×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-1, Ahmedabad dated 29/12/2016 (in short “Ld.CIT(A)”) arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (herein-after referred to as "the Act") dt.06/01/2016 relevant to the Assessment Year 2013-2014.
The assessee has raised the following grounds of appeal.
1. The Ld.CIT Appeals 1 Ahmedabad has erred in law and on facts in passing appellate order dated 29-12-2016 for A.Y.2013-14 in the case of appellant by confirming the action of the assessing officer in respect of treating the capital gain on sale of land as short term capital gains as against long term capital gain claimed by appellant in return of income.
2. The Ld. CIT (A) Appeals has erred in law and on facts in confirming short trm capital gain at Rs.28722950/- as against long term capital gain claimed at Rs.28464441/- in return of income.
3. The appellant craves to add, alter, amend or withdraw any of the grounds of appeal on or before of the final hearing of appeal
The assessee has also raised the additional ground of appeal vide letter dated NIL which is reproduced as under:
1. The Ld.CIT(A) has erred in law and on facts in not allowing cost of stamp duty and other expenses of Rs.18 40 850/ incurred for purchasing the land as deduction from the sales consideration
2. The issue raised by the assessee in ground no. 1 is that the Ld.CIT (A) erred in confirming the action of AO by treating the long term capital gain as short term capital gain.
3. Briefly stated facts are that the assessee is an Individual and engaged in the business of trading in grey, fabrics, and hosiery. The assessee in the year under consideration declared long term capital gain amounting to Rs. 2,86,64,441/- on sale of Land situated at Makarba vide survey no. 415/2, Ahmedabad. The property was sold vide sale deed dated 31-08-2012 at Rs. 3,11,00,000/- only.
3.1 The AO on verification of the purchase deed of Land dated 16-03-2012 found that the property was held by the assessee for a period less than 3 years. Accordingly the AO proposed to treat the capital gains arising on such property as short term capital gain.
3.2 In response to questions put forward by AO, the assessee made following representations:
1) He has entered into an agreement for purchase of impugned land situated at Makarba with Khoadaji Mansingh bhai thakor and baldeji thakor on 15-02-2006 and paid an amount of Rs. 1,00,000/- to the seller out of the total amount agreed at Rs. 5,36,200.00 only.
2) Thereafter, the land owner refused to sell the land to him (the assessee). The land owner sold such land to Rameshbhai Jivrajbhai desai, rajeshbhai Jivrajbhai desai, and Ranjibhai Jivrajbhai Desai on 28-05- 2010.
3) He preferred an appeal before the civil court where the appeal was decided in his favor. As a result of which the land was transferred to him (the assessee) as per the order of the court i.e. on 07-01-2012.
4) The balance amount of Rs. 4,36,200/- was deposited by him (the assessee) in the court in the year 2011 against the said Banakhat.
3.3 The assessee accordingly claimed that he has acquired the right in the property by virtue of the agreement dated 15-02-2006 and therefore the property should be treated as long term property. The assessee in support of his contention relied on the judgment of Bombay High Court in case CIT Vs. Tata Tele Service Ltd. reported in 122 ITR 254 and the judgment of Andhra Pradesh High Court in case of M. Syamala Rao Vs. CIT reported in 243 ITR 140.
3.4 However the AO rejected the submission put forth by the assessee by observing as under:
1) The impugned land was neither held by the assessee nor transferred to him. As such only “Banakat” was executed between the assessee and the seller which was not materialized. Moreover, the seller sold such impugned land to some other party.
2) The conditions as specified under the section 53A of the Transfer of Property Act remained un-satisfied by the assessee.
3) The assessee got the possession of the property after the order of the Court dated 07-01-2012
4) Merely on the basis of the Banakat dated 15-02-2006 it can’t be assumed that the Land was transferred to the assessee within the meaning of the section of 53A of the transfer of property Act.
5) The case M.Syamala Rao Vs. CIT (supra) cited by the assessee is not applicable to the given fact & circumstances. In that case the assessee got the possession of land on the date of Banakat itself.
3.5 The AO based on the above findings reached to a conclusion that the assessee held the land for a period of less than 3 years and accordingly computed short term capital gain of Rs. 3,05,63,800/-(3,11,00,000-5,36,200/-) instead of long term capital gain of Rs. 2,86,64,441/- which was claimed by the assessee.