The order of the Bench was delivered by
1 ASHA VIJAYARAGHAVAN (Judicial Member).-These three appeals preferred by the assessees are directed against separate orders of the Commissioner of Income-tax (Appeals)-V, Hyderabad, all dated February 14, 2011 for the assessment year 2007-08. As a common issue is involved, these appeals are clubbed and heard together, for being disposed of with this common order for the sake of convenience.
2 Let us take up for consideration first, the appeal of Shri Vimal Kumar Agarwal, viz., 1. T. A. No. 414/Hyd/2011.
3 Briefly the facts of the case are that the assessee filed his return of income for the assessment year 2007-08, on October 29,2007 admitting a total income of Rs. 23,20,013 from house property, capital gains and other sources. During the course of scrutiny proceedings, the Assessing Officer found that the assessee had received an amount of Rs. 2,45,00,000 as his share of sale proceeds from sale of house property, but, had admitted only Rs. 24,96,507 as capital gains. The Assessing Officer noticed that the transaction of sale of the house property took place in the financial year 2005-06. Therefore, the Assessing Officer held that the capital gain should be brought to tax in the assessment year 2006-07 and not in the assessment year under consideration, viz., 2007-08. Further, taking note of the assessee's claim for relief under section 54 of the Act in respect of two residential properties, observing that relief under section 54 is allowable only in respect of one house property only-the one of higher value, viz., the one at Banjara Hills, Road No. 12, Hyderabad, made addition in relation to the value of the other property in respect of which also relief under section 54 of the Act was claimed. With that addition of Rs. 53,75,000, the Assessing Officer completed the assessment on a total income of Rs. 76,95,110 vide order of the assessment dated December 29, 2009, passed under section 143(3) of the Act.
4 Aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the Commissioner of Income-tax (Appeals), contesting not only the year of assessability of the capital gains, but also the other addition of Rs. 53,75,000, made by the Assessing Officer. The Commissioner of Income-tax (Appeals), following the view taken by him on the issue of year of assessability in the case of the other co-owner, Shri Purushottam Agarwal (HUF) upheld the order of the Assessing Officer. He also sustained the other addition of Rs. 53,75,000 made in relation to the value of the property, in respect of which, according to the Assessing Officer, the assessee is not eligible for relief under section 54 of the Act.
Since the impugned order of the Commissioner of Income-tax (Appeals) in the case of Shri Vimalkumar Agarwal on the issue of year of assessability of the capital gains, is based on his corresponding appellate order on that very issue in the case of Shri Purushothamdas Agarwal, we may summarise below, the submissions of the assessee before him and the findings of the Commissioner of Income-tax (Appeals) in that case, viz., the order of the Commissioner of Income-tax (Appeals) impugned in LT.A. No. 415/Hyd/ 2011, for ready reference :
"Narrating the facts of the case, it was stated before the Commissioner of Income-tax (Appeals) that the Assessing Officer found that the assessee along with Sri Purushothamdas Agarwal (HUF) and Sri Satish Kumar Agarwal sold a house property bearing No. 6-3-249, Road No.1, Banjara Hills, Hyderabad vide registered sale deed executed on January 1, 2007. The Assessing Officer held that the property was sold by the assessee on September 3, 2005, since the physical possession was handed over on the said date as established from the sale deed. Consequently, the Assessing Officer held that the capital gains derived by the assessee on the said property, should be assessed in the assessment year 2006-07 and not in the assessment year 2007-08, viz., the year under appeal. The learned authorised representative for the assessee submitted that the possession as per the unregistered sale deed was not given and the actual possession as given on December 11, 2006 and accordingly, the capital gains is to be assessed in the current assessment year, only, viz., 2007-08. He also submitted written submissions, which, as summarised by the Commissioner of Income-tax (Appeals) in paragraph 5.1 read as follows:
-'The appellant is an HUF has no sources of income but had onethird share in capital gains and hence filed its return of income admitting capital gains of Rs. 2,90,102 after setting off loss from other sources of Rs. 4,09,442. The Assessing Officer completed the assessment after scrutiny determining the loss to be Rs. 4,09,442 being loss from other sources. While doing so, the Assessing Officer held that the capital gains arising from sale of property bearing No. 6-3-240. Rd. No.1, Banjara Hills, Hyderabad registered on January 1, 2007 is assessable only in the assessment year 2006-07 and not in this year. During the course of assessment proceedings it was submitted that the sale deed drafted on September 3, 2005 was not acted upon and hence the question of handing over possession as stated in that unexecuted deed does not arise. It was also submitted that the possession of building was handed over only during actual registration to a third party. A letter to this effect from MIs. Viceroy Hotels Ltd. also is filed. There is ample evidence in the form of telephone bills, ration card, registration of property purchased by the appellant in April 2006 with the address of the property in question, rent payments to new premises to which the appellant has shifted commencing from April 2006. The Assessing Officer merely relying on the recitals in the sale deed dated January 1, 2007 which is normal practice of recital has held that possession was handed over when the sale deed was drafted on September 3, 2005 without verifying the facts that are available otherwise and not accepting the letter from M/s. Viceroy Hotels Ltd. The present appeal is against this order.'
The Commissioner of Income-tax (Appeals), after discussing the definition of the term 'transfer' as contained in the provisions of section 2(47) of the Act, referred to the facts of the case and made the following observations :
(1) That the sale deed was executed on proper stamp paper and duly signed by the three vendors and the sale consideration was paid by M/s. Viceroy Hotels to Purushothamdas Agarwal, Virnal Kumar Agarwal and Satish Kumar Agarwal on various dates through cheques. The vendors also transferred all rights on the property as stated in clause 4.4 of the sale deed, noted below-
'4.4 The vendors thereby assure that the purchaser would at all times hereafter quietly and peacefully enter upon, occupy or hold, possess and enjoy the schedule property hereby conveyed and receive all rents, profits, thereto and income therefrom without any let up, hindrance, interruption, claim or demand whatsoever from the vendors herein or any person or persons or any party claiming through them.'
(2) The property was sold by M/s. Viceroy Hotels on January 31, 2007 to Smt. Ameena Khaton and MIs. AZ Developers. In this sale deed, Shri Purushothamdas Agarwal, Shri Vimal Kumar Agarwal and Shri Satishkumar Agarwal have also signed as confirming parties.
(3) In the agreement, it was clearly mentioned that the vendor, M/s.
Viceroy Hotels purchased the property on September 3, 2005 and has been in actual physical possession and has conveyed all rights on the property as the owner till the date of sale to Smt. Ameena Khatoon and MIs. AZ Developers.
(4) During the proceedings before the Commissioner of Incometax (Appeals), the authorised representative of the assessee has taken a stand that he had not given the possession as per the unregistered sale deed and instead gave possession on October 1, 2006. The assessee's authorised representative submitted additional evidence in the form of letter dated October 11, 2006, which says that possession was given on October 11, 2006. Further the telephone bill from BSNL issued ort May 6, 2006 in favour of Mis. Vimal Kumar Agarwal and another in favour of Shri Pumshothamdas Agarwal for landline was also submitted. It was pointed out that the numbers mentioned on those bills is that of the property in question. The authorised representative wanted to prove that the possession has handed over in the financial year 2006-07 only. The additional evidence was admitted by the Commissioner of Income-tax (Appeals) and a remand report was called for from the Assessing Officer. In the remand report, the Assessing Officer pointed out that the assessee was given an opportunity to submit evidence for intimation of change of address, which ought to have been submitted to the BSNL for use of land line, or for shifting, and in reply, the assessee stated that he had not preserved the letter submitted to the telephone department for shifting of telephone. Learned counsel also produced copy of the sale deed executed by Smt. Radhika Virum in favour of the assessee and his other family members, wherein the address 1"s given as that of Road No.1, Banjara Hills. The learned authorised respesentative submitted that the registering authority has registered the property accepting the residence proof, the photocopy of the ration card, which contains the address of the property.
(5) The Commissioner of Income-tax (Appeals) after considering the. remand report of the Assessing Officer and the submission of the assessee thereon, discussed as to the year in which the capital gains are to be assessed, i.e., 2006-07 an claimed by the Department or 2007-08 as claimed by the assessee on pages 8, 9 and 10 of the impugned order, in the light of the various case law on the issue of whether for the purpose of assessing the capital gains, registration of sale deed is essential or not and whether the enjoyment of property and physical possession of the property coupled with unregistered e deed would amount to transfer, has been discussed thoroughly. The Commissioner of Income-tax (Appeals), thereafter concluded that the assessee had relinquished all rights in the property, which is clearly mentioned in the sale deed entered into in September, 2005. It was also observed by the Commissioner of Income-tax (Appeals) that e entire sale consideration was received by the assessee, through cheques and all the rights in the property were transferred to M/s. Viceroy Hotels. Hence, the assessee has transferred all the rights in the property in the year 2005-06 itself.
(6) As for the additional evidence filed by way of telephone bills, water bills, etc., the Commissioner of Income-tax (Appeals) held that they are not of much significance and do not indicate that the assessee was living in the premises. The Commissioner of Income-tax (Appeals) also held that the letter received from the chairman of the Viceroy Hotels stating that the possession of the property was taken in October, 2006 is unreliable, since the said letterhead does not contain the address and telephone or any other details about the Viceroy Hotel. The Commissioner of Income-tax (Appeals) doubted the very authenticity of the said letter.
(7) Further, the Commissioner of Income-tax (Appeals) distinguished the decision in Asst. err v. Hotel Harbour View [2010] 2 ITR (Trib) 178 (Cochin) relied upon by the authorised representative for the assessee before him, observing that in that case, there was nonperformance of the contract and accordingly, the property was not transferred, whereas in the present case, there was clear-cut performance in pursuance of the agreement and transfer of the property.
For all the above reasons, the Commissioner of Income-tax (Appeals) held that the capital gains in respect of the property was to be assessed in the assessment year 2006-07 and accordingly directed the Assessing Officer to issue notice under section 148 for that year."
6 Aggrieved by the order of the Commissioner of Income-tax (Appeals) on both issues, the assessee is in appeal before us.
7 Before us, learned counsel for the assessee Shri A. V. Raghuram referred to page 13 of the paper book wherein it was stated by the purchaser M/s. Viceroy Hotels Ltd. that it had received the possession of the house and the site on October 11, 2006. Learned counsel for the assessee further submitted that he has enough evidence that the possession was given only in the assessment year 2007-08 and to this effect, he referred to pages 31 to 37 of the paper book, which are copies of telephone bills and submitted that from the receipts it can be proved that the possession was not handed over to the possessor at an earlier date as held by the Assessing Officer. Learned counsel for the assessee referred to pages 50 to 53, which are copies of household card procured by the assessee on March 6, 2006. Learned counsel for the assessee referred to the provisions of section 54 of the Transfer of Property, 1882, which reads as under :
"'Sale' defined. Sale how·made.-'Sale' is a transfer of ownership in exchange for a price paid or promised or part-paid and partpromised.
-Sale how made.
-Such transfer, in the case of tangible immovable property of the
value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing can be made only by a registered instrument.
In the case of tangible immovable property, of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
Contract for sale.
-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.
It does not, of itself, create any interest in or charge on such property./J
Learned counsel for the assessee also invited our attention to page 5 of 8 the sale deed dated January 3l 2007, wherein it has been stated as follows:
"Whereas the 'confirming parties' have purchased the 'schedule property' through three registered sale deed bearing document Nos. 250/94, dated December 15, 1993, 1154 of 1993, dated April 7, 1993 and Doc. No. 1585 of 1993, dated May 18, 1993 and the confirming parties have sold the scheduled property to the vendor under an unregistered sale deed. Since the sale deed executed by the 'confirming parties' in favour of the vendor, they are joined as confirming parties in the said above sale deed."
Referring to the above extract from the sale deed, learned counsel for the assessee submitted that the fact that the property was transferred at a later point of time is clearly evident.
The learned Departmental representative countered the arguments of learned counsel for the assessee stating that Sri Purushotham Agarwal, HUF and Vlffialkumar Agarwal were merely confirming parties and hence, nothing can be inferred from their signatures on the sale deed, and hence their signatures on the sale deed are of no significance. He, therefore, submitted that nothing can be inferred therefore, from the clauses of the sale deed of M/s. Viceroy Hotels relied upon by the learned counsel for the assessee. The learned Departmental representative, further submitted that even the address given on the return filed by the assessee for the assessment year 2007-08, remained the same.
In the rejoinder, learned cmmsel for the assessee, referring to the contention of the assessee with regard to the address given in the return filed for the assessment year 2007-08, invited our attention to page 30 of the paper book, wherein the purchaser has categorically stated that the possession was handed over by the assessee only on October 11,2006 and submitted that the date mentioned in the return filed cannot be a factor, which has to be held against the assessee.
We have heard the arguments of both parties, perioed the record and gone through the orders of the authorities below The question to be decided by us is whether the provisions of section 2(47)(v) read with section 53A can be invoked in this case or not. The facts in this case show that possession was given on September 3, 2005, as per the signed original sale deed dated September 3, 2005, which remain umegistered and the same can be treated as agreement for sale. the following clauses of the said sale deed are significant to arrive at such a conclusion :
II 4.3 That the vendors further declare that they have complied with all the legal and procedural formalities prescribed in conveying the scheduled property to the purchaser and assure the perfect passing of title in the scheduled property to the purchaser through this sale deed.
4.4 The vendors hereby assure that the purchaser would at all times hereafter quietly and peacefully enter upon, occupy or hold, possess and enjoy the schedule property hereby conveyed and receive all rents, profits, thereto and income therefrom without any let up, hindrance, interruption, claim or demand whatsoever from the vendors herein or any person or persons or any party claiming through them.
4.5 The vendors hereby declare and confirm that the schedule property is not the subject matter of any litigation, civil or criminal, and the vendors have not created any charge or encumbrance, thirdparty right or interest etc., over the schedule property.
5. Indemnity: The vendors hereby undertake to indemnify the purchaser in the event of any claim or right or interest over the schedule property by third party/parties or in the event the title of the vendor is found to be defective and undertake to make good the entire loss suffered by the purchaser.
8. The vendors have handed over the original authenticated title documents, link documents along with all other relevant documents, Le., tax paid receipts, sanction plan, etc. to the purchaser."
The above clauses undisputedly confirm the fact that the possession of the property has been handed over to the purchaser on September 3, 2005. The evidences produced by the assessee, such as, filing of telephone bills and ration card etc. are not the conclusive material. The fact remains that the sale deed was executed on September 3, 2005 and consideration was also received in September, 2005. From the clauses of the sale deed dated September 3, 2005, it is clear that the possession was also handed over in the assessment year 2006-07 itself. Therefore, in our considered view, the Commissioner of Income-tax (Appeals) has rightly confirmed the action of the Assessing Officer in holding that the capital gain on the sale of the property was to be assessed in the assessment year 2006-07. We accordingly confirm the order of the Commissioner of Income-tax (Appeals) on this aspect and reject the grounds of the assessee on this issue.
Though certain arguments have been advanced with regard to addition of Rs. 53,75,000, and written submissions have also been made in relation to the claim of the assessee for relief under section 54 of the Act, we are not inclined to go into the merits and adjudicate upon the same, in the absence of any ground raised by the assessee on this issue. Accordingly, we dismiss the plea of the assessee for deletion of the addition of Rs. 53,75,000 made by the Assessing Officer and confirmed by the Commissioner of Income- tax (Appeals .
In the result, the appeal of the assessee is dismissed.
I.T.A. No. 413/Hyd/2011 Satishkumar Agarwal: Assessment year 2007-08 and I.T.A. No. 415/Hyd/2011 Shri Purushothamdas Agarwal: Assessment year 2007-08.
The only issue involved in these two appeals relates to the year of assessability of the capital gains received by the assessee on the sale of property. Since the property sold giving rise to the receipt of capital gains has been jointly owned and possessed by these two assessees along with Shri Vimalkumar Agarwal, and consequently, the factual background involved in these two appeals and also the contentions of the parties are the same, as considered by us, while dealing with this very issue in the case of Shri Vimalkumar Agarwal, viz., I.T.A. No. 414/Hyd/2011, hereinabove.
For the detailed reasons discussed in that context, in paragraphs 11 and 12 hereinabove, we find no merit in the grounds of the assessees on this issue.
We accordingly uphold the view taken by the lower authorities on this issue, rejecting the grounds of the assessee in these appeals.
17 In the result, both these appeals are dismissed.
18 To sum up, all the three appeals are dismissed.
19 Pronounced in the open court on 9th January, 2013.