsequently. Thus, it is pertinent to take note of section 49 along with proviso which reads as under:

“49. Effect of non-registration of documents required to be registered.–No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall–
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered : Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877), or as evidence of part performance of a contract for the purposes of section 50 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 53A of the Transfer of Property Act, 1882 (4 of 1882) or as evidence of any collateral transaction not required to be effected by registered instrument.”

25. Section 53A of the T.P. Act provide a shield to defend the possession taken by virtue of the agreement. The vendee can claim protection of the possession even against the owner i.e. vendor, during the period sale deed was not registered. The person who has acquired the possession on execution of agreement as referred to in section 53A may not be able to protect his possession on account of non-registration of the agreement, but for all other ITA No.2414/Ahd/2013 collateral purposes, i.e. for tendering the agreement into evidence for suit for specific performance, etc. it is to be treated as valid agreement. A controversy in this aspect had arisen whether such non-registered agreement can be entertained in evidence or not in a suit for specific performance. A reference was made before the Division Bench of Punjab & Haryana High Court in regular Second appeal No.4946 of 2011 in the case of Ram Kishan Vs. Bijeder Mann. The Hon’ble High Court has resolved the controversy and held that such unregistered agreement can be produced as evidence in suit for specific performance. It can be made basis of suit for specific performance. The finding recorded by the Hon’ble Punjab & Haryana High Court in this case reported in (2013) 1 PLR 195 as under:

“11. A conjoint appraisal of sections 53A of the Transfer of Property Act, 1882, sections 17(1A) and 49 of the Indian Registration Act, 1908, particularly the proviso to section 49 of the Indian Registration Act, in our considered opinion, leaves no ambiguity that, though, a contract accompanied by delivery of possession or executed in favour of a per- son in possession, is compulsorily registrable under section 17(1A) of the Registration Act, 1908, but the failure to register such a contract would only deprive the person in possession of any benefit conferred by section 53A of the 1882 Act. The proviso to section 49 of the Indian Registration 51 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 Act clearly postulates that non-registration of such a contract would not prohibit the filing of a suit for specific performance based upon such an agreement or the leading of such an unregistered agreement into evidence.
12. A suit for specific performance based upon an unregistered agreement to sell accompanied by delivery of possession or executed in favour of a person who is already in possession, cannot, therefore, be said to be barred by section 17(1A) of the Registration Act, 1908.
13. Section 17(1A) merely declares that such an unregistered contract shall not be pressed into service for the purpose of section 53A of the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the ITA No.2414/Ahd/2013 proviso to section 49 of the Indian Registration Act, 1908, put paid to any argument to the contrary.
14. We, therefore, hold that :
(a) a suit for specific performance, based upon an unregistered contract/agreement to sell that contains a clause recording part per- formance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/agreement;
(b) the proviso to section 49 of the Registration Act, legitimises such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract.”

26. Thus, if the assessee refused to honour her agreement dated 4.4.2008, SDS has a right to get this agreement enforced by way of suit for specific performance and the assessee could be persuaded to execute the sale deed in favour of SDS by virtue of this agreement. The validity of this 52 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 agreement under general law viz. Specific Relief Act as well as Indian Registration Act has not been effected. This aspect has not been appreciated by the ld.CIT(A) while holding that since the agreements are unregistered, therefore, they are non-genuine.

27. Let us examine the issue with different angles. For example, the assessee refuses to honour her agreement dated 4.4.2008 and SDS/Capital Consultancy files a suit for specific performance. A decree for performance of the contract is being granted in favour of the SDS. In that situation, the assessee has to register sale deed in favour of SDS. On such registration she would get the amounts only agreed upon by way of agreement dated 4.4.2008. She could be charged for capital gain on this amount only. Even for argument’s sake, the reasons of the Revenue authorities are being accepted that the agreements dated 4.4.2008 and 2.3.2009 are unregistered, therefore, ITA No.2414/Ahd/2013 they shall not goad the adjudicator to construe part performance of the contract u/s.53A of T.P. Act and no transfer of the land could be construed within the meaning of section2(47)(v) of the Act. In that situation, only the year of taxability could be shifted i.e. effective date for transfer of capital asset could be taken to 27.1.2010. How the AO can bring the amount for taxation in the hands of the assessee ? Under issue No.(i), we have discussed the nature of right acquired by SDS by virtue of agreement dated 4.4.2008. Suppose the agreement was not honored and suit for specific performance was filed by the assessee for persuading the SDS to purchase the land in dispute. During the pendency of the Civil Suit SDS assigned his right to a third party and ultimately that third party agreed for purchase of suit land. A settlement is arrived. The assessee would get only a consideration agreed upon by virtue of agreement dated 4.4.2008, and other consideration will go to SDS for assigning his right accrued under this agreement. The right to obtain registration of sale deed acquired by him by virtue of agreement dated 4.4.2008, is a capital right, therefore, 53 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 the transfer would result capital gain. It will be taxed in the hands of SDS. This aspect has been dealt with in a large number judgment discussed by us in issue no.(i). Thus, the ld. Revenue Authorities have failed to notice distinction between a valid and genuine contract under the general law vis-à-vis a contract having effected for the purpose of section 53A of TP Act.

28. Next reason assigned by the ld.First Appellate Authority in the impugned order is section 63 of Gujarat/Bombay Tenancy and Agriculture Land Act, 1948 which prohibits non-agriculturists to purchase the agriculture land. As per ld. CIT(A), since SDS was not proved to be an agriculturist, therefore, he was not competent to purchase the agriculture land. Once he was prohibited by the provisions of Tenancy Act, then he cannot purchase agriculture land, meaning thereby, he will be disqualified even to enter into an ITA No.2414/Ahd/2013 agreement for purchase of the land. On consideration of all these reasons, we are of the view that the assessee and the SDS are duly eligible to enter into any contract as per the Indian Contract Act. The effect of the contract may not be given by virtue of Gujarat/Bombay Tenancy and Agriculture Land Act, as per clause (c) of Section 63 referred by the ld.CIT(A). But the ld.CIT(A) failed to note proviso appended to his section. The proviso authorizes the Controling Officer to grant permission for such sales. The sale could be executed after the agreement and after getting approval. As far as this section is concerned, it does not create any disqualification for entering into contract
– it creates disqualification for enforcing that contract. The contractee can enforce contract in favour of a person who is an agriculturist. It is important to note that the land transacted by the parties was within the vicinity of Ahmedabad City. It was going to be converted into urban land under the Town Planning scheme and ultimately before the agreement dated 2.3.2009, the status of the land was changed from agriculture land. When SDS has assigned his right under the agreement dated 2.3.2009, the land was already converted into a non-agriculture land. Thus, this 54 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 section has no bearing as a corroborative piece of evidence to goad any authority to conclude that agreements were not genuine.

29. Next reasoning given by the ld.First Appellate Authority is that there is a huge change in the price of land between a short span of time. When the assessee acquired the land, she incurred a cost of Rs.67,96,432/-. She had acquired the land in between 18.12.2007 utpo 4.3.2008. She had agreed to sell this land on 4.4.2008 to SDS for consideration of Rs.76,75,413/-. The rate of land upto this stage was Rs.62.03 per sq.meters, whereas, when the agreement dated 2.9.2009 was executed, it was at the rate of Rs.860/- per sq.meter. According to the ld.CIT(A) appreciation in the price of real estate does take place over a period of time. However, it is also a fact that such ITA No.2414/Ahd/2013 appreciation also happens in slow process, and in any case, it does not happen in such a manner. The ld.CIT(A) further observed that nothing has prevented the assessee from retracting the contract entered into with SDS so as to earn this gain by herself.

30. We have duly considered this reasoning of the ld.First Appellate authority, but, we find that as per the agreement dated 2.3.2009, the vendor, i.e. SDS has to obtain permission which are necessary under the existing law at his cost for converting the land into non-agriculture land. The land was converted into non-agriculture land authorizing the owners to construct dwelling units on the land. This permission was granted by the District Panchyat and District Development Officer, Ahmedabad by its order no.Masal/Bakhap/SR-131/Vashi-1526 to 1552 dated 12.9.2008. This was a significant change in the character of the land. The moment, it was converted into non-agriculture land, its value increase many folds. It is also pertinent to note that as per section 40jj(i) of the Gujarat Town and Country Planning Act, 1976, the land falling within the scheme of development, would vests upto 40% in the development authorities for 55 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 utilisation of roads, park, schools, drainage etc. Thus, once the land is being converted into non-agriculture land, the whole nature of the land would change. As far as observation of the ld.CIT(A) is concerned, that nothing prevented the assessee to retract from the agreement is concerned, we fail to understand the basis of making such observation. She entered into a lawful contract, which is of binding nature, and how can she retract ? The moment she retracts, then other party can file suit for specific performance. Even if the court does not grant specific performance of the contract, then, would compensate the contractee for damage ? The damages again would be quantified considering the market value of the land. It is also pertinent to note that the assessee has purchased the land from 18.12.2007 to 4.3.2008. She had purchased the agriculture land ITA No.2414/Ahd/2013 from non-associate vendors. The purchase cost shown by the assessee was at Rs.67,96,432/-. No circumstances have changed, and therefore, she has sold the land on 4.4.2008 at a price of Rs.76,75,413/-. There is no substantial change or appreciation of the value of the land in just short span. The ld.Revenue authorities have failed to compare this figure while evaluating the evidence. The change in the value taken place only at the moment, when, the land was converted into a non-agriculture land. From analysis of the orders, it revealed that approach of the Revenue authorities for appreciating the genuineness and veracity of the agreement is guided by the tax liability. According to the Revenue authorities, since tax liability has been avoided by the parties, therefore, their agreements are not genuine. In our opinion, genuineness of any agreement is not depended upon the actual payment of tax resulted on account of execution of these agreements. It is other way round. First genuineness of the agreements has to be ascertained, and then, in consequence of these agreements, if any tax liability has arisen, it is to be fastened upon the right persons. According to the AO, SDS has shown Rs.9,87,33,247/- on account of profit on sale of land, and against this, he claimed loss of Rs.9,17,78,957/- from his business of trading of shares
56 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 and securities. These losses have been allowed to SDS in a scrutiny assessment order passed in his case u/s.143(3) of the I.T.Act. The department did not raise any objection in his assessment proceedings and did not doubt the transactions. Now, the stand of the Revenue is, since if it is taxable in the hands of the SDS, then no taxes would be collected on these transactions, because gain would be set off against brought forward loss. Even if transaction is shifted to the assessment year, in which sale deed registered, in that case, SDS will bring his losses of earlier year to A.Y.2010-11. Therefore, the agreement ought to be suspected and ought to be ignored, only then taxes could be fasted upon the assessee. With this angle, when the AO has started ITA No.2414/Ahd/2013 inquiry, obviously he would reach on the conclusion that the agreement are non-genuine.

31. At this stage, for fortifying ourself on our finding, we would like to note the observations of the Hon’ble Supreme Court judgment in the case of Union of India Vs. Azadi Bachao Andola, (2003) 132 taxmann 373 (SC). The Hon’ble Supreme Court while referring to the decision of the Hon’ble Gujarat High Court in the case of Banyan & Berry Vs. CIT, 222 ITR 831 made the following observations.

“134. We may also refer to the judgment of Gujarat High Court in Banyan and Berry v. Commissioner of Income-Tax where referring to McDowell, the Court observed:
“…..The court nowhere said that every action or inaction on the part of the taxpayer which results in reduction of tax liability to which he may be subjected in future, is to be viewed with suspicion and be treated as a device for avoidance of tax irrespective of legitimacy or genuineness of the act; an inference which unfortunately, in our opinion, the Tribunal apparently appears to have drawn from the enunciation made in McDowell case (1985) 154 ITR 148 (SC). The ratio of any decision has to be understood in the context it has been made. The facts and circumstances 57 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 which lead to McDowell’s decision leave us in no doubt that the principle enunciated in the above case has not affected the freedom of the citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the framework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity.”
This accords with our own view of the matter.
In CWT v. Arvind Narottam , a case under theWealth Tax Act, three trust deeds for the benefit of the assessee, his wife and children in identical terms were prepared under section 21(2) of ITA No.2414/Ahd/2013 the Wealth Tax Act. Revenue placed reliance on McDowell . Both the learned Judges of the Bench of this Court gave separate opinions.
Chief Justice Pathak, in his opinion said (at p.486): “Reliance was also placed by learned counsel for the Revenue on McDowell and Company Ltd. v. CTO (1985) 154 ITR 148(SC). That decision cannot advance the case of the Revenue because the language of the deeds of settlement is plain and admits of no ambiguity.”

Justice S. Mukherjee said, after noticing McDowell’s case, (at page 487):

“Where the true effect on the construction of the deeds is clear, as in this case, the appeal to discourage tax avoidance is not a relevant consideration. But since it was made, it has to be noted and rejected.”

In Mathuram Agrawal v. State of Madhya Pradesh another Constitution Bench had occasion to consider the issue. The Bench observed:

“The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or 58 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature.”

The Constitution Bench reiterated the observations in Bank of Chettinad Ltd. v. CIT , quoting with approval the observations of Lord Russell of Killowen in IRC v. Duke of Westminster and the observations of Lord Simonds in Russell v. Scott It thus appears to us that not only is the principle in Duke of Westminster alive and kicking in England, but it also seems to have acquired judicial benediction of the Constitutional ITA No.2414/Ahd/2013 Bench in India, notwithstanding the temporary turbulence created in the wake of McDowell .

144. If the Court finds that notwithstanding a series of legal steps taken by an assessee, the intended legal result has not been achieved, the Court might be justified in overlooking the intermediate steps, but it would not be permissible for the Court to treat the intervening legal steps as non-est based upon some hypothetical assessment of the ‘real motive’ of the assessee. In our view, the court must deal with what is tangible in an objective manner and cannot afford to chase a will-o’- the-wisp.”

32. Next reasoning assigned by the AO is that funds have been provided by Ganesh plantation to SDS. Husband and father-in-law of the assessee were holding voting power of more than 20% in the Ganesh Plantation Ltd. Therefore, the transactions are arranged in the family itself. The assessee has pointed out that Capital Consultancy is a proprietary concern of SDS. This concern has taken unsecured loan from the company in F.Y.2006-07 relevant to the Asstt.Year 2007-08. In F.Y.2006-07, the interest of
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ITA No.371/Ind/2015 A.Y. 2010-11 Rs.1,77,534/- was charged from SDS by Ganesh Plantation. In F.Y.2007-08 an interest of Rs.61,74,961/- was charged. Thus, according to the assessee, the funds were provided on interest in the ordinary course of business. Similarly, the AO has raised a point that the funds to the assessee were provided by Tarang Reality Pvt. Ltd. which is also family concern. The assessee has contended that she has taken loan from Tarang Reality Pvt. Ltd. of Rs.66,55,000/- and on receipt of sale consideration of Rs.73,75,413/-, she had repaid the loan to Tarang Reality Pvt. Ltd. In the case of the assessee, no phenomenal rise in the value of the land has arisen. She has purchased at Rs.67,96,342/- for the period starting from 18.12.2007 upto 4.3.2008. She had agreed to sell this property on 4.4.2008, just in a span of 3-4 months. She has earned small amount of capital gain which has been offered for taxation. An analysis of all the facts ITA No.2414/Ahd/2013 and circumstances, discussed by the ld.Revenue authorities, we are of the view that setting of surrounding facts and circumstances, even as a whole, does not suggest that agreement dated 4.4.2008 or 2.3.2009 are sham or bogus. Their enforceability in the law cannot be ignored. The alleged gains on sale of property calculated in the hands of the assessee are not sustainable. We allow the appeal of the assessee and delete the addition of Rs.6,83,09,792/- from the hands of the assessee.”
22. Perusal of the above findings by the Co-ordinate Bench, Ahmedabad and examining the facts of the instant appeal we find that the “agreement to sale” was entered between the assessee and Shri R.K. Lalwani for sale of agriculture land for a consideration of Rs.1,68,90,500/- and the sum was received by the assessee before handing over the possession to Shri R.K. Lalwani on 20.03.2010.

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ITA No.371/Ind/2015 A.Y. 2010-11 All the conditions mentioned in the impugned agreement of sale have been duly adhered by both the parties and therefore the alleged agreement of sale cannot be held to be invalid and the alleged transfer of agriculture land by assessee to Shri R.K. Lalwani and therefore is a valid transfer under the provisions of Section 2(47)(v) of the Act. Revenue has not disputed the fact that the Ld.

CIT(A) has granted the benefit of Section 54B of the Act to the assessee for purchasing the agriculture land out of the sale consideration received from selling agriculture land. It itself prove that the revenue authorities have accepted that the alleged sale consideration received by the assessee against which benefit/ exemption u/s 54B of the Act has been granted was for agriculture land only and not the residential plots as inferred by the Ld.A.O while recasting the Long Term Capital Gain. Shri R.K. Lalwani has also stated on oath before the Ld.A.O accepting all the transactions entered into between the assessee and Shri R.K. Lalwani as per “agreement of sale” dated 20.03.2009. It was also stated by him on oath that the residential plots sold during the year were effected by him only and he has duly received the sale consideration from various plot owners and those transactions had no financial 61 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 relation with the assessee. There is no dispute about the price of agriculture land per acre which is at Rs.41,50,000/- per acre and is above the prevailing rate of Rs.40,48,552/- as provided in the guidelines of Zila Panjiyak Sanyojak. We therefore are of considered view that both the lower authorities erred in calculating the sale consideration by invoking provisions of Section 50C of the Act and applying the price of each plot of land sold during the year and thereby computing the Long Term Capital Gain. We therefore allow this issue in favour of the assessee and direct the revenue authorities to calculate the Long Term Capital Gain by taking the sale consideration of impugned agriculture land at Rs.1,68,90,500/- as against the sale consideration confirmed by the Ld.CIT(A) at Rs.3,83,79,019/-. Accordingly issue No. 1 & 2 mentioned by us in para 11 above which are at Ground No.1, 1.1, 1.2 and 1.3 are decided in favour of the assessee.
23. Now we take up the third issue that whether the Ld.CIT(A) is justified in denying the benefit of exemption u/s 54B of the Act for investment in agriculture land in the name of son and daughter of the assessee.

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ITA No.371/Ind/2015 A.Y. 2010-11 24. Brief facts relating to this issue are that the assessee applied the sale consideration from sale of agriculture land for purchasing the agriculture land in order to claim exemption u/s 54B of the Act.

The Ld.A.O denied the benefit because the assessee filed the belated revised return. The Ld.CIT(A) accepted the revised return in view of the judicial pronouncements. The Ld.CIT(A) gave the benefit of exemption u/s 54B of the Act for the purchase of land in the name of assessee at Rs.64,70,890/- and in the name of his wife at Rs.28,94,460/-. The Ld. CIT(A) did not allow the benefit u/s 54B for investment in purchase of agriculture land in the name of assessee’s son Shri Umesh Patidar at Rs.49,86,085/- and in the name of his daughter Ms. Seema Patidar at Rs.,12,50,175/-.

Revenue has not appealed against the benefits given by the Ld.CIT(A) for allowing exemption u/s 54B of the Act for the purchase of agriculture land in the name of the assessee and his wife. Now the assessee is aggrieved against the findings of Ld.CIT(A) in not giving the benefit of exemption u/s 54B of the Act for the investment in purchase of agriculture land in the name of assessee’s son and daughter.

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ITA No.371/Ind/2015 A.Y. 2010-11 25. We find that there is no dispute to the fact that the amount utilized for purchasing the agriculture land in the name of Mr. Umesh Patidar and Ms. Seema Patidar has its nexus to the sale consideration received by the assessee. Now whether the benefit is available to the assessee for investment made in the name of his children needs to be examined in view of the judicial pronouncements. There are judgments both in the favour of assessee and revenue but as held by Hon’ble Apex Court in the case of Vegetable Products Ltd 88 ITR 192, that “if two reasonable construction of a taxing provision are possible, then construction which favours the assessee must be adopted. This is will accepted rule of construction recognized by the Hon’ble court in several of its decisions”. Keeping the above discussions and judgments in mind we observe that the Hon’ble High Court in the case of CIT V/s Ravinder Kumar Arora I.T.A. No.1106/2011 order dated 27.9.2011 held that “for the purpose of giving exemption under section 54F the word assessee must be given wide and liberal interpretation so as to include his legal heirs also Hon’ble Court further held that there is no warrant for strict interpretation to the word assessee as that would 64 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 frustrate the object of granting exemption”. Holding so, the Hon’ble Court observed as under;
“9. On the aforesaid facts, we are of the view that the conditions stipulated in Section 54F stand fulfilled. It would be treated as the property purchased by the assessee in his name and merely because he- has included the name of his wife and the property purchased in the joint names would not make any difference. Such a conduct has to be, rather, encouraged which gives empowerment to women. There are various schemes floated by the Government itself permitting joint ownership with wife. If the. view of the Assessing Officer (AO) or the contention of the Revenue is accepted, it would-be a derogatory step.
10. Even when we look into the matter from another angle, facts remain that the assessee is the actual and constructive owner of the house. In CIT Vs. Podar Cements (P) Ltd. & Ors., (1997) 226 ITR 625 (SC), the Supreme Court has also accepted the theory of constructive ownership. Moreover, Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. Here is a case where the house was purchased by the assessee and that too in his name and wife’s name was also included additionally. Such inclusion of the name of the wife for the above-stated peculiar. factual reason should not stand in the way of the deduction legitimately accruing to the assessee. Objective of Section 54F and the like provision such as Section 54 is to provide impetus to the house construction and so long as the purpose of house construction is achieved, such hyper technicality should not impede the way of deduction which the legislature has allowed. Purposive construction is to be preferred as against the literal construction, more so when even literal construction also does not say that the house should be purchased in the name of the 65 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 assessee only. Section 54F of the Act is the beneficial provision which should be interpreted liberally in favour of the exemption/deduction to the taxpayer and deduction should not be denied on hyper technical ground. Andhra Pradesh High Court in the. case of Late Mir Gulam Ali Khan Vs. CIT, (1987) 165 ITR 228 (AP) has held that the object of granting exemption under Section 54 of the Act is that an assessee who sells a residential house -for purchasing another house must be given exemption so far as capital gains are concerned. The word “assessee”- must be given wide and liberal interpretation so as to include his legal heirs also. There is no warrant for giving too strict an interpretation to the word “assessee” as that would frustrate the object of granting exemption. I1. We also find judgments of other. High Courts giving benefit of Section 54F(l) of the Act when the house of the assessee is purchased jointly with his wife. In the case of CIT V~. Natrajan, (2007) 287 ITR 271 (Mad), though this case was decided in relation to Section 54 of the Act, the said Section is pari materia of Section 54F(l) of the Act. Likewise, the Punjab & Haryana High Court in the case of Cl’I’ Vs, Gurnam Singh, (2010) 327 ITR 278 took the same view while discussing the provisions of Section 54 of the Act which is again pari materia of Section 54F(1) of the Act.
26. Hon’ble Delhi High Court in the case of CIT V/s Shri Kamal Wahal, ITA. No.4/2013 dated 11.1.2013, while adjudicating the issue relating to exemption under section 54F of the Act, held in favour of the assessee that the benefit could be given for deduction u/s 54F of the Act if the investment is made in the name of assessee’s wife. The Hon’ble Court held as under;

“7. We have no hesitation in agreeing with the view taken by the Tribunal.

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ITA No.371/Ind/2015 A.Y. 2010-11 Apart from the fact that the judgments of the Madras and Karnataka High Courts (supra) are in favour of the assessee, the revenue fairly brought to our notice a similar view of this Court in CIT Vs. Ravinder Kumar Arora: (2012)342 ITR 38 (Del.). That was also a case which arose under Section 54F of the Act. The new residential property was acquired in the joint names of the assessee and his wife. The income tax authorities restricted the deduction under Section .54F to 50% on the footing that the deduction was not available on the portion of the investment which stands in the name of the assessee’s wife. This view was disapproved by this Court. It noted that the entire purchase consideration was paid only by the assessee and not a single penny was contributed by the. assessee’s wife. It also noted that a purposive construction is to be preferred as against a literal construction, more so when even applying the literal construction, there is nothing in the section to show that the house should be in the name of the assessee only. As a matter of fact, Section 54F in terms does not require the new residential property shall be purchased in the name of the assessee; it merely says that the assessee should have purchased/constructed “a residential house”.
8. This court in the decision cited alone also noticed the judgment of the Madras High Court (supra) and agreed with the same, observing that though the Madras case was decided in relation to Section 54 of the Act, that Section was in pari materia with Section 54F. The judgment of the Punjab and Haryana High Court in the case of CIT V s. Gurnam Singh , (2014) 327 ITI{ 278 in which the same view was taken with reference to Section 54F was also noticed by this Court.
9. It thus appears to us that the predominant judicial view, including that of this, Court. is that for the purposes of Section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. It is moreover to be noted that the assessee in the present case has not purchased the new house in the name of a stranger or somebody who is
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ITA No.371/Ind/2015 A.Y. 2010-11 unconnected with him. He has purchased it only in the name of his wife. There is also no dispute that the entire investment has come out of the sale proceeds, and that there was no contribution from the assessee’s wife.
10. Having regard to the rule of purposive construction and the object which Section 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the revenue.”
27. From going through the above judgments as well as the facts of the instant appeal we find that the assessee has claimed exemption u/s 54B of the Act. If we apply the finding of Hon’ble courts on the issue before us we conclude that the provisions of Section 54B of the Act is mainly focused on providing the benefit to such assessee who sells their agriculture land and invest the sale consideration so received for purchasing another piece of agriculture land. The main weightage is for applying the consideration for purchase of agriculture land and it is not specifically mentioned as to whether it has to be purchased in the name of the assessee. For better perusal we mention below the provisions of Section 54B;

S.54B:73 [Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.
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ITA No.371/Ind/2015 A.Y. 2010-11 54B. [Subject to the provisions of sub-section (2), where the capital gain arises] from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by [the assessee being an individual or his parent, or a Hindu undivided family] for agricultural purposes (hereinafter referred to as the original asset),, and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,-
(i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the shall be charged under section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or
(ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain] (2) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section(1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the
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ITA No.371/Ind/2015 A.Y. 2010-11 Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purpose of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then –
the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid”.
28. The above provision contemplates that the benefit/exemption is available if an agriculture land is purchased out of the sale consideration of sale of agriculture land. In the instant appeal also the assessee received the sale consideration from sale of agriculture land and applied the same to purchase another piece of agriculture land in the name of self and others in the name of wife and children. The revenue authorities have also accepted the claim and allowed by Ld.CIT(A) made by the assessee for purchase of agriculture land in the name of the assessee as well as his wife.

The other two remaining persons are assessee’s son and daughter.

We do not find any reason that why the benefit should not be given 70 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 for purchase of agriculture land in the name of his son and daughter who are not someone not connected or strangers to the assessee and as held by the Hon’ble High Court that the assessee includes his legal heirs also so as to give the vide and legal interpretation. We therefore are of the view that the Ld.CIT(A) erred in denying the exemptions u/s 54B of the Act to the assessee for investment of sale consideration for purchasing agriculture land in name of his son and daughter at Rs.49,86,085/- and Rs.

12,50,175/- respectively. We accordingly set aside the findings of both the lower authorities and direct the Ld. Assessing Officer to give the benefit of exemption u/s 54B of the Act to the assessee at Rs.62,36,260/- which is over and above the benefit of Rs.91,18,190/- already allowed by Ld.CIT(A) u/s 54B of the Act. In the result the issue No.3 raised by the assessee under Ground No.2 of the appeal is allowed.
29. Now we are left with Ground No. 1.2 of the assessee’s appeal relating to cost of acquisition of land sold by the assessee. The assessee adopted it at Rs.5 lakhs per hectare whereas the Assessing Officer took it at Rs.27,580/-. The Ld.CIT(A) confirmed the view 71 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 taken by the Ld.A.O which was based on the rate of agriculture land situated in the vicinity of the impugned agriculture land. Now the assessee is aggrieved with the findings of Ld.CIT(A) confirming the action of Ld.A.O. of assessing the cost of acquisition at Rs.27,580/-.
30. We have heard rival contentions and perused the records placed before us. We find that there was sale of agriculture land measuring 1.647 hectare. The cost of acquisition on 1.04.1981 was taken at Rs. 5 lakhs per hectare thereby computing the cost of acquisition at Rs. 8,23,500/-. The onus to prove the basis of taking the cost of Rs.5 lakh per hectare was on the assessee. However during the course of assessment proceedings two registration sale deeds of the nearby agriculture land situated at Village Raslakhedi were available. As per the sale deed dated 25.7.1985 the rate of land was Rs.10,000/- per acre and in another case of registered sale deed dated 31.7.85 also the rate was Rs.10,000/-. No new evidences were brought on record. In the given facts and circumstances of the case and being fair to both the parties, we are of the view that cost of acquisition for 1.647 acres should be 72 Raja Ram Patidar
ITA No.371/Ind/2015 A.Y. 2010-11 adopted at Rs.1 lakh per hectare which will work out the acquisition cost at Rs.1,64,700/- per hectare. Ld.A.O is hereby directed to adopt the cost of acquisition at Rs.1,64,700/- as against Rs.8,23,500/- adopted by the assesssee. This ground of appeal of the assessee is partly allowed.

31. Ground No.3 is general in nature which needs to adjudication.
32. In the result, appeals of the assessee for Assessment Year
2010-11 is partly allowed.
Order was pronounced in the open court on 28.09.2018.
Sd/- Sd/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; “दनांक Dated :28/09/2018
Dev/ Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Private Secretary/DDO, Indore 73

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