Ramesh B Patil Huf, Mumbai vs Department Of Income Tax
- CitationI.T.A. No.4032/Mum/2013
Ratio decidendi
The rule this decision rests on
The Tribunal has reasoned to a ratio on the point that the Assessing Officer and the CIT(A) proceeded on the premise that a development agreement was a sale agreement, and that the date of transfer for the purposes of section 54EC must be determined by examining the development agreement, the conduct of the parties, and the jurisdictional High Court's decision in Chaturbhuj Dwarakadas Kapadia, with the question of handing over possession requiring examination. The Tribunal's ratio is that where the operative date of transfer is in issue, that question must be decided by reference to the terms of the agreement, the parties' conduct, and the governing jurisdictional authority, and an order resting on a different factual premise cannot stand.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
आयकर अपील य अ धकरण, मुंबई यायपीठ "डी " मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL" D" BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं अ मत शु ला, या यक सद य के सम
आयकर अपील सं./I.T.A. No.4032/Mum/2013 ( नधारण वष / Assessment Year :2005-06)
Income Tax Officer, 18(2)(4), बनाम/ Shri Ramesh B Patil HUF, Room No.109, 1st Floor, 101, Ganesh M Patil Road, Vs. Piramal Chambers, Parel, Patil Wadi, Dadar, Mumbai-400012 Mumbai-400028 (अपीलाथ /Appellant) .. ( यथ / Respondent)
थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAJHR5443K
अपीलाथ ओर से / Appellant by Shri Love Kumar यथ क ओर से/Respondent by Shri K K Lalkaka
सन ु वाई क तार ख / Date of Hearing : 19.3.2015 घोषणा क तार ख /Date of Pronouncement : 17.4.2015
आदे श / O R D E R
PER B.R. BASKARAN (AM)
The Revenue has filed this appeal challenging the order dated 21.2.2013 passed by Ld CIT(A)-16, Mumbai and it relates to the assessment year 2005-
06. The Revenue is aggrieved by the decision of Ld CIT(A) in holding that the assessee is entitled for deduction u/s 54EC of the Income Tax Act, 1961 (the Act) from the "Long Term Capital Gain" (LTCG).
2. We heard the parties and perused the record. The facts relating to the issue are stated in brief. The assessee, along with his brothers, had inherited an ancestral property from his father named Shri Balaram Patil. The assessee's two brothers had already expired and hence the property was inherited by legal heirs of his brothers, some of whom were minor. Subsequently, a Development agreement was entered by all the co-owners 2 I . T . A . N o . 4 0 3 2 / Mu m / 2 0 1 3
with a person named M/s Shreeji Homes (called "Developers"). Shri Rammohan Gopalrao Kallianpur and others were occupying the property as tenants and hence they also joined the Development agreement as "Confirming parties". The Development agreement was executed on 27.7.2004 and according to the parties, the same was registered on 29.7.2004. The assessee subsequently, invested his share of sale consideration on 13.6.2005 in NABARD CAPITAL GAINS BOND and claimed deduction against Long term Capital gain u/s 54EC of the Act. According to the assessee, the developer insisted for sanction or order from Hon'ble High Court, since some of the co- owners happened to be "Minors". Accordingly a petition was moved by the parties and the Hon'ble High Court approved the development agreement on 17.2.2005.
3. Under the provisions of sec. 54EC of the Act, the investment in Capital gains Bonds is required to be made within a period of six months after the date of transfer. The assessee took the stand that the date of Court order should be taken as the "Date of transfer", since only after the receipt of the order of High Court, effective transfer has taken place. However, the AO took the view that the transfer has taken place on the date of entering of Development agreement i.e. on 27.7.2004 and since the investment in NABARD Bond was made on 13.6.2005, the same would fall beyond the prescribed period of six months as provided u/s 54EC of the Act. Accordingly, the AO held that the assessee was not entitled for deduction under section 54EC of the Act.
4. In the appellate proceedings, the ld. CIT(A) noticed that identical issue was considered by the ld. CIT(A)-29, Mumbai in one of the co-owners i.e. Smt. Shubhada Narottam Patil in Appeal No. CIT(A)-29/RG-18/73/11-12 and the ld. CIT(A), vide his order dated 18.5.2012, has held that the possession of the property was handed over to the Developer only after receipt of the order of Hon'ble High Court on 25.3.2005. Accordingly, the ld CIT(A), in the above 3 I . T . A . N o . 4 0 3 2 / Mu m / 2 0 1 3
said case held that investment made in NABARD Bond would fall within the time limit of six months. Accordingly the ld. CIT(A) had allowed the deduction u/s 54EC of the Act to Mrs. Shubhada Patil. By following the said decision, the ld CIT(A) held that the assessee is entitled for deduction u/s 54EC of the Act. Aggrieved, the Revenue has filed this appeal before us.
5. While the Ld D.R placed strong reliance on the assessment order, the Ld A.R placed strong reliance on the order passed by Ld CIT(A). However a perusal of the both the orders would show that the tax authorities have proceeded on the presumption that the agreement entered by the parties are "Sale agreement", whereas the fact remains that it was only a development agreement. The tax liability arising out of development agreement has been dealt with by the Hon'ble jurisdictional Bombay High Court in the case of Chaturbhuj Dwarakadas Kapadia Vs. CIT (260 ITR 491)(Bom). A perusal of the order passed by the Ld CIT(A) would show that he has followed the decision rendered by his counterpart in the case of Mrs. Shubhada Patil, wherein the Ld CIT(A) has held that the possession of the property was given only after receipt of the Court orders. However, in the instant case, the question relating to handing over of the possession of property was not examined at all. Further, the decision of the jurisdictional High Court referred above was also not considered. Since, the issue before us revolves around "Date of transfer" of property; we are of the view the same has to be examined by duly considering the development agreement, conduct of parties and the decision rendered by the Hon'ble jurisdictional High Court in the above said case. Accordingly, we are of the view that this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) and restore the same to the file of the assessing officer with the direction to re-examine this issue in the light of discussions made supra.
4 I . T . A . N o . 4 0 3 2 / Mu m / 2 0 1 3
6. In the result, the appeal filed by the Revenue is treated as allowed for statistical purposes.
The above order was pronounced in the open court on 17th Apr, 2015.
घोषणा खल ु े यायालय म दनांकः17th Apr, 2015 को क गई ।
Sd sd
(अ मत शु ला / AMIT SHUKLA) (बी.आर.बा करन / B.R. BASKARAN) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai: 17th Apr,2015.
व. न.स./ SRL , Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A)- concerned
4. आयकर आयु त / CIT concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai concerned
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free