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04-09-2019, Ayyappa Roller Flour, Section 53A, 2(47)(v), Tribunal Cochin

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1 week 2 days ago #10703 by amit
Section - 53A, 2(47)(v), 2(47), 45
Order Date - 04-09-2019
Favouring - Revenue
Court - Tribunal Cochin
Appellant - Ayyappa Roller Flour Mills Limited
Respondent - DCIT
Justice - Chandra Poojari, AM & George George K, JM
Citation - 919Taxpundit33
Appeal No. - ITA No.482/Coch/2016
Asstt. Year - 2011-2012

Order

PER : George George K, JM

This appeal at the instance of the assessee is directed against the CIT(A)’s order dated 04.08.2016. The relevant assessment year is 2011-2012.

2. The brief facts of the case are as follows:

The assessee is a public limited company. It is engaged in the business of manufacture of wheat products. For the assessment year 2011-2012, the return of income was filed on 13.09.2011 declaring total income at Rs.`Nil’ and current year’s loss to be carried forward amounting to Rs.2,37,39,601. Subsequently, the assessee filed revised return on 12.12.2011 declaring total taxable income at Rs.`Nil’ and current year’s loss to be carried forward at Rs.2,24,12,466. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act and the assessment order u/s 143(3) of the I.T.Act was completed vide order dated 27.03.2014 by disallowing certain claims by the assessee and making additions to the total income. The total income assessed by the Assessing Officer was at Rs.35,88,80,850 as against returned loss of Rs.2,24,12,466. Aggrieved by the order passed by the Assessing Officer, the assessee preferred an appeal to the first appellate authority. The CIT(A) vide his order dated 04.08.2016 partially allowed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal.

We shall adjudicate the issues argued by the learned AR as under:

3. Sale of land whether exigible to Long Term Capital Gain (LTCG) in assessment year 2011-2012 (Rs.38,82,19,823)

3.1 The Assessing Officer in the course of assessment proceedings noted that the assessee had entered into an agreement for sale on 10.11.2010 with M/s.Maruti Suzuki India Limited (MSIL). The assessee received Rs.8.50 crore on signing the agreement for sale. The agreement for sale was a registered document with Sub Registrar Office, Edappally, Ernakulam. The Assessing Officer was of the view that the assessee through the agreement for sale had handed over the physical possession of the property and the purchaser, namely, MSIL had taken over absolute control of the entire property. The Assessing Officer explained in detail that all the conditions stipulated in section 53A of the Transfer of Property Act, 1882 has been fulfilled in the assessee’s case, and therefore, as per the provisions of section 2(47)(v) of the I.T.Act, the assessee was liable for long term capital gains in the relevant assessment year, viz., A.Y. 2011-2012.

3.2 Aggrieved by the order of the Assessing Officer bringing to tax the long term capital gain in the current assessment year, the assessee preferred an appeal to the first appellate authority. It was contended before the CIT(A) that as per the clauses of the sale agreement, the provisions of section 2(47)(v) of the I.T.Act is not applicable because only a small portion of land was given as symbolic possession. It was stated that possession was handed over as security for the amount received on execution of the sale agreement. It was submitted that the sale agreement culminated in execution of sale deed dated 29.09.2011 and all the conditions for a transfer has been satisfied only in the subsequent assessment year, viz., A.Y. 2012-2013. The CIT(A) held that the Assessing Officer has
analyzed the entire issue in great detail and has categorically observed that the conditions mentioned in section 53A of the Transfer of Property Act, 1882 r.w.s. 2(47)(v) of the I.T.Act is applicable in assessee’s case. The relevant finding of the CIT(A) reads as follow:-

“10.5 It is observed from the above discussions of the Assessing Officer that the appellant through the “agreement to sale”, has handed over the physical possession of the property and the MSIL has taken over the absolute control of the entire property. The Assessing Officer has also explained in detail that all the conditions stipulated in section 53A of the TP Act has been fulfilled in the appellant’s case. Therefore I agree with the views of the Assessing Officer and I am of the opinion that the provisions of section 2(47)(v) of the I.T.Act is squarely applicable in the appellants case. Hence it is held that the Assessing Officer was legally correct in invoking the provisions of section 2(47)(v) and assessed the capital gain in the assessment year 2011-2012 itself.”

3.3 Aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The learned Counsel for the assessee more or less reiterated the submissions raised before the Income Tax Authorities. It was contended that the capital gain cannot be brought to tax in the relevant assessment year since there is no accrual nor receipt of income during the relevant assessment year. Further, it was submitted that the actual possession was never handed over to the buyers of the property, viz., MSIL on execution of the sale agreement dated 10.11.2010. It was contended that almost 80% of the total consideration was payable only on registration of the sale deed and only on execution of the sale deed, there is a transfer of property. Hence, it was contended that LTCG cannot be taxed in the relevant assessment year. It was further argued that there were many conditions stipulated in the sale agreement dated 10.11.2010 and the willingness to perform on part of transferee was a condition precedent to determine whether there is a transfer effected in the current assessment year or not. The learned AR has filed a paper book containing 241 pages inter alia enclosing computation statement, agreement for sale dated 10.11.2010, copies of the orders of the Income-tax authorities and the case laws relied in support

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