ACIT, Trichy v. Mr. PR.Chockalingam, Trichy

ITA 1830/CHNY/2009 | 2000-2001
Pronouncement Date: 24-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 183021714 RSA 2009
Assessee PAN AETPC4075Q
Bench Chennai
Appeal Number ITA 1830/CHNY/2009
Duration Of Justice 2 year(s) 2 month(s) 17 day(s)
Appellant ACIT, Trichy
Respondent Mr. PR.Chockalingam, Trichy
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 24-02-2012
Date Of Final Hearing 24-02-2012
Next Hearing Date 24-02-2012
Assessment Year 2000-2001
Appeal Filed On 07-12-2009
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI A BENCH CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. ABRAHAM P. GE ORGE A.M. I.T.A. NO. 1830/MDS/2009 ASSESSMENT YEAR: 2000-01 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE II TRICHY. VS. MR. PR. CHOCKALINGAM #2 SECOND CROSS THILLAINAGAR TRICHY 17. [PAN:AETPC4075Q] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB SR. DR ASSESSEE BY : SHRI S. SRIDHAR ADVOCATE DATE OF HEARING : 10.08.2011 DATE OF PRONOUNCEMENT : .09.2011 ORDER PER U.B.S. BEDI J.M. THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER PASSED BY THE LD. CIT(A) TIRUCHIRAPPALLI DATED 22.09.2009 RELEVA NT TO THE ASSESSMENT YEAR 2000- 01 IN WHICH IT RAISED FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED C.I.T.(APPEALS) IS CO NTRARY TO THE LAW FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED C.I.T.(APPEALS) HAS ERRED IN DELETI NG THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DED UCTION U/S 54 AND 54-F . 3. THE LEARNED C.I.T.(APPEALS) CARNE TO ERRONEOUS CONCLUSION THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY THE MATERIAL FACTS WHICH WERE NECESSARY FOR COMPLETING THE ASSESSMENT AT THE TIME OF FRAMING OF ORIGINAL ASSESSMENT. THE CIT(APPEALS) FAILED TO NOTE THAT TH E AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WRONGLY SUBMITTED BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 23.02.2004 THAT DATE OF SALE OF KILPAUK GARDEN PROPERTY TO SANMAR PROPERTIES WAS 28.11.1999 WHEN NO SALE DEED WITH THE SANMAR PROPER TIES WAS REGISTERED AND IN FACT IMPUGNED PROPERTY WAS REGISTERED IN NAME OF SOME O THER CONCERN IN 2001 TO I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 2 WHOM THE PROPERTY WAS FINALLY SOLD AND SANMAR PROPE RTIES ACTED AS CONFORMING PARTY. 4. THE LEARNED C.1T.(APPEALS) FAILED TO NOTE THAT THE CORRECT SEQUENCE OF EVENTS WAS FURNISHED BY THE ASSESSEE ONLY SUBSEQUENT TO TH E PASSING OF ASSESSMENT ORDER AND ONLY IN COURSE OF RE-ASSESSMENT PROCEEDINGS. IT WAS ONLY IN THE COURSE OF RE- ASSESSMENT PROCEEDINGS THAT THE ASSESSEE CHANGED HI S STAND FROM 'SALE' OF THE IMPUGNED PROPERTY TO SANMAR PROPERTIES; TO DEEMED ' 'TRANSFER'' U/S 2(47)(V) TO SANMAR PROPERTIES ON ACCOUNT OF HANDING OVER OF THE POSSESSION TO THE BUYERS ON 28.11.2009. 5. THE LEARNED C.I.T.(APPEALS) FAILED TO NOTE THAT ONLY IN RE-ASSESSMENT PROCEEDINGS THE FACT THAT THERE WAS SALE AGREEMENT IN RESPECT TO KILPAUK PROPERTY WITH M/S SANMAR PROPERTIES (DATED 28.06.1996 WHICH WAS DULY MODIFIED BY WAY OF SUPPLEMENTARY AGREEMENTS DATED 18/12/1996 6/2/1998 AND 25/11/1999) WAS BROUGHT ON RECORDS. NO DEED SHOWING 'SALE' OF KILPA UK PROPERTY TO M/S. SANMAR PROPERTIES WAS REGISTERED. 6. THE C .I.T.(APPEALS) ALSO ERRED IN FAILING TO NO TE THAT THE LETTER DATED 28.11.1999 PRODUCED BY THE ASSESSEE IN SUPPORT OF T HE CONTENTION THAT POSSESSION BEEN HANDED OVER TO THE BUYER CONSEQUENT TO THE RECEIPT OF ENTIRE SALE CONSIDERAT ION WAS SELF-SERVING DOCUMENT AND MISLEADING. THIS EVID ENCE WAS CREATED TO SHOW THAT POSSESSION WAS HANDED OVER PRIOR TO ISSUE OF NOC BY APPROPRIATE AUT1LORITY. THE C.I.T.(APPEALS) FAILED TO NOTE THAT LAST PAYMENT WA S RECEIVED BY THE ASSESSEE ONLY ON 21.12.1999 AND THEREFORE IT IS WRONG AND UNTRUT HFUL STATEMENT THAT ENTIRE CONSIDERATION WAS RECEIVED ON 28.11.1999. 7. THE C.I.T.(APPEALS) OUGHT NOT TO HAVE GIVEN REL IEF ON THE BASIS OF SECTION 2(47)(V) AS THE POSSESSION WAS NOT HANDED OVER PURSUANT TO AN AGREEMENT OF SALE. THE C.I.T.(APPEALS) FAILED TO NOTE THAT IN THE SALE AGREEMENT (RIGHT FROM SALE AGREEMENT DATED 28.06.1996 DULY MODIFIED BY WAY OF VARIOUS SUPPLEMENTARY AGREEMENTS) IT WAS CLEARLY MENTIONED THAT POSSESSI ON WOULD BE HANDED OVER AFTER OBTAINING LAST INSTALLMENT OF THE BALANCE CONSIDERA TION SUBSEQUENT TO RECEIPT OF NO OBJECTION CERTIFICATE (NOC) FROM THE APPROPRIATE AU THORITY. IN THE INSTANT CASE THE HANDING OVER OF POSSESSION WAS BEFORE RECEIPT OF LA ST INSTALLMENT OF THE BALANCE CONSIDERATION AND BEFORE RECEIPT OF NOC AND WAS THE REFORE NOT PURSUANT TO THE SALE AGREEMENT AS REQUIRED U/S 53A OF TRANSFER OF PROPER TY ACT R.W.S. 2(47)(V) OF THE ACT. 8. THE C.I.T.(APPEALS) ALSO ERRED IN NOT FOLLOWING THE RATIO OF DECISION OF R.B.FALCON (A) PVT. LTD. VS C.I.T. 301 ITR 309(SC) SHRI KRISHNA ENGG CO. [2005]2 SCC 692 VISITOR VS K.S. MISRA [2007] 8 SCC 593 PARSOTTAM NAGINDAS VS B.R. ADWALPARKAR 218 ITR 392 (GUJ) ASSAM CO. LTD. VS STATE OF ASSAM 248 ITR 567 (SC) WHEREIN THE APEX COURT & OTHER HIGH COURT S HAVE CLEARLY HELD THAT PROVISIONS OF LAW HAVE TO BE READ HARMONIOUSLY IN S UCH A WAY THAT NO PROVISION IS RENDERED REDUNDANT OR OTIOSE. IF THE INTERPRETATION TAKEN BY THE C.I.T.(APPEALS) THAT I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 3 DEEMED TRANSFER 2(47)(V) OF THE ACT HAS TAKEN PLACE IS ACCEPTED THE PROVISIONS OF SECTION 269 UK OF THE CHAPTER XXC WOULD BECOME REDU NDANT. THE SELLERS HAVE ALREADY FILED STATEMENT IN FORM 371 TO THE APPROPRI ATE AUTHORITY AND CONSEQUENTLY AS PER SECTION 269 UK R. W.S. 26900 & 269UL OF THE ACT; NO TRANSFER COULD TAKE PLACE UNLESS NOC IS ISSUED BY THE APPROPRIATE AUTHO RITY. ALLOWING DEDUCTION U/S 54 & 54F BY THE CIT(APPEALS) WAS THEREFORE AGAINST THE RATIO OF THE DECISION CITED ABOVE. 9. THE CIT(APPEALS) FAILED TO NOTE THAT SINCE THE NOC WAS OBTAINED ONLY ON 21.02.2000 THE DEEMED TRANSFER U/S 2(47)(V) R.W.S. 269 UK OF THE ACT COULD HAVE TAKEN PLACE ON 21/2/2000 AND NOT ON 28/11/1999. CON SEQUENTLY RELIEF U/S 54 & 54F WAS NOT AVAILABLE TO THE ASSESSEE IN RESPECT OF PUR CHASE AND CONSTRUCTION OF THE BANGALORE PROPERTY. THE CIT(APPEALS) SHOULD HAVE CO NFIRMED THE ORDER OF THE ASSESSING OFFICER. 10. THE C.I.T.(APPEALS) ERRED IN RELYING UPON THE DECISION OF CHATURBUJ DWARAKADAS KAPADIA VS C.I.T. 260 ITR 491 WHICH WAS RENDERED IN A DIFFERENT CONTEXT AND INVOLVED DIFFERENT ISSUE. IF THE RATIO OF THIS DECISION (CHATURBUJ D. KAPADIA) IS FOLLOWED THEN THE TRANSFER TOOK PLACE ON 28.06.1996 I.E. RELEVANT FOR A.Y. 1997-98 AND NOT A.Y. 2000-01. THE ASSESSEE HIM SELF OFFERED FOR TAX THE CAPITAL GAINS ONLY IN RESPECT OF A.Y. 2000-01. THE RELIANCE BY C.I.T.(APPEALS) ON CHATURBUJ DWARAKADAS KAPADIA VS C.I.T. IS THEREFORE MISPLACED. 11. ANY OTHER GROUND THAT MAY BE ADDUCED DURING TH E COURSE OF APPEAL PROCEEDINGS. 2. FACTS INDICATE THAT THE ASSESSEE SOLD THE PROPE RTY AT CHENNAI AND THE SALE AGREEMENT WAS ORIGINALLY ENTERED INTO ON 28.07.1996 THROUGH WHICH THE PROPERTY WAS SOLD TO SANMAR PROPERTIES AND INVESTMENTS LTD. FOR A TOTAL CONSIDERATION OF RS.5 69 78 750/- AND CLEARANCE FROM THE APPROPRIATE AUTHORITY WAS OBTAINED ON 8.10.1996 LATER SUBSEQUENT AGREEMENTS WERE EXECUTE D WITH CHANGE IN AMOUNT OF TOTAL CONSIDERATION AND ACTUAL AREA AND CONSEQUENTL Y THE SALE CONSIDERATION WAS REDUCED TO RS.5 42 64 458/- SUBSEQUENTLY THIS AGRE EMENT WAS RESTATED ON 18.12.1996 ONCE AFTER VERIFICATION IN THE ACTUAL EX TENT OF THE PROPERTY TO BE CONVEYED AND AGAIN ON 25.11.1999 FOR A STEEP FALL I N PRICES AND IN RESPECT OF THIS FINAL RESTATED AGREEMENT THE ASSESSEE HAS APPROACH ED THE APPROPRIATE AUTHORITY I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 4 ON 11.02.2000 FOR CLEARANCE AND OBTAINED THE SAME. THE TOTAL SALE CONSIDERATION FOR THE PROPERLY WAS RS.5 42 74 658/- AND THE ASSESSEE'S SHARE WAS RS.1 35 66 114/- THE POSSESSION OF THE PROPERTY WAS DELIVERED BY THE ASSESSEE ON 28.11.1999 AND THE VENDER HAD IN WRITING ACKNOWLEDG ED THE TAKING OF POSSESSION. DURING THE COURSE OF THE ORIGINAL ASSESSMENT COMPLE TED U/S. 143(3) R. W.S. 147 THE ASSESSEE HAS DISCLOSED ALL THESE FACTS AND HAD ALSO PRODUCED THE LETTER HANDING OVER POSSESSION AND HAD CLAIMED EXEMPTION U/S. 54 F OF THE IT ACT 1961 FOR HAVING INVESTED IN THE PROCEEDS IN THE PURCHASE AND CONSTR UCTION OF THE PROPERTY AT BANGALORE. THE DEDUCTION WAS CONSIDERED AND ALLOWED ONLY FOR THE PURCHASE AT THE STAGE OF ASSESSMENT. THE ASSESSEE TOOK THE MATTER I N APPEAL BEFORE THE CIT (A) WHO AFTER GOING THROUGH THE FACTS AND OBSERVING THE DATE OF SALE TO BE 28.11.1999 AND CONSIDERING JUDICIAL PRONOUNCEMENT ON THE APPLI CABILITY OF SEC. 54 AND SEC. 54F OF THE IT ACT HELD THAT DEDUCTION IS AVAILABLE FOR BOTH THE PURCHASE AND CONSTRUCTION OF THE PROPERTY AT BANGALORE (ITA NO. 84.05-06). 2.1. SUBSEQUENTLY A NOTICE U/S. 263 OF THE IT ACT 1961 DATED 13.02.2007 WAS RECEIVED BY THE ASSESSEE TO REVISE THE ORDER BASED U/S. 143(3) R.W.S. 147 OF THE IT ACT. THE ASSESSEE HAD FILED THE REPLY TO THIS NOTIC E ON 05.03.2007 AND BASED ON THE REPLY THE PROCEEDINGS U/S. 263 OF THE IT ACT WE RE WITHDRAWN. AGAIN A FRESH NOTICE U/S. 148 HAD BEEN ISSUED AND SERVED ON THE A SSESSEE ON 27.03.2007 TO RE- OPEN AND RE-CONSIDER THE DETERMINATION OF LONG TERM CAPITAL GAIN. THE ASSESSEE HAD IN RESPONSE TO THE SAID NOTICE FILED THE RETURN UNDER PROTEST RETURN OF INCOME REVISED BY THE CIT(A) IN HIS ORDER CITED ABOVE. THE ASSESSEE HAD ALSO QUESTIONED THE VALIDITY OF RE-OPENING OF THE ASSESSMENT AFTER A PERIOD OF 4 YEARS IN THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 5 ABSENCE OF ANY FAILURE ON HIS PART AS HE HAS DISCLO SED FULLY AND TRULY ALL MATERIALS REQUIRED FOR COMPLETION OF THE RE-ASSESSMENT. THE A SSESSEE HAD ALSO CONTENDED THAT THE DEFINITION OF TRANSFER U/S. 2(47) OF THE IT ACT MENTIONS ONLY ABOUT THE DELIVERY OF POSSESSION IN PURSUANCE OF THE AGREEMEN T TO SALE AND ONCE THE DELIVERY HAD BEEN GIVEN THE TRANSFER TAKES PLACE AND CHARGIN G OF CAPITAL GAIN HAS TO BE DONE BASED ON SUCH DATE OF TRANSFER. THE ASSESSING OFFICER HAD IN HIS ORDER STATED THAT THE ASSESSEE HAD OBTAINED NOC FROM APPROPRIATE AUTHORITY ON 21.02.2000 AND THEREFORE THE TRANSFER CAN TAKE PLACE ONLY AFTER T HE SAID DATE. HE HAS ALSO PRESUMED THAT THE ASSESSEE SHOULD HAVE TRANSFERRED THE PROPERTY ONLY AFTER THAT DATE SINCE PROVISION OF CHAPTER XXC HAD BEEN COMPLI ED WITH ONLY ON 21.02.2000. THEREFORE HE HAD HELD THAT THE ASSESSEE HAS FURNIS HED THE WRONG DATE OF TRANSFER AND HAD CLAIMED EXEMPTION AND HENCE WITHDRAWN THE DEDUCTION ALREADY GRANTED U/S. 54/54F. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSES SING OFFICER WITH REGARD TO WITHDRAWAL OF DEDUCTION UNDER SECTION 54/54F AS WEL L AS REOPENING OF ASSESSMENT BEYOND FOUR YEARS IT WAS ARGUED THAT THERE HAD BEE N NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIALS R EQUIRED FOR COMPLETION OF THE ASSESSMENT. ALL THE DATES OF TRANSACTIONS HAD BEEN DISCLOSED AND COPIES OF NOC OBTAINED WERE ALREADY AVAILABLE WITH THE ASSESSING OFFICER WHEN THE FIRST REASSESSMENT WAS DONE ON 20.03.2005. NO FRESH MATER IALS HAD COME INTO THE POSSESSION OF THE ASSESSING OFFICER AFTER DATE OF C OMPLETION OF THE ASSESSMENT AFTER THE SAID REASSESSMENT. THE LD. AR OF THE ASSE SSEE STATED TO HAVE CITED SEVERAL CASE LAW BEFORE THE FIRST APPELLATE AUTHORI TY WHERE REOPENING OF THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 6 ASSESSMENT AFTER LAPSE OF FOUR YEARS HAD BEEN HELD TO BE INVALID IN THE ABSENCE OF HAVING MADE OUT ANY CASE BY THE ASSESSING OFFICER T HAT UNDER ASSESSMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE. THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT IN THIS CASE THERE HAD BEEN NO SUCH FAILURE AS THE ASSESSEE HAD FULLY AND TRULY DISCLOSED ALL MATERIALS RELEVANT TO COMPLETION OF THE ORIGINAL ASSESSMENT. THE ASSESSEES AR HAS FURTHER SUBMITTED IN FIRST APPEAL THAT THE REASSESSMENT TO BE HELD TO BE INVALID AND THE ORIGI NAL ASSESSMENT TO BE RESTORED. HE FURTHER CONTENDED THAT CAPITAL GAIN IS TAXABLE W ITH THE CAPITAL ASSET TRANSFERRED BY THE ASSESSEE AND WORD TRANSFER HAD BEEN DEFINED IN SECTION 2(47)(VI) AS ANY TRANSACTIONS INVOLVING THE ALLOWING OF THE POSSESSI ON OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF THE CON TRACT OF THE NATURE REFERRED IN SECTION 53A OF THE TRANSFER OF PROPERTY (4) OF 1882 AND IN THIS CASE POSSESSION HAS BEEN HANDED OVER ON 28.11.1999 SO THE GRANTING OF POSSESSION HAS BEEN FOUND TO BE CORRECT IN THE REASSESSMENT ORDER AND ALSO IN TH E APPELLATE PROCEEDINGS. EVENT THAT WARRANTED LEVY OF CAPITAL GAIN TAX IS TRANSFER . THE PROVISION OF CHAPTER XXC IMPOSES RESTRICTION ON REGISTRATION AND MUTATION UN DER THE TRANSFER OF PROPERTY ACT AND SUCH PROVISION DO NOT OVERRIDE SECTION 2(47)(VI ) AND ONCE IT IS TRANSFERRED UNDER THE SAID PROVISION THE CAPITAL GAIN IS ATTRA CTED. THE COMPLIANCE OF CHAPTER XXC IS AN INDEPENDENT ACT AND IT IS NOT THE CHARGIN G SECTION FOR LEVY OF CAPITAL GAINS. THEREFORE IT IS THE CONTENTION OF THE ASSES SEES REPRESENTATIVE THAT THE DATE OF TRANSFER IS ONLY 28.11.1999 AND EVEN IF THE CERT IFICATE UNDER CHAPTER XXC IS OBTAINED ITSELF RELATES BACK TO THE DATE OF AGREEME NT AND DATE OF DELIVERY OF POSSESSION FOR THE PURPOSES OF LEVY OF TAX SINCE TH E TAXING EVENT IS DELIVERY OF I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 7 POSSESSION. IT WAS THUS PLEADED THAT FIRST REASSES SMENT IS CORRECTLY MADE AND DOES NOT CALL FOR ANY INTERFERENCE. SO THE IMPUGNE D ORDER TO BE SET ASIDE ON THE ISSUE OF REOPENING AS WELL AS ON MERITS. 4. THE LD. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE IN THE LIGHT OF HONBLE BOMBAY HIGH COURTS DECISION I N THE CASE OF CHATURBUJ DWARAKADAS KAPADIA VS CIT 260 ITR 491BY DRAWING CON CLUSION IN PARA 9 ONWARDS ALLOWED THE APPEAL ON REOPENING AS WELL AS ON WITHD RAWING OF DEDUCTION CLAIMED UNDER SECTION 54 AND 54F OF THE ACT. 5. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A) THE DEPARTMENT HAS COME UP IN APPEAL AND RAISED VARIOUS GROUNDS ON BOTH THE ISSUE S DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE. THE DEPARTMENT HAS ALSO FIL ED STATEMENT OF FACTS ALONG WITH GROUNDS OF APPEAL GIVING VARIOUS DETAILS AND M ENTIONING ABOUT CERTAIN DOCUMENTS AND CASE LAWS AND THE LD. DR FILED THE WR ITTEN SUBMISSIONS AND WHILE EXPLAINING SUCH SUBMISSION HAS DISCUSSED ABOUT THE CASE LAW CITED THEREIN. THE LD. DR HAS ALSO SUBMITTED THAT THIS WRITTEN SUBMISSIONS WERE FILED ON 30.05.2011 AT THE TIME OF EARLIER HEARING AND THE LD. COUNSEL FOR THE ASSESSEE HAD AMPLE TIME TO REBUT THE FACTUAL ASPECTS MENTIONED IN THE STATEMEN T OF FACTS AS WELL AS POINTS RAISED AND ARGUED IN THE WRITTEN SUBMISSIONS BUT HE DID NOT DO SO. NO AFFIDAVIT HAD BEEN FILED AGAINST SUCH PLEADINGS AND RELYING UPON SUCH WRITTEN SUBMISSION AND THE RATIO OF THE DECISION CITED THEREIN IT WAS PLE ADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER AS NOT ONLY REASSESSMENT IS VALID IN LAW THE DEDUCTION CLAIMED UNDER SECTIO N 54 AND 54F IS ALSO NOT AVAILABLE TO THE ASSESSEE AS TRANSFER COULD TAKE PLACE ONLY A FTER FINAL NOC BY THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 8 APPROPRIATE AUTHORITY UNDER XXC WHICH HAD BEEN ISS UED ON 21.02.2000 AND TRANSFER OF ORIGINAL ASSET COULD ONLY TAKE PLACE TH EREAFTER OF TRANSFER AS EVEN DATE IS AVAILABLE ON RECORD. NEITHER THE ASSESSEE HAS BEEN ABLE TO GIVE SUCH DATE AND EVEN AFTER THIS 21.02.2000 IS TO BE TAKEN AS DATE O F TRANSFER THEN INVESTMENT MADE ON PURCHASE OF NEW ASSET IS BEFORE ONE YEARS PERIO D AS STIPULATED UNDER SECTION 54 AND OTHERWISE THE AMOUNT SPENT FOR FURTHER IMPR OVEMENT IS NOT COVERED BY RELEVANT PROVISIONS. THEREFORE THE ASSESSING OFFIC ERS ACTION FOR NOT ALLOWING THE RELIEF AS CLAIMED BY THE ASSESSEE UNDER SECTION 54/ 54F IS JUSTIFIED AND THE LD. CIT(A) IS NOT LEGALLY OR FACTUALLY CORRECT TO REVER SE THE ORDER OF THE ASSESSING OFFICER IN THIS REGARD. THEREFORE ORDER PASSED BY THE LD. CIT(A) SHOULD BE SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED WRIT TEN SUBMISSION VIDE DATED 07.09.2010 CONTAINED IN 3 PAGES WHICH READS AS UN DER: 1. THE ASSESSMENT HAD BEEN RE-OPENED AFTER A LAP SE OF FOUR YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR. THE ORIGINA L ASSESSMENT HAD BEEN COMPLETED U/S 143(3) READ WITH SEE 147. THERE HAD B EEN NO FAILURE ON THE PART OF THE RESPONDENT ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. THEREFORE THE RE-OPENI NG OF THE ASSESSMENT IS IMPERMISSIBLE AS PER PROVISO TO SEC 147. RELIANCE I S PLACED ON THE FOLLOWING DECISIONS: I. C I T VS. TUBE INVESTMENTS OF INDIA LIMITED 11 DTR 73 (MAD) II. C I T VS. INDBANK HOUSING LIMITED 11 DTR 68 (M AD) III. GARDEN SILKS LIMITED VS. C I T 222 ITR 27 2. THE ORIGINAL ASSESSMENT WAS APPEALED AGAINST BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS) TRICHY AND THE DECISION OF THE CIT(A) WAS ACCEPTED BY THE DEPARTMENT. LATER PROCEEDINGS W ERE INITIATED FOR REVISION U/S 263 ON 17.2.2007 AND BASED ON THE OBJE CTIONS FILED ON 5.3.2007 THE PROCEEDINGS WERE DROPPED. SUBSEQUENTLY THE ASSE SSMENT WAS RE-OPENED BY ISSUE OF NOTICE U/S 148 ON 28.3.2007. THE SEQUEN CE OF THESE EVENTS CLEARLY BEAR TESTIMONY TO THE SUGGESTION THAT THE ASSESSMEN T HAD BEEN RE-OPENED ON I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 9 CHANGE OF OPINION AND SUCH RE-OPENING HAD BEEN HELD TO BE INVALID UNDER LAW IN 320 ITR 561 BY THE SUPREME COURT. 3. THE RESPONDENT BELIEVES THAT THE RE-OPENING HAS BEEN MADE AT THE INSTANCE OF THE DIRECTIONS OF THE COMMISSIONER OF I NCOME TAX SUBSEQUENT TO THE DROPPING OF THE PROCEEDINGS U/S 263. SUCH AN AC T OF RE-OPENING THE ASSESSMENT ON THE BASIS OF THE INFORMATION BY THE C OMMISSIONER OF INCOME TAX HAD BEEN HELD TO BE INVALID IN ADANI EXPORTS VS . DCIT 240 ITR 224. 4. ON MERITS THE CONTENTION OF THE APPELLANT THAT T HE RESPONDENT HAD NOT PRODUCED THE RELEVANT DOCUMENTS AT THE TIME OF THE FIRST ASSESSMENT IS CONTRADICTORY TO THE FINDINGS CONTAINED IN THE ASSE SSMENT ORDER. THE ASSESSING OFFICER HAD OBSERVED IN PAGE 2 OF HIS ORD ER DATED 20.3.2005. 'IT IS FOUND THAT THE ASSESSEE HAD SOLD RESIDENTIAL PROPER TY AT KILPAUK CHENNAI FOR A CONSIDERATION OF RS.1 35 66 114/- ON 28.11.99.' T HE ASSESSING OFFICER HAD CONSCIOUSLY USED THE WORD 'FOUND' THAT IMPLIES SCRU TINY OF DOCUMENTS AND EVIDENCE FILED ASSIMILATION OF FACTS AND APPLICATI ON OF MIND. IN SUCH AN EVENT THE ALLEGATION THAT THE RESPONDENT HAD NOT FURNISHE D THE DETAILS IS NOT MAINTAINABLE. 5. THE ENTIRE EXERCISE OF RE-OPENING THE ASSESSMENT FLOWS FROM THE SURMISE THAT THE RESPONDENT HAD OBTAINED THE NOC FR OM THE APPROPRIATE AUTHORITY 21 ST FEBRUARY 2000 AND THEREFORE THE TRANSFER COULD HAV E TAKEN PLACE ONLY THEREAFTER. THE RESPONDENT HAD HANDED OV ER POSSESSION OF THE PROPERTY ON 28.11.99 AND HAD ALSO PRODUCED A DOCUME NT TO THIS EFFECT. THIS HAD BEEN DESCRIBED AS A SELF-SERVING LETTER WITHOUT ANY EFFORT TO PROVE THAT IT'S A DUMB DOCUMENT ESPECIALLY IN THE LIGHT OF THE OBSE RVATIONS OF THE ASSESSING OFFICER CITED EARLIER. 6. THE APPELLANT HAD OVERLOOKED THE FACT THE OUTSTA NDING SALE CONSIDERATION AS ON THE DATE OF DELIVERY OF POSSESS ION IS LESS THAN 2% OF THE TOTAL CONSIDERATION AND THE DELIVERY OF POSSESSION PRIOR TO THE RECEIPT OF THIS MEASLY SUM CANNOT BE FAULTED WITH. 7. THE APPELLANT HAD OVERLOOKED THE FACT THAT THE A PPLICATION FOR NO OBJECTION HAD BEEN FILED ON 30 TH NOVEMBER 1999 ITSELF. 8. THE RESPONDENT SUBMITS THAT HE HAD ALREADY FURNI SHED A POWER OF ATTORNEY ON 6.2.98 ITSELF IN FAVOUR OF THE BUYERS S ANMAR PROPERTIES LIMITED. 9. THE BASIS OF CHARGE IS ON THE HAPPENING OF THE E VENT OF TRANSFER AS PER SEE 2(47(V) AND NOT BASED ON THE OBTAINING OF CLEAR ANCE FROM THE APPROPRIATE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 10 AUTHORITY WHICH IS AN INDEPENDENT CHAPTER AND NOT C APABLE DETERMINING 'TRANSFER'. 6.1 THE LD. COUNSEL FOR THE ASSESSEE WHILE RELYING UPON THE ORDER OF THE LD. CIT(A) AND CONTENTION RAISED IN THE WRITTEN SUBMISS ION HAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER. HE HAS STRONGLY PLEADED THAT FIRST AGREEMENT WAS ENTERED INTO BETWEEN THE ASSESSEE WITH OTHER CO -OWNERS AND SANMAR PROPERTIES DEVELOPMENT LTD. ON 26.08.1996 WHERE CO NSIDERATION AMOUNT IN THE HANDS OF THE ASSESSEE IS SHOWN TO BE AT RS.65 68 79 750/- AND SUPPLEMENTARY AGREEMENT WAS EXECUTED ON 06.02.1998 IN WHICH THE C ONSIDERATION AMOUNT IN THE HANDS OF THE ASSESSEE WAS RS.5 62 64 450/- AND IN A NOTHER RESTATED AGREEMENT DATED 25.11.1999 THE CONSIDERATION AMOUNT IN THE H ANDS OF THE ASSESSEE WAS TO THE EXTENT OF RS.5 42 64 650/- AND AS PER LETTER GI VEN BY THE LD. AR OF THE ASSESSEE THE POSSESSION WAS HANDED OVER ON 28.11.1 999. WHEREAS APPLICATION TO APPROPRIATE AUTHORITY UNDER CHAPTER XXC WAS GIVE N ON 30.11.1999 AND FINAL APPROVAL WAS GRANTED ON 25.05.2000 AND SINCE POSSES SION WAS HANDED OVER ON 28.11.1999 SO APPROVAL OF THE APPROPRIATE AUTHORIT Y UNDER CHAPTER XXC EVEN IF GRANTED ON 25.02.2000 HAS NO BEARING OF TRANSFER HA VING TAKEN PLACED WITH THE GIVING OF POSSESSION ON 28.11.1999 BECAUSE AS PER PROVISIONS OF SECTION 2(47)(VI) R.W.S. 53A FOR TRANSFER OF PROPERTY ACT ACTUAL TRA NSFER HAS ALREADY BEEN TAKEN PLACE ON 28.11.1999 AND FURTHER INVESTMENT IN NEW HOUSE W AS WITHIN ONE YEAR PRIOR TO MAKING SALE/TRANSFER OF THE ORIGINAL ASSET AND FURT HER IMPROVEMENT OF THE SAME IS ALSO COVERED BY PROVISIONS OF SECTION 54/54F. THERE FORE THE ASSESSEE HAS MADE RIGHTFUL CLAIM OF DEDUCTION FROM THE CAPITAL GAIN A RISING OUT OF TRANSFER HAVING TAKEN PLACE ON 28.11.1999 UNDER SECTION 54/54F OF THE ACT . THEREFORE THE ASSESSING I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 11 OFFICERS ACTION IS NOT JUSTIFIED AND SAME HAS RIGH TLY BEEN REVERSED BY THE LD. CIT(A). SO FAR AS REOPENING OF THE ASSESSMENT AS WE LL AS DECIDING ISSUE ON MERITS IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE RELI ED UPON CHENNAI BENCH DECISION AS REPORTED IN 4 ITR (AT) 379 (CHENNAI) 320 ITR 56 1 (SC) AND 127 ITD 303 (DEL). THE ASSESSEES COUNSEL FURTHER PLEADED THAT THE REA SONS RECORDED ARE LOOKED INTO IT WOULD TRANSPIRE THAT THESE ARE NOT VALID REASON AND MOREOVER 2 ND NOC HAS NO RELEVANCE BECAUSE AT THE TIME OF EXECUTING RESTATED AGREEMENT DATED 25.11.1999 AND HANDING OVER OF POSSESSION ON 28.11.1999. SO 2 ND NOC IS NOT FATAL TO THE TRANSFER ALREADY TAKEN PLACE AND IF AT ALL ANY OFFE NCE AGAINST CHAPTER XXC HAS BEEN COMMITTED THAT IS CHALLENGEABLE IN THE CIVIL C OURT. SINCE APPROPRIATE AUTHORITY IS NOT FROM DEPARTMENT OF INCOME TAX THE REFORE ANY INFORMATION RECEIVED FROM SUCH APPROPRIATE AUTHORITY CANNOT BE MADE BASI S FOR REOPENING OF THE ASSESSMENT AND MOREOVER SECOND REASSESSMENT IS NOT VALID. FURTHER RELIANCE WAS MADE ON 309 ITR 110 (MAD) 305 ITR 333 (MAD) 319 I TR 192 (MAD) AND 296 ITR 573 (MAD). 7. THE LD. DR. IN ORDER TO COUNTER THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE TRANSFER OF THE PROPE RTY IN VIEW OF SPECIAL PROVISIONS UNDER CHAPTER XXC COULD NOT TAKE PLACE UNTIL OR UNL ESS THE ASSESSEE OBTAIN NOC AND IF TRANSFER CANNOT TAKE PLACE THE DEEMED TRANS FER COULD ALSO NOT TAKE PLACE. CHAPTER XXC HAS A OVERRIDING EFFECT AND IT IS A SPE CIFIC/SPECIAL PROVISION WHICH WILL OVERRIDE GENERAL PROVISIONS WHICH SPECIFICALLY DEB ARRED ANY TRANSFER TO TAKE PLACE EXCEEDING PARTICULARS MENTIONED IN PARTICULAR ORDER AS PRESCRIBED AND EVEN AFTER MAKING 100% PAYMENT THE ASSESSEE COULD NOT TRANSFE R THE POSSESSION OF THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 12 ASSET BECAUSE IT FALLS BEYOND THE AMOUNT PRESCRIBED WITHIN THE SPECIFIED PERIOD AND EVEN GIVING POSSESSION NO TRANSFER COULD TAKE PLAC E. THERE IS A SPECIFIC PROVISION FOR ISSUING 2 ND NOC AND IF THERE IS CHANGE IN THE AMOUNT OR YEAR O R OTHER PARTICULARS ENTERED INTO BETWEEN THE PARTIES AS SPECIFIED IN EA RLIER AGREEMENT AND 2 ND NOC HAS THE SAME EFFECT AS THAT OF THE FIRST NOC SO WH EN 2 ND NOCS TERMS AND CONDITIONS AS THAT OF THE FIRST AGREEMENT EVEN ALTE RED SO THE ASSESSEE HAS NECESSARILY TO OBTAIN 2 ND NOC AND TILL THAT IS ISSUED NO VALID TRANSFER COU LD TAKE PLACE AND EVEN AFTER IT TAKES PLACE IT WOULD BE VO ID AS PER PROVISIONS OF SECTION 269 UK(2). THEREFORE IN VIEW OF THE SPECIFIC PROVI SIONS IN THIS REGARD IN THE ABSENCE OF NOC UNDER SECTION XXC ANY TRANSFER OF A NY IMMOVABLE PROPERTY IS NOT ONLY BE IN CONTRAVENTION OF THE RELEVANT PROVISIONS AS CONTAINED IN THE SAID CHAPTER SHALL ALSO BE VOID SO THE ASSESSEES CONTE NTION THAT THE RELEVANT PROVISIONS IS IN CONFLICT WITH THE SECTION 2(47)(VI ) IS LIABLE TO BE REJECTED BECAUSE SPECIAL PROVISION HAS TO BE GIVEN PREFERENCE OVER G ENERAL PROVISIONS. IT WAS THUS PLEADED TO REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. 8. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL ON RECORD AS WELL AS PRECEDENTS RELIED BY THE RIVAL SIDES. SO FAR AS THE ISSUE RELATABLE TO REOPENING IS CONCERNED WE FIND THAT THE ASSESSEE FILED RETURN O F INCOME FOR THE ASSESSMENT YEAR 2000-01 ON 30.01.2001 DECLARING INCOME OF RS.3 9 11 155/- WHICH INCLUDES LONG TERM CAPITAL GAINS OF RS.37 94 440/-. THE ASSE SSMENT WAS COMPLETED UNDER SECTION 143(3) ON 20.03.2005 DETERMINING THE TOTAL INCOME AT RS.61 70 523/- WHICH INCLUDES LONG TERM CAPITAL GAINS AT RS.54 34 410/-. THE ASSESSMENT WAS I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 13 REVISED ON 28.04.2006 GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) AND REVISED TOTAL INCOME WAS RS.41 77 554/- WHICH INCLUDES LONG TERM CAPITAL GAINS OF RS.34 71 410/-. 8.1 THE ASSESSEE HAS SOLD THE PROPERTY AT KILPAUK G ARDEN ROAD TO M/S. SANMAR PROPERTIES AND INVESTMENTS LIMITED FOR RS.1 35 66 114/-. A DEDUCTION UNDER SECTION 54/54F OF INCOME TAX ACT WAS CLAIMED. HOWEVER IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS OBTAINE D NO OBJECTION CERTIFICATE FROM APPROPRIATE AUTHORITY FOR THE SALE OF PROPERTY ONLY ON 21.02.2000 AND THE SALE CAN TAKE PLACE ONLY AFTER THIS DATE. SINCE THE INVE STMENT AT THE PROPERTY WAS MADE PRIOR TO ONE YEAR OF THE SALE THE DEDUCTION UNDER SECTION 54/54F IS NOT CORRECT AND SINCE THE ASSESSEE HAS CLAIMED 54/54F DEDUCTION TH E ASSESSMENT WAS REOPENED UNDER SECTION 147 BY ISSUING NOTICE ON 28.03.2007 WHICH CAME BE SERVED ON 28.03.2007 ITSELF. THE ASSESSING OFFICER RECORDED F OLLOWING REASONS FOR REOPENING OF THE ASSESSMENT: IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE AS ST. YEAR 2000-01 ASSESSEE STATED THAT HE SOLD A RESIDENTIAL PROPERTY AT KILPAUK CHENNAI FOR CONSIDERATION OF RS.1 35 66 114/- ON 28.11.99. IN THE CAPITAL GAINS WORKING BASED ON THE DETAILS FURNISHED BY THE ASSE SSEE A DEDUCTION OF RS.74 78 800/- WAS ALLOWED U/S 54/54F FOR A PRIO R INVESTMENT IN A RESIDENTIAL HOUSE AT BANGALORE ON 9/12/99. HOWEVER POST ASSESSMENT VERIFICATION REVEALS THAT NO OBJECTION CERTIFICATE BY THE APPROPRIATE AUTHORITY FOR THE SALE OF PROPERTY IN AA/MDS/11(240 )/2/99-2000 HAS BEEN ISSUED ON 21/2/2000. HENCE THE SALE CAN TAKE EFFECT ONLY AFTER THIS DATE. AS INVESTMENT IN THE PROPERTY AT BANGALO RE IS MADE MORE THAN ONE YEAR EARLIER TO THIS DATE I.E. 9/12/98 A SSESSEE IS NOT ENTITLED TO RELIEF U/S 54/54F OF RS.74 78 800/-. BECAUSE OF THE FAILURE ON THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 14 PART OF THE ASSESSEE TO FULLY DISCLOSE ALL THE MATE RIAL FACTS CONCERNING THE ASSESSMENT I AM SATISFIED INCOME HAS ESCAPED A SSESSMENT WITHIN THE MEANING OF SEC. 147. 8.2 IN RESPONSE TO NOTICE UNDER SECTION 148 THE AS SESSEE FILED RETURN OF INCOME ON 26.11.2007 RETURNING TOTAL INCOME OF RS.41 77 55 0/-. AFTER DUE NOTICE AND CONSIDERING THE OBJECTIONS OF THE ASSESSEE THE ASS ESSMENT ORDER DATED 14.12.2007 WAS PASSED BY DETERMINING TOTAL INCOME A T RS.1 36 19 334/- WHICH INCLUDES INCOME FROM LONG TERM CAPITAL GAINS ON PRO PERTY AT RS.1 21 61 564/- AGAINST WHICH THE ASSESSEE CAME UP IN APPEAL AND TH E LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE ON BOTH THE ISSUES OF REOPEN ING AS WELL AS DETERMINING OF INCOME ON LONG TERM CAPITAL GAINS AND DEPARTMENT HA S FILED THIS PRESENT APPEAL. 8.3 IN THIS CASE NO OBJECTION CERTIFICATE WAS ISSU ED ON 21.02.2000 BY THE APPROPRIATE AUTHORITY UNDER SECTION 269UA OF THE IN COME TAX ACT AND IT IS A CASE OF THE DEPARTMENT SINCE TRANSFER OF THE PROPERTY CO ULD TAKE PLACE ONLY AFTER THE DATE OF ISSUANCE OF NO OBJECTION CERTIFICATE WHICH WAS FINALLY ISSUED ON 21.02.2000 AND NOT BEFORE THAT DATE WHEREAS AS PER ASSESSEE THE DEEMED TRANSFER TOOK PLACE ON EXECUTION OF THE FIRST AGREEMENT AND FROM THAT DATE THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 54/54F IN RELATION TO PROPE RTY PURCHASED AT BANGALORE. 8.4 IN THIS CASE NO DOUBT THE ASSESSEE EXECUTED F IRST AGREEMENT ON 28.07.1996 AND CLEARANCE FROM THE APPROPRIATE AUTHO RITY UNDER CHAPTER XXC WAS STATED TO BE OBTAINED ON 08.10.1996. SUBSEQUENTLY THIS AGREEMENT WAS SUPPLEMENTED BY VARIOUS RESTATED AGREEMENTS AND LAS T AGREEMENT WAS EXECUTED ON 25.11.1999. ONCE AFTER VERIFICATION IN THE ACTUA L EXTENT OF PROPERTY TO BE CONVEYED AGAIN ON 25.11.1999 FOR A STEEP FALL IN PR ICE AND IN RESPECT OF THIS FINAL I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 15 RESTATED AGREEMENT THE ASSESSEE HAS APPROACHED THE APPROPRIATE AUTHORITY ON 11.02.2000 AND ANOTHER NO OBJECTION CERTIFICATE FRO M APPROPRIATE AUTHORITY WAS ISSUED ON THE BASIS OF SUBSEQUENT DOCUMENTS WHICH HAD VARIOUS VARIATIONS ON 21.02.2000. FROM THE RELEVANT PROVISIONS AS CONTAIN ED IN CHAPTER XXC IT BECOMES CLEAR THAT THERE IS RESTRICTION ON REVOCATION OR AL TERATION OF CERTAIN AGREEMENTS FOR THE TRANSFER OF IMMOVABLE PROPERTY OR ON TRANSFER O F CERTAIN IMMOVABLE PROPERTY AND OTHERWISE THERE IS CLEAR RESTRICTION ON TRANSF ER OF IMMOVABLE PROPERTY WITHOUT OBTAINING NO OBJECTION CERTIFICATE FROM THE COMPE TENT AUTHORITY. HERE IN THIS CASE THE ASSESSEE EXECUTED AN AGREEMENT ON 28.07.1 996 ON THE BASIS OF WHICH HE OBTAINED NO OBJECTION CERTIFICATE ON 08.10.1996 AND THEREAFTER THE ASSESSEE IS FOUND TO HAVE EXECUTED FURTHER AGREEMENTS TO SELL A ND FINAL AGREEMENT IN THIS REGARD WAS EXECUTED ON 25.11.1999. 8.5 CONSIDERING THE ARGUMENTS OF BOTH THE SIDES IN THE LIGHT OF DOCUMENTS PLACED BEFORE US AND THE PRECEDENTS RELIED UPON IT IS FOUND THAT THE IMMOVABLE PROPERTY AT 275 KILPAUK GARDEN ROAD WAS AGREED TO B E SOLD AS PER AGREEMENTS DATED 28.07.1996 12.08.1996 AND 06.02.1998 AND 25. 11.1999. ALL THESE AGREEMENTS ARE ONLY AGREEMENTS TO SELL AND THE RE GISTERED SALE DEED WAS NOT PRODUCED BY THE ASSESSEE. THE ASSESSEE HAS SOLD THI S PROPERTY TO SANMAR PROPERTIES INVESTMENTS LTD. WHICH IS A COMPANY THAT CONSTRUCTS FLATS TO BE SOLD TO VARIOUS FLAT BUYERS. THE COMMON PRACTICE IN THIS LI NE OF BUSINESS IS TO GIVE A POWER OF ATTORNEY BY THE SELLER IN FAVOUR OF THE PROPERTY DEVELOPER. HOWEVER THE ASSESSEE HAS NOT EXECUTED ANY POWER OF ATTORNEY IN FAVOUR OF THE PROPERTY DEVELOPER AND THE SAME WAS ALSO NOT PRODUCED. THE P ROPERTY CAN BE STATED TO BE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 16 HANDED OVER TO THE DEVELOPER ONLY ON EXECUTING A PO WER OF ATTORNEY IN FAVOUR OF THE DEVELOPER WHO WILL PREPARE NECESSARY DRAWINGS OF TH E BUILDING TO BE SUBMITTED TO THE MUNICIPAL AUTHORITIES FOR APPROVAL OF THE PLAN. HENCE THE TRANSACTION WILL BE DEEMED TO BE COMPLETED ONLY WHEN THE ASSESSEE GIVES A POWER OF ATTORNEY. THE POWER OF ATTORNEY IS WRITTEN TO AVOID STAMP DUTY FO R THE DEVELOPER AND THE STATE GOVERNMENT WILL COLLECT THE STAMP DUTY FROM THE BUY ERS OF THE FLATS. THE UNDIVIDED SHARE OF LAND WILL BE SOLD TO THE BUYERS OF THE FLA TS BY THE DEVELOPER ON THE STRENGTH OF THE POWER OF ATTORNEY. IN THIS CASE NO POWER OF ATTORNEY HAS BEEN EXECUTED AND HENCE THE DEVELOPER DOES NOT HAVE THE RIGHT OVER TH E PROPERTY. THE ASSESSEE HAS OBTAINED NOC FROM THE APPROPRIATE AUTHORITY ONLY ON 21.02.2000. IN THE PRESCRIBED APPLICATION FOR OBTAINING NO OBJECTION CERTIFICATE THE ASSESSEE AND THE PURCHASER HAS TO SPECIFICALLY STATE THAT IT/HE INTENDS TO SEL L/PURCHASE THEREBY ENCLOSING THE REQUIRED DOCUMENT AND IF ASSESSEE HAS GIVEN SUCH DE CLARATION BEFORE THE APPROPRIATE AUTHORITY HOW COULD IT CHANGE HIS STAN D. SO THIS STATEMENT BECOMES CONTRADICTORY IF HIS ARGUMENTS THAT POSSESSION HAS ALREADY BEEN HANDED OVER BEFORE OBTAINING NOC IS TO BE ACCEPTED. MOREOVER T HE ASSESSEE CAN GIVE A POWER OF ATTORNEY ONLY AFTER OBTAINING THE NOC FROM THE A PPROPRIATE AUTHORITY. HENCE THE POWER OF ATTORNEY WOULD HAVE BEEN EXECUTED BY THE A SSESSEE TO THE DEVELOPER ONLY AFTER 21.02.2000 AND THEN ONLY THE TRANSFER OF PROPERTY WILL BE DEEMED TO BE COMPLETED. THE ASSESSEE HAS GIVEN A WRONG DECLARATI ON TO THE DEPARTMENT THAT THE POSSESSION IS HANDED OVER ON 29.11.1999 THEREBY COMPLETING THE TRANSFER SO AS TO CLAIM THE EXEMPTION/DEDUCTION U/S. 54/54F OF THE INCOME TAX ACT. SINCE THE ASSESSEE HAS MADE A WRONG CLAIM WHICH HAS NOT BEEN CONSIDERED BY THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 17 DEPARTMENT IN THE ORIGINAL ASSESSMENT THE REOPENIN G OF THE ASSESSMENT FOR WHICH VALID REASONS HAVE BEEN RECORDED IN OUR VIEW IS V ALID AND IN VIEW OF NO OBJECTION CERTIFICATE ISSUED ON 21.02.2000 NO VALID TRANSFE R/DEEMED TRANSFER COULD TAKE PLACE SO THE ASSESSEE COULD NOT BE ELIGIBLE FOR DE DUCTION U/S. 54/54F IN RESPECT OF THE INVESTMENT AND IMPROVEMENTS MADE TO THE PROPERT Y PURCHASED ON 09.12.1998 AT BANGALORE BEING NOT WITHIN ONE YEAR BEFORE THE D ATE OF SALE. THEREFORE THE ORDER OF THE LD. CIT(A) IS NOT PROPER AND JUSTIFIED EITH ER IN HOLDING REOPENING TO BE JUSTIFIED OR ACCEPTING THE ASSESSEES CLAIM FOR DED UCTION UNDER SECTION 54/54F IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. AS SUCH THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THAT OF THE ASSESSING OFFIC ER IS RESTORED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED ON 09.2011. - INITIALED/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI DATED THE 09.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R. BY SEPARATE ORDER SD/- A.M. I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 18 PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : I HAVE CAREFULLY GONE THROUGH THE ORDER OF LD. JUD ICIAL MEMBER. DESPITE DISCUSSION AND DEEP STUDY OF THE ORDER I A M UNABLE TO PERSUADE MYSELF TO AGREE WITH HIS VIEWS ON ONE OF THE ISSUES RAISED IN THE APPEAL FILED BY THE DEPARTMENT. GROUNDS OF THE DEPARTMENT INTRINSICALLY RAISE TWO ISSUES. FIRST IS ON THE VA LIDITY OF REOPENING AND SECOND IS ON ALLOWABILITY OF DEDUCTION CLAIMED UNDE R SECTION 54/54F OF THE ACT BOTH OF WHICH WERE HELD IN FAVOUR OF TH E ASSESSEE BY LD. CIT(A). 2. ON THE FIRST ISSUE REGARDING REOPENING WHICH WA S HELD TO BE INVALID BY THE LD. CIT(APPEALS) I AM PERFECTLY IN AGREEMENT WITH THE ORDER OF LD. JM THAT THE REOPENING WAS VALIDLY DONE . IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE REOPENING WAS DEFINI TELY VALID SINCE THE NO OBJECTION CERTIFICATE FROM APPROPRIATE AUTHO RITY ISSUED ON 21.02.2000 WAS NEVER BROUGHT TO THE NOTICE OF ASSES SING OFFICER BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSME NT PROCEEDINGS. 3. HOWEVER VIS--VIS THE SECOND ISSUE REGARDING TH E DATE OF TRANSFER OF THE PROPERTY WHICH IS RELEVANT FOR DECI DING WHETHER I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 19 ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION UNDER S ECTION 54/54F OF INCOME-TAX ACT 1961 (IN SHORT THE ACT) I AM UNA BLE TO AGREE WITH THE VIEW OF THE LD. JM. FACTS OF THE CASE HAVE BEE N NARRATED BY LD. JM AT PARAS 2 TO 4 OF HIS ORDER. NEVERTHELESS FO R CLARITY SOME PERTINENT FACTS WHICH ACCORDING TO ME ARE RELEVAN T FOR DECIDING ON THE SECOND ISSUE IS SPELT OUT ONCE AGAIN. 4. THERE WAS AN INITIAL AGREEMENT FOR SALE DATED 28 .7.1996 WHICH THE PARTIES CALL AS PRINCIPAL AGREEMENT UNDER WH ICH WHAT WAS TO BE SOLD WAS 7 GROUNDS AND 510 SQ. FT. FOR A TOTAL CONS IDERATION OF ` 5 69 78 750/-. NO OBJECTION CERTIFICATE UNDER SECT ION 269UL OF THE ACT WAS ALSO OBTAINED BY THE ASSESSEE FROM THE APPR OPRIATE AUTHORITY FOR THIS AGREEMENT. THEREAFTER IT SEEMS ON FINDI NG THE ACTUAL MEASUREMENT OF THE PROPERTY TO BE ONLY 7 GROUNDS AN D 293 SQ. FT. SUPPLEMENTARY AGREEMENTS WERE EXECUTED ON 18.12.199 6 AND 06.02.1998 AND THE CONSIDERATION WAS BROUGHT DOWN T O ` 5 62 64 458/-. THERE WAS ANOTHER REVISION OF AGREE MENT ON 25.11.1999 NOMENCLATURED AS RESTATED SUPPLEMENTAR Y AGREEMENT WHEREBY THE SALE CONSIDERATION WAS FURTHER REDUCED TO ` 5 42 64 458/- AND THE REASON FOR SUCH A REVISION WA S MENTIONED AS I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 20 DETERIORATING MARKET CONDITION AND CRASH IN REAL ES TATE MARKET. AS PER THE LAST MENTIONED RESTATED SUPPLEMENTARY AGREE MENT THE TOTAL CONSIDERATION OF ` 5 42 64 458/- EXCEPT FOR ` 10 83 000/- STOOD PAID BY 05.02.1998. THE RESTATED SUPPLEMENTARY AGREEMEN T DATED 25 TH NOVEMBER 1999 ALSO MENTIONS TOWARDS LAST PART OF I TS PREAMBLE THAT THE PARTIES HAD APPLIED TO THE APPROPRIATE AUTHORIT Y FOR AN NOC FOR THEIR EARLIER SUPPLEMENTARY AGREEMENT DATED 6.2.98 AND APPROPRIATE AUTHORITY BY THEIR LETTER DATED 29.5.98 HAD LODGED THE SAID APPLICATION. NEVERTHELESS THE PARTIES FILED FORM NO.37-I ONCE A GAIN ON 30.11.99 FOR GETTING APPROVAL OF THE RESTATED SUPPLEMENTARY AGREEMENT AND APPROPRIATE AUTHORITY BY THEIR ORDER DATED 21.2.200 0 ISSUED NO OBJECTION FOR TRANSFER OF THE PROPERTY FOR A CONSID ERATION OF ` 5 42 64 458/- MENTIONED IN THE RESTATED AGREEMENT D ATED 25 TH NOVEMBER 1999. FINDING OF THE A.O. WAS THAT ASSES SEE HAD NEVER EXECUTED A POWER OF ATTORNEY IN FAVOUR OF THE PROPE RTY DEVELOPER AND SINCE ASSESSEE COULD NOT PRODUCE A POWER OF ATTORNE Y THE TRANSFER COULD NEVER BE TREATED AS COMPLETE. RELATED OBSERV ATIONS OF THE A.O. IS REPRODUCED HEREUNDER:- THE OBJECTION IS NOT ACCEPTABLE. THE IMMOVABLE PROP ERTY AT 275 KILPAUK GARDEN ROAD WAS AGREED TO BE SOLD AS PER I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 21 AGREEMENTS DATED 28/6/96 12/8/96 6/2/98 AND 25/11 /99. ALL THESE AGREEMENTS ARE ONLY AGREEMENTS TO SALE AND TH E REGISTERED SALE DEED WAS NOT PRODUCED BY THE ASSESSEE. THE AS SESSEE HAS SOLD A PROPERTY TO SANMAR PROPERTY DEVELOPMENT LTD. WHICH IS A COMPANY THAT CONSTRUCTS FLATS TO BE SOLD TO VARIOUS FLAT BUYERS. THE COMMO PRACTICE IN THIS LINE OF BUSINESS IS TO G IVE A POWER OF ATTORNEY BY THE SELLER IN FAVOUR OF THE PROPERTY DE VELOPER. HOWEVER THE ASSESSEE HAS NOT EXECUTED ANY POWER OF ATTORNEY IN FAVOUR OF THE PROPERTY DEVELOPER AND THE SAME WAS A LSO NOT PRODUCED. THE PROPERTY CAN BE STATED TO BE HANDED OVER TO THE DEVELOPER ONLY ON EXECUTING A POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER. ONCE THE DEVELOPER OBTAINS THE POWER OF ATTORNEY THE DEVELOPER WILL PREPARE NECESSARY DRAWINGS OF TH E BUILDING TO BE SUBMITTED TO THE MUNICIPAL AUTHORITIES FOR APPRO VAL OF THE PLAN. HENCE THE TRANSACTION WILL BE DEEMED TO BE C OMPLETED ONLY WHEN THE ASSESSEE GIVES A POWER OF ATTORNEY. THE P OWER OF ATTORNEY IS GIVEN TO AVOID STAMP DUTY FOR THE DEVEL OPER AND THE STATE GOVERNMENT WILL COLLECT THE STAMP DUTY FROM T HE BUYERS OF THE FLATS. THE UNDIVIDED SHARE OF LAND WILL BE SOL D TO THE BUYERS OF THE FLATS BY THE DEVELOPER ON THE STRENGTH OF PO WER OF ATTORNEY. IN THIS CASE NO POWER OF ATTORNEY HAS BE EN EXECUTED AND HENCE THE DEVELOPER DOES NOT HAVE THE RIGHT OVE R THE PROPERTY. THE ASSESSEE HAS OBTAINED NOC FROM THE A PPROPRIATE AUTHORITY ONLY ON 21/2/2000. THE ASSESSEE CAN GIVE A POWER OF ATTORNEY ONLY AFTER OBTAINING THE NOC FROM THE APPR OPRIATE AUTHORITY. HENCE THE POWER OF ATTORNEY WOULD HAVE BEEN EXECUTED BY THE ASSESSEE TO THE DEVELOPER ONLY AFTE R 21/2/2000 AND THEN ONLY THE TRANSFER OF PROPERTY WILL BE DEEM ED TO BE COMPLETED. THE ASSESSEE HAS GIVEN A WRONG DECLARAT ION TO THE DEPARTMENT THAT THE TRANSFER IS OVER ON 29/11/99 SO AS TO CLAIM THE EXEMPTION U/S. 54/54F OF THE INCOME-TAX ACT. S INCE THE ASSESSEE HAS MADE A WRONG CLAIM WHICH HAS NOT BEEN CONSIDERED BY THE DEPARTMENT IN THE ORIGINAL ASSESSMENT THE R EOPENING OF THE ASSESSMENT IS VALID. THE QUESTION THAT HAS BEE N DECIDED BY THE COMMISSIONER OF INCOME TAX(A) IS WHETHER THE AS SESSEE IS ELIGIBLE FOR DEDUCTION U/S. 54/54F IN RESPECT OF TH E IMPROVEMENTS MADE TO THE PROPERTY PURCHASED O N 9/12/98 AT I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 22 BANGALORE. THE ASSESSEE IS NOT ENTITLED FOR DEDUCT ION U/S. 54/54F SINCE THE PROPERTY AT BANGALORE WAS PURCHAS ED MORE THAN ONE YEAR BEFORE THE DATE OF SALE. 5. THE PAPER-BOOK PRODUCED BY THE LEARNED D.R. PLA CES AT PAGE NO.2 COPY OF A LETTER WRITTEN BY THE ASSESSEE TO D EVELOPER M/S SANMAR PROPERTIES AND INVESTMENTS LIMITED. THE CONTENTS O F THE SAID LETTER IS REPRODUCED HEREUNDER:- SIRS / MADAM RE: (1) PROPERTY BEARING DOOR NOS : 275 KILPAUK G ARDEN ROAD MADRAS 600 010. (2) AGREEMENT FOR SALE ENTERED INTO BETWEEN US ON 28.6.96. (3) SUPPLEMENTARY AGREEMENTS DATED 18.12.1996 AND 06.02.1998 ---------- I CONFIRM HAVING RECEIVED THE ENTIRE SALE CONSIDERA TION FULLY AND FINALLY PAYABLE TO ME UNDER THE ABOVE SAID AGREEMEN T DATED 28.06.1996 AND THE SUPPLEMENTARY AGREEMENTS DATED 1 8.12.1996 AND 06.02.1998 FOR SALE OF THE PROPERTY REFERRED TO ABOVE. CONSEQUENT UPON RECEIPT OF THE ENTIRE SALE CONSIDER ATION AS STATED ABOVE I AM HEREWITH DELIVERING FREEHOLD VACANT POSS ESSION OF THE PROPERTY BEARING DOOR NO: 275 KILPAUK GARDEN ROAD CHENNAI 600010. I HAVE INSTRUCTED MR. M. SUBRAMANIA RAO ADVOCATE TO HAND OVER THE ORIGINAL DEVELOPMENTS OF TITLE PERTAINING TO TH E ABOVE PROPERTY TO YOUR DULY AUTHORIZED REPRESENTATIVE. I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 23 KINDLY ACKNOWLEDGE IN DETAIL ON RECEIPT OF THE ORIG INAL DOCUMENTS OF TITLE PERTAINING TO THE ABOVE PROPERTY FROM MR. M. SUBRAMANIA RAO. YOURS FAITHFULLY SD/- (PR. CHOCKALINGAM) NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER AS TO WHY THE ABOVE LETTER COULD NOT BE CONSIDERED. NO S TATEMENT HAS BEEN TAKEN FROM M/S SANMAR PROPERTIES AND INVESTMEN TS LIMITED IN THIS REGARD. SO THE NUTSHELL OF ENTIRE GAMUT OF F ACTS ARE THAT THERE WAS A PRINCIPAL SALE AGREEMENT FOR SALE DATED 28.6. 96 WHICH WERE SUPPLEMENTED THROUGH FURTHER AGREEMENTS DATED 18.12 .1996 AND 6.2.1998 AND 25.11.2009. IN THE FIRST AGREEMENT TH E EXTENT OF THE PROPERTY SHOWN WAS 7 GROUNDS AND 510 SQ. FT. AND CO NSIDERATION ` 5 69 78 750/- THROUGH THE VARIOUS SUPPLEMENTAL AGR EEMENT RESTING WITH SUPPLEMENTAL AGREEMENT DATED 25.11.2009 THE E XTENT OF THE PROPERTY BASED ON PHYSICAL MEASUREMENT HAD COME DOW N TO 7 GROUNDS 293 SQ. FT. AND THE SALE CONSIDERATION RED UCED TO ` 5 42 64 458/- EXCEPT FOR ` 10 83 000/- THE WHOLE OF THE CONSIDERATION STOOD PAID BY 05.02.1998 AND ORIGINAL TITLE DEEDS ALSO STOOD HANDED OVER AS SPELLED OUT AT CLAUSE (4) OF T HE LAST I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 24 SUPPLEMENTARY RESTATED AGREEMENT. NOW THE FIRST QU ESTION TO BE DETERMINED IS WHETHER THERE IS A TRANSFER WITHIN TH E MEANING OF CLAUSE (V) OF SECTION 2(47) OF THE ACT BY PART PERFORMANCE . IF WE LOOK AT THE CONDITIONS SET OUT UNDER SECTION 53A OF TRANSFER OF PROPERTY ACT 1882 (T.P. ACT IN SHORT) HON'BLE APEX COURT IN THE CASE OF NATHULAL V. PHOOLCHAND AIR 1970 (SC) 546 HAS SUMMARIZED THEM A S UNDER:- (I) THERE MUST BE A CONTRACT TO TRANSFER FOR CONSID ERATION ANY IMMOVABLE PROPERTY; (II) THE CONTRACT MUST BE IN WRITING SIGNED BY THE TRANSFEROR OR BY SOMEONE ON HIS BEHALF; (III) THE WRITING MUST BE IN SUCH WORDS FROM WHICH THE TERMS NECESSARY TO CONSTRUE THE TRANSFER CAN BE ASCERTAIN ED WITH REASONABLE CERTAINTY; (IV) THE TRANSFEREE IN PART -PERFORMANCE OF THE CO NTRACT TAKE POSSESSION OF THE PROPERTY OR OF ANY PART THEREOF OR IF THE TRANSFEREE IS ALREADY IN POSSESSION HE MUST CONTIN UE IN POSSESSION IN PART-PERFORMANCE OF THE CONTRACT; (V) THE TRANSFEREE MUST HAVE DONE SOME ACT IN FURTH ERANCE OF THE CONTRACT; (VI) THE TRANSFEREE MUST HAVE PERFORMED OR BE WILL ING TO PERFORM HIS PART OF THE CONTRACT. NONE OF THE ABOVE CONDITIONS SPELL OUT THE REQUIREM ENT OF EXECUTION OF A POWER OF ATTORNEY AS A NECESSARY INGREDIENT TO QUALIFY FOR A PART PERFORMANCE. WHAT IS REQUIRED IS THAT THE TRANSFER EE HAS TO BE IN POSSESSION THERE SHOULD BE A CONTRACT FOR TRANSFER IN WRITING THE TERMS OF THE CONTRACT SHOULD BE ASCERTAINABLE AND T HE TRANSFEREE MUST I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 25 BE WILLING TO PERFORM HIS PART OF THE CONTRACT. HE RE EXCEPT FOR A SUM OF ` 10 83 000/- THE WHOLE OF THE CONSIDERATION OF ` 5 42 64 458/- STOOD PAID. POSSESSION WAS ALREADY HANDED OVER. A TLEAST FOR THE FIRST AGREEMENT NOC FROM THE APPROPRIATE AUTHORITY HAD BEEN OBTAINED BY THE PARTIES. THUS THE CONDITIONS PRES CRIBED UNDER SECTION 53A OF T.P. ACT STOOD SATISFIED. THIS WOUL D AUTOMATICALLY CALL FOR APPLICATION OF SECTION 2(47) OF THE ACT WHICH D EFINES TRANSFER SINCE THE ABOVE TRANSACTION FALLS WITHIN THE PURVIE W OF CLAUSE (V) THEREUNDER. 6. THIS BRINGS US TO THE VITAL SECOND QUESTION. TH E QUESTION IS EVEN IF THE TRANSACTION FALLS WITHIN THE DEFINITION OF TRANSFER UNDER SECTION 2(47) OF THE ACT CAN IT BE CONSIDERED SO IN VIEW OF CHAPTER XXC OF THE ACT WHEREIN SECTION 269UC AND SECTION 26 9UL PLACE RESTRICTION FOR TRANSFER AND REGISTRATION OF DOCUME NTS IN RESPECT OF TRANSFER OF CERTAIN SPECIFIED CATEGORIES OF IMMOVAB LE PROPERTY. THERE IS ABSOLUTELY NO DOUBT THAT FOR THE FINAL RESTATED AGREEMENT DATED 25.11.2009 NO OBJECTION ORDER PASSED BY THE APPROP RIATE AUTHORITY UNDER SECTION 269UL OF THE ACT WAS DATED 21.2.2000. IF DATE OF SUCH NO OBJECTION IS TREATED AS DATE OF TRANSFER THEN W ITHOUT DOUBT THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 26 INVESTMENT MADE BY THE ASSESSEE ON 9.12.1998 FOR CL AIMING DEDUCTION UNDER SECTION 54/54F OF THE ACT WAS OUT O F TIME SINCE IT WAS DONE MORE THAN ONE YEAR EARLIER TO THE FORMER D ATE. THE ARGUMENT OF THE LEARNED D.R. WAS THAT ANY TRANSFER OF IMMOVABLE PROPERTY MADE IN CONTRAVENTION OF CHAPTER XXC OF TH E ACT WHICH PUT CERTAIN RESTRICTIONS ON TRANSFER OF CERTAIN CATEGOR IES OF PROPERTIES MENTIONED THEREIN COULD NEVER BE DEEMED AS A TRAN SFER AT ALL. ACCORDING TO HIM EVEN IF THE CONDITIONS SPECIFIED UNDER CLAUSE (V) OF SECTION 2(47) ARE SATISFIED THE TRANSACTIONS COULD NOT BE TREATED AS A TRANSFER IF PROVISIONS OF CHAPTER XXC ARE NOT COMP LIED WITH. SO THE FACE-OFF IS BETWEEN DEFINITION OF TRANSFER UNDER SECTION 2(47)(V) OF THE ACT AND CHAPTER XXC OF THE ACT IN SO FAR AS IT APPLIED THE CATEGORIES OF IMMOVABLE PROPERTY FALLING WITHIN THE PURVIEW OF THE LATTER CHAPTER. IF THE INTERPRETATION GIVEN BY THE LEARNED D.R. IS ACCEPTED DEFINITION OF TRANSFER AS GIVEN IN SECT ION 2(47)(V) OF THE ACT WOULD HAVE TO BE IGNORED IN ALL CASES WHERE CHA PTER XXC IS APPLICABLE UNLESS AND UNTIL ASSESSEE OBTAINS AN NOC UNDER SECTION 269UL OR THE TIME SPECIFIED UNDER SECTION 269UD OF THE ACT HAS EXPIRED. IN MY OPINION NOC GIVEN BY APPROPRIAT E AUTHORITY UNDER I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 27 SECTION 269UL OF THE ACT CANNOT BE EQUATED WITH A CONVEYANCING. IN OTHER WORDS IF THE INTERPRETATION GIVEN BY THE LEA RNED D.R. IS ACCEPTED THE TRANSFER CAN BE DEEMED AS TO HAVE BEE N EFFECTED ONLY WHEN THE REGISTRATION OF THE CONVEYANCE DEED IS DON E BY THE REGISTRATION OFFICER APPOINTED UNDER REGISTRATION A CT 1908 ON THE ASSESSEE PRODUCING AN NOC UNDER SECTION 269UL OF TH E ACT. DEFINITION OF TRANSFER INSOFAR AS IT COVERS PART PERFORMANCE MENTIONED UNDER CLAUSE (V) OF SECTION 2(47) OF THE ACT WOULD THUS BECOME OTIOSE IN EVERY CASE WHERE CHAPTER XXC IS AP PLICABLE. IF INTERPRETATIONS GIVE RISE TO A SITUATION RESULTING IN A SEEMING CONTRADICTION IT IS TRITE LAW THAT THE FIRST EFFOR T OF EVERY COURT SHOULD BE TO RECONCILE THE POSITION IN SUCH A WAY THAT RELEV ANT SECTIONS COULD BE RENDERED WORKABLE. BY EFFECTING A TRANSFER PRI OR TO THE FILING OF THE STATEMENT IN FORM NO.37-I PRESCRIBED UNDER CHAPTER XXC OF THE ACT THE PARTIES MIGHT HAVE VIOLATED STIPULATIONS UNDER CHAPTER XXC. IT COULD MAKE IT IMPOSSIBLE FOR AN APPROPRIATE AUTHORI TY TO PASS AN ORDER FOR PURCHASE UNDER SECTION 269UD(1) OF THE ACT EVE N IF IT WANTS TO PASS SUCH AN ORDER SINCE THE TRANSFER STOOD ALREADY EFFECTED. SO IN MY OPINION THE SOLUTION WOULD LIE IN RELATING BA CK THE NOC IF GIVEN I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 28 BY THE APPROPRIATE AUTHORITY TO THE DATE ON WHICH THE CONDITIONS SPECIFIED UNDER SECTION 53A OF T.P. ACT 1882 STOOD SATISFIED. THUS EVEN THOUGH THE CERTIFICATE OF NO OBJECTION HAS BEE N ISSUED FINALLY BY THE APPROPRIATE AUTHORITY ON 21.2.2000 IT WOULD OP ERATE BACK TO THE DATE ON WHICH POSSESSION WAS GIVEN WHICH HERE WA S ADMITTEDLY 28.11.99. IN TAKING THE VIEW THAT TRANSFER UNDER CLAUSE (V) OF SECTION 2(47) OF THE ACT COULD BE CONSIDERED AS COM PLETE EVEN IF THE APPROVAL OF APPROPRIATE AUTHORITY HAS NOT BEEN OBTA INED I AM FORTIFIED BY THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN PATRIKA LTD. V. UNION OF INDIA (213 ITR 4 43). IN THAT CASE POSSESSION OF THE PROPERTY WAS GIVEN OVER PART PERF ORMANCE AND THEIR LORDSHIP WAS OF THE OPINION THAT THERE WAS A LOT OF DIFFERENCE BETWEEN ACTUAL TRANSFER AND INTENDED TRANSFER. THEIR L ORDSHIP AFTER ANALYZING FORM NO.37-I IN GREAT DETAIL HELD THAT T HE TRANSFER STOOD EFFECTED BY WAY OF PART PERFORMANCE UNDER SECTION 5 3A OF T.P.ACT 1882 EVEN BEFORE FILING OF FORM NO.37-I. IT WAS HE LD THAT IF THE TRANSFER WAS EFFECTED BEFORE SUBMITTING FORM NO.37- I NOTHING REMAINED BUT PROSECUTION OF THE VIOLATOR. THE ABOV E DECISION OF HON'BLE RAJASTHAN HIGH COURT WAS TAKEN AFTER DU E CONSIDERATION OF I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 29 THE DECISION OF HON'BLE APEX COURT IN THE CASE OF A PPROPRIATE AUTHORITY V. TANVI TRADING & CREDITS P. LTD. (191 I TR 307). I AM ALSO FORTIFIED IN TAKING THE ABOVE VIEW BY VIRTUE OF TH E DECISION OF DELHI HIGH COURT IN THE CASE OF MEGSONS EXPORTS V. UNION OF INDIA (194 ITR 225) WHERE IT WAS HELD THAT AN APPROPRIATE AUTHORIT Y COULD NOT DECLINE TO GIVEN AN NOC FOR A REASON THAT RIGHT IN FAVOUR OF TRANSFEREE STOOD ALREADY CREATED IN TERMS OF SECTION 53A OF T.P. ACT 1882. ALL THESE DECISIONS WOULD CLEARLY SHOW THAT THE PURPOSE OF IN SERTION OF CHAPTER XXC WAS TO PREVENT UNDERSTATEMENT IN CONSIDERATION FOR TRANSFER OF PROPERTY AND MAKING IT MANDATORY FOR THE REGISTRATI ON AUTHORITY TO OBTAIN AN NOC ISSUED UNDER SECTION 269UL OF THE ACT BEFORE EFFECTING A REGISTRATION. THIS WOULD NOT IN MY OP INION ANY WAY AFFECT OPERATION OF TRANSFER AS DEFINED UNDER SECTION 2(47 )(V) OF THE ACT FOR THE PURPOSE OF ASSESSING CAPITAL GAINS. THUS I AM OF THE OPINION THAT EVEN THOUGH THE NO OBJECTION FOR RESTATED AGREEMENT WAS GIVEN BY THE APPROPRIATE AUTHORITY ONLY ON 21.2.2000 THE TR ANSFER HAS TO BE DEEMED AS EFFECTED ON 28.11.99 SINCE THE CONDITIONS SPECIFIED UNDER SECTION 53A OF T.P.ACT 1882 STOOD SATISFIED AND TH EREBY THE TRANSACTION AUTOMATICALLY CAME WITHIN THE PURVIEW OF SECTION 2(47)(V) I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 30 OF THE ACT. THIS BEING SO INVESTMENT MADE BY THE ASSESSEE ON 9.12.98 IN THE RESIDENTIAL PROPERTY AT BANGALORE WA S WELL WITHIN THE TIME PERIOD MENTIONED FOR AVAILING DEDUCTION UNDER SECTION 54/54F OF THE ACT. THEREFORE I CONFIRM THE ORDER OF CIT(APP EALS) THAT ASSESSEE WAS ELIGIBLE FOR AVAILING EXEMPTION UNDER SECTION 5 4/54 OF THE ACT. 8. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY A LLOWED. SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER CHENNAI DATED THE 15 TH SEPTEMBER 2011. I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 31 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O.K.NARAYANAN VICE-PRESIDENT THIRD MEMBER ITA NO.1830(MDS)/2009 ASSESSMENT YEAR: 2000-01 THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE II TIRUCHIRAPALLI. VS. MR. PR CHOCKALINGAM 2 SECOND CROSS THILLAINAGAR TIRUCHIRAPALLI-17 PAN AETPC4075Q. (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI SHA JI P JACOB IRS COMMISSIONER OF INCOME-TAX. RESPONDENT BY : SHRI S.SRID HAR ADVOCATE. DATE OF HEARING : 15 TH DECEMBER 2011 DATE OF ORDER : 10 TH JANUARY 2012 O R D E R PER DR.O.K.NARAYANAN VICE-PRESIDENT: THIS APPEAL ARISES OUT OF THE ASSESSMENT COMPLET ED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT 1961. THE ASSESSEE HAD EARNED LONG-TERM CAPIT AL GAINS ON I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 33 SALE OF A PROPERTY IN WHICH HE HAD A SHARE. HE HA D ALSO INVESTED HIS SHARE OF SALE PROCEEDS IN A RESIDENTIA L PROPERTY AT BANGALORE ON THE BASIS OF WHICH HE CLAIMED DEDUCTI ON UNDER SECTION 54/54F OF THE INCOME-TAX ACT 1961. IN THE ORIGINAL ASSESSMENT THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 54/54F WAS ACCEPTED. THE ASSESSMENT WAS TA KEN IN FIRST APPEAL ON POINTS OF DISPUTES WITH REFERENCE TO CERT AIN INCIDENTAL MATTERS AND THAT APPEAL WAS ALSO DISPOSED OFF. LAT ER ON NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO REVISE T HE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSING AUTHORITY HA D COMMITTED AN ERROR IN RECKONING THE ACTUAL DATE OF THE SALE O F THE PROPERTY WHEREBY THE BENEFIT OF DEDUCTION UNDER SECTION 54/5 4F WAS ERRONEOUSLY GRANTED TO THE ASSESSEE. AFTER CONSIDE RING THE DETAILED SUBMISSIONS FILED BY THE ASSESSEE THE PRO POSED REVISION UNDER SECTION 263 WAS DROPPED BY THE COMMI SSIONER OF INCOME-TAX. BUT ANYHOW A NOTICE UNDER SECTION 14 8 WAS ISSUED THEREAFTER AND THE REASSESSMENT WAS COMPLETED WHER EIN THE DEDUCTION ALREADY GRANTED TO THE ASSESSEE UNDER SEC TION 54/54F WAS WITHDRAWN BY THE ASSESSING AUTHORITY. ACCORDIN G TO THE ASSESSING AUTHORITY THE NO OBJECTION CERTIFICATE ( NOC) FROM THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 34 APPROPRIATE AUTHORITY CONSTITUTED UNDER THE INCOME -TAX ACT 1961 WAS OBTAINED ONLY ON 21-2-2000 AND THEREFORE THE TRANSFER OF THE PROPERTY COULD HAVE BEEN MADE ONLY AFTER THAT DATE WHEREAS THE ASSESSEE HAS MADE THE INVESTMENT IN BANGALORE PROPERTY ON 9-12-1998 WHEREBY THERE IS A GAP OF MORE THAN ONE YEAR BETWEEN THE PURCHASE OF THE NEW PROPERTY AND THE SALE OF THE OLD PROPERTY BY WHICH THE ASSE SSEE WAS NOT ENTITLED FOR THE DEDUCTION UNDER SECTION 54/54F. I N SHORT THE ASSESSING OFFICER HELD THAT THE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE UNDER SECTION 54/54F WAS NOT SUSTAINABLE AS THE INVESTMENT IN NEW PROPERTY WAS MADE BY THE ASSESSEE BEYOND THE ELIGIBLE ONE YEAR PERIOD PROVIDED IN LAW. 2. WHEN THE ASSESSMENT WAS TAKEN IN FIRST APPEAL THE COMMISSIONER OF INCOME-TAX(APPEALS) HELD THAT THE A SSESSEE WAS ENTITLED FOR THE DEDUCTION AVAILABLE UNDER SECT ION 54/54F AS HE HAD MADE THE INVESTMENT IN THE BANGALORE PROPERT Y WITHIN A PERIOD OF ONE YEAR PRIOR TO THE DATE OF SALE OF THE OLD PROPERTY. THE COMMISSIONER OF INCOME-TAX(APPEALS) HELD THAT T HE TRANSFER ACTUALLY DID TAKE PLACE ON 28-11-1999 WHEN THE POS SESSION OF THE PROPERTY WAS HANDED OVER TO THE BUYERS AND THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 35 CONSIDERATION WAS RECEIVED BY THE ASSESSEE IN TERMS OF SECTION 2(47)(VI) OF THE INCOME-TAX ACT 1961 AND SECTION 5 3A OF THE TRANSFER OF PROPERTY ACT. HE ACCORDINGLY ALLOWED T HE APPEAL. THE FIRST APPELLATE ORDER WAS PASSED BY THE COMMISS IONER OF INCOME-TAX(APPEALS) AT TIRUCHIRAPALLI ON 22-9-2009 . 3. THE ABOVE FIRST APPELLATE ORDER CAME BEFORE THE TRIBUNAL IN SECOND APPEAL FILED BY THE REVENUE IN I TA NO.1830(MDS)/2009. WHILE DECIDING THE SAID APPEAL FILED BY THE REVENUE THE LEARNED JUDICIAL MEMBER HELD THAT THE REOPENING OF THE ORIGINAL ASSESSMENT WAS VALIDLY DONE BY THE ASS ESSING OFFICER AND THE INCOME ESCAPING ASSESSMENT IS VALID AND ALSO THE ASSESSEE WAS NOT ENTITLED FOR THE EXEMPTION PRO VIDED UNDER SECTION 54/54F OF THE ACT AS THE INVESTMENT IN THE BANGALORE PROPERTY WAS MADE BEYOND A PERIOD OF ONE YEAR PRIOR TO THE DATE OF SALE OF THE PROPERTY. HE ACCORDINGLY ALLOWED TH E APPEAL OF THE REVENUE AND RESTORED THE ORDER PASSED BY THE ASSESS ING AUTHORITY. 4. THE LEARNED ACCOUNTANT MEMBER AGREED WITH THE ORDER OF THE LEARNED JUDICIAL MEMBER ON THE POINT O F VALIDITY OF RE- OPENING AND THE ASSESSMENT COMPLETED UNDER SECTION 147 OF I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 36 THE ACT. BUT HE DID NOT AGREE WITH THE LEARNED JU DICIAL MEMBER THAT THE ASSESSEE WAS NOT ENTITLED FOR THE DEDUCTIO N UNDER SECTION 54/54F OF THE ACT. THE LEARNED ACCOUNTANT MEMBER HELD THAT THE POSSESSION OF THE PROPERTY HAVING BEEN HAN DED OVER TO THE BUYERS ON THE BASIS OF AN IRREVOCABLE POWER OF ATTORNEY AND THE CONSIDERATION RECEIVED BY THE ASSESSEE THE TRA NSFER FOR THE PURPOSE OF INCOME-TAX ACT 1961 WAS COMPLETE ON THA T DATE AND ACCORDINGLY THE PERIOD BETWEEN THE INVESTMENT IN TH E BANGALORE PROPERTY AND THE TRANSFER OF THE OLD PROPERTY WAS L ESS THAN ONE YEAR AND THE ASSESSEE WAS ENTITLED FOR THE DEDUCTIO N UNDER SECTION 54/54F OF THE ACT. HE HELD THAT THE INVEST MENT MADE BY THE ASSESSEE ON 9-12-1998 IN THE RESIDENTIAL PROPER TY AT BANGALORE WAS WELL WITHIN THE PERIOD MENTIONED FOR AVAILING THE DEDUCTION UNDER SECTION 54/54F OF THE ACT. HE ACCO RDINGLY CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME-T AX(APPEALS) ON THAT POINT AND GRANTED RELIEF TO THE ASSESSEE ON THE MERIT OF THE ISSUE. 5. IN THE LIGHT OF THE DIFFERENCE OF OPINION BETWE EN THE MEMBERS WHO HEARD THE APPEAL THE FOLLOWING QUESTIO N WAS REFERRED TO THE HONBLE PRESIDENT INCOME-TAX APPEL LATE TRIBUNAL I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 37 UNDER SECTION 255(4) OF THE ACT FOR REFERRING THE S AME TO A THIRD MEMBER FOR ADJUDICATION:- WHETHER IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE PRIOR TO APPLYING AND OBTAINING NO OBJECTION CERTIFICATE UNDER CHAPTER XXC FOR PROPOSED TRANSFE R EXCEEDING AMOUNT AND ASSET SITUATED IN AREA PRESCRIBED DEEMED TRANSFER U/S 2(47) OF INCOME TAX ACT COULD BE HELD TO BE VALID WHEN THERE IS SPECIFI C RESTRICTION IMPOSED IN THIS REGARD AND ALSO THERE I S SPECIFIC PROVISION TO TREAT SUCH TRANSFER AS VOID AND EXEMPTION/DEDUCTION U/S 54/54F COULD BE ALLOWED ON THE BASIS OF SUCH DEEMED TRANSFER OR NOT? IT IS HOW THAT THE MATTER HAS NOW BEEN PLACED BEFOR E ME. 6. I HEARD SHRI SHAJI P JACOB THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E AND SHRI S.SRIDHAR THE LEARNED COUNSEL APPEARING FOR THE AS SESSEE. I HAVE GONE THROUGH THE DETAILED ORDERS PASSED BY THE LEARNED MEMBERS AND ALSO THE ORDERS OF THE LOWER AUTHORITIE S AND ALL I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 38 OTHER RELEVANT MATERIALS AVAILABLE ON RECORD. THE FACTS AND CIRCUMSTANCES LEADING TO THE DISPUTE HAVE ALREADY B EEN DISCUSSED IN DETAIL IN THE ORDER OF THE COMMISSIONE R OF INCOME- TAX(APPEALS) IN THE ORDER PASSED BY THE LEARNED J UDICIAL MEMBER AND MORE EXPLICITLY IN THE ORDER OF THE LEAR NED ACCOUNTANT MEMBER. THEREFORE ALL THOSE THINGS ARE NOT REPEATED AGAIN. 7. THE SHORT QUESTION TO BE CONSIDERED IN THE PRES ENT CASE IS THIS. THE ASSESSEE HAD SOLD HIS PROPERTY I N CHENNAI AND UTILIZED THE SALE PROCEEDS IN MAKING INVESTMENT IN A RESIDENTIAL PROPERTY IN BANGALORE. THE INVESTMENT IN THE BANGA LORE PROPERTY WAS MADE ON 9-12-1998. ACCORDING TO THE ASSESSEE THE TRANSFER OF THE OLD PROPERTY WAS MADE WITHIN A PERI OD OF ONE YEAR FROM THAT DATE OF 9-12-1998. THEREFORE HE IS ENTI TLED FOR THE DEDUCTION UNDER SECTION 54/54F OF THE ACT. BUT AC CORDING TO THE REVENUE THE ASSESSEE COULD HAVE TRANSFERRED THE OL D PROPERTY ONLY AFTER 21-2-2000. THIS IS BECAUSE THE NOC WAS ISSUED BY THE APPROPRIATE AUTHORITY ONLY ON THAT DATE OF 21-2 -2000. THE DATE OF 21-2-2000 ITSELF IS BEYOND A PERIOD OF ONE YEAR FROM THE DATE OF PURCHASE OF THE BANGALORE PROPERTY ON 9-12- 1998. I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 39 THEREFORE AT ANY RATE THE TRANSFER OF PROPERTY MA DE BY THE ASSESSEE WOULD INVARIABLY BE BEYOND A PERIOD OF ONE YEAR. ACCORDINGLY THE ASSESSEE IS NOT ENTITLED FOR THE B ENEFIT OF DEDUCTION UNDER SECTION 54/54F OF THE ACT. 8. THE ORIGINAL AGREEMENT OF SALE OF THE CHENNAI PROPERTY WAS MADE ON 28-6-1996. BASED ON THAT AGRE EMENT NOC FROM THE APPROPRIATE AUTHORITY WAS OBTAINED ON 8-10-1996. THEREAFTER A SUPPLEMENTARY AGREEMENT WAS EXECUTED O N 6-2-1998 IN ORDER TO ACCOMMODATE THE ACTUAL EXTENT OF THE LANDED PROPERTY ARRIVED AT ON RE-MEASUREMENT. ONCE THE SUPPLEMENTARY AGREEMENT WAS EXECUTED ON 6-2-1998 A N IRREVOCABLE POWER OF ATTORNEY WAS EXECUTED IN FAVOU R OF THE BUYERS OF THE PROPERTY ON 6-2-1998 ITSELF. AS THE SALE PRICE OF THE PROPERTY WAS REVISED ON THE BASIS OF THE REVISED EX TENT OF LAND A FRESH APPLICATION WAS PLACED BEFORE THE APPROPRIATE AUTHORITY FOR A FRESH NOC. THE APPROPRIATE AUTHORITY LODGED THE SECOND APPLICATION FOR CLEARING THE SUPPLEMENTARY AGREEMEN T ON 29-5-1998. MEANWHILE THE AGREEMENT WAS AGAIN REST ATED TO REVISE THE SALE CONSIDERATION CONSEQUENT TO THE FAL L IN PRICE OF REAL ESTATE. THERE WAS RENEGOTIATION OF PRICE AND THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 40 CONSIDERATION WAS AGAIN REVISED AND FIXED. THE RES TATED AGREEMENT WAS EXECUTED ON 25-11-1999. IMMEDIATELY THEREAFTER ON 28-11-1999 THE POSSESSION OF THE PR OPERTY WAS GRANTED TO AND TAKEN OVER BY THE BUYERS ON RECEIPT OF THE CONSIDERATION EXCEPT 2% THEREOF. AGAIN AN APPLIC ATION WAS FILED BEFORE THE APPROPRIATE AUTHORITY ON 30-11-1999 FOR A FRESH NOC. THE REMAINING 2% CONSIDERATION WAS ALSO PAID BY THE BUYERS ON 21-12-1999. FINALLY THE NOC WAS ISSUED BY THE APP ROPRIATE AUTHORITY ON 21-2-2000. AS THE PROPERTY WAS SOL D TO DEVELOPERS AND BUILDERS THE ULTIMATE CONVEYANCES W ERE EXECUTED BY THE SELLERS TO THE ULTIMATE BUYERS OF T HE APARTMENTS ON THE BASIS OF AN IRREVOCABLE POWER OF ATTORNEY AL READY GRANTED ON 6-2-1998. 9. WHEN THE ABOVE SEQUENCES OF EVENTS ARE CONSIDERED IN A WHOLESOME MANNER IT IS EVIDENT THA T THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE B UYERS AND THE CONSIDERATION WAS PAID BY THE BUYERS ON 28-11-1 999 ITSELF. THIS GIVING AWAY OF THE POSSESSION OF THE PROPERTIE S TO THE BUYERS AGAINST RECEIPT OF THE CONSIDERATION OF THE TRANSACTION HAS SATISFIED THE REQUIREMENTS OF TRANSFER WITHIN THE MEANING OF I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 41 SECTION 2(47) OF THE INCOME-TAX ACT 1961 AND WITH IN THE MEANING OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THEREFORE IT IS CLEAR THAT THE TRANSFER OF PROPERT Y IN THIS CASE HAS TAKEN PLACE ON 28-11-1999 ITSELF. IF THAT DATE IS TAKEN AS THE DATE OF TRANSFER OF THE PROPERTY IT IS TO BE SEEN THAT THE ASSESSEE HAD INVESTED THE SALE PROCEEDS IN HIS BANGALORE PROPERT Y WITHIN A PERIOD OF ONE YEAR PRIOR TO THE DATE OF TRANSFER. THE ASSESSEE HAS MADE THE INVESTMENT IN HIS BANGALORE PROPERTY O N 9-12-1998. 10. NOW THE QUESTION IS AS TO WHEN THE FINAL AND BINDING NOC WAS ISSUED BY THE APPROPRIATE AUTHORITY IN THE PRESENT CASE. THE FINAL NOC WAS ISSUED ON 21-2-200 0. THE REVENUE IS CLINCHING ON THIS DATE TO SHOW THAT THE NOC WAS ISSUED ON 21-2-2000 AND THEREFORE THE TRANSFER C OULD HAVE BEEN TAKEN PLACE ONLY AFTER THAT DATE AND NEVER BEF ORE THAT DATE AND PARTICULARLY ON 28-11-1999. THIS ARGUMENT OF THE REVENUE IS HIGHLY TECHNICAL. THE REVENUE HAS OVERLOOKED TH E SEQUENCE OF EVENTS PRECEDED THE ISSUE OF FINAL NOC BY THE AP PROPRIATE AUTHORITY ON 21-2-2000. TO REPEAT AGAIN THE ORIGI NAL AGREEMENT OF SALE WAS EXECUTED ON 28-6-1996. THE APPROPRIATE AUTHORITY I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 42 HAD ISSUED THE NOC ON THE BASIS OF THAT AGREEMENT O N 8-10-1996 ITSELF. THEREAFTER THE CIRCUMSTANCES WAR RANTED TO REVISE THE AGREEMENT TWICE ONE FOR RESTATING THE A CTUAL EXTENT OF THE PROPERTY AND THE OTHER FOR RESTATING THE NEGOTI ATED CONSIDERATION OF SALE. THE ASSESSEE HAD FILED REVI SED APPLICATIONS FOR NOC BEFORE THE APPROPRIATE AUTHORI TY ON BOTH OCCASIONS WHEN THE ORIGINAL AGREEMENT WAS RESTATED. MEANWHILE THE POSSESSION WAS ALSO HANDED OVER TO T HE BUYERS AND THE CONSIDERATION WAS ALSO RECEIVED FROM THEM. THEREFORE IT IS NECESSARY TO CONSIDER ALL THESE EVENTS AS INSEPA RABLE SEGMENTS OF A SINGLE AND COMPOSITE TRANSACTION. TH E ORIGINAL SALE AGREEMENT WAS EXECUTED BY THE PARTIES ON 28-6- 1996. THE SUBSEQUENT RESTATEMENTS OF THE AGREEMENT WERE ONLY TO INCORPORATE MODIFICATIONS AND NOT TO ALTER OR SUBST ITUTE THE ORIGINAL AGREEMENT. THE APPROPRIATE AUTHORITY HAD ALREADY GRANTED ITS NOC ON THE BASIS OF THE ORIGINAL AGREEM ENT ON 8-10-1996 ITSELF. THIS FIRST NOC ISSUED BY THE APP ROPRIATE AUTHORITY HOLDS GOOD FOR THE PROVISIONS OF CHAPTER XX-C OF THE INCOME-TAX ACT 1961. THE LATEST NOC ISSUED BY THE APPROPRIATE AUTHORITY ON 21-2-2000 IS ONLY A REVISION OF THE FI RST NOC GRANTED I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 43 ON 8-10-1996. THE LATEST NOC ISSUED BY THE APPROPR IATE AUTHORITY ON 21-2-2000 CANNOT BE CONSIDERED IN ISOL ATION OF THE EARLIER NOC ISSUED BY THE APPROPRIATE AUTHORITY ON 8-10-1996. IT IS TO BE SEEN THAT THE LATEST NOC ISSUED BY THE APPROPRIATE AUTHORITY ON 21-2-2000 RELATES BACK TO THE FIRST NO C ISSUED BY THE APPROPRIATE AUTHORITY ON 8-10-1996. THE RESTAT EMENTS OF THE ORIGINAL AGREEMENT AND THE RE-ISSUE OF NOC HAVE NOT DISTURBED THE FIRST NOC ISSUED BY THE APPROPRIATE AUTHORITY. THEREFORE IT IS TO BE SEEN THAT THE NOC ISSUED ON 21-2-2000 RELA TES BACK TO 8-10-1996 AND AS SUCH REINFORCES THE FACT OF TRANSF ER OF THE PROPERTY ON 28-11-1999 WHEN THE POSSESSION WAS HAN DED OVER TO THE BUYERS. IN THESE CIRCUMSTANCES AS FAR AS T HIS CASE IS CONCERNED THEREFORE THERE IS COMPLETE COMPATIBILI TY BETWEEN THE APPLICATION OF SECTION 2(47) OF THE INCOME-TAX ACT 1961 WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND CHA PTER XX-C OF THE INCOME-TAX ACT 1961. 11. IN VIEW OF THE ABOVE I AGREE WITH THE ORDER O F THE LEARNED ACCOUNTANT MEMBER. I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 44 12. NOW THIS FILE WILL BE PLACED BEFORE THE REGULA R DIVISION BENCH FOR PASSING APPROPRIATE ORDERS TO DI SPOSE OF THE APPEAL. SD/- (DR.O.K.NARAYANAN) VICE-PRESIDENT THIRD MEMBER CHENNAI DATED THE 10 TH JANUARY 2012. V.A.P. I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 45 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NO. 1830/MDS/2009 (ASSESSMENT YEAR : 2000-01) THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE II TIRUCHIRAPALLI (APPELLANT) V. MR. P.R. CHOCKALINGAM 2 SECOND CROSS THILLAINAGAR TIRUCHIRAPALLI 17. PAN : AETPC4075Q (RESPONDENT) APPELLANT BY : MR. SHAJI P. JACOB IRS CIT RESPONDENT BY : NONE DATE OF HEARING : 24.02.2012 DATE OF PRONOUNCEMENT : 24.02.2012 ORDER GIVING EFFECT TO MAJORITY VIEW PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : IN THIS CASE FILED BY THE REVENUE IT HAD RAISED TWO ISSUES. FIRST ONE ASSAILED THE ORDER OF THE LD. CIT(APPEALS ) HOLDING THE REOPENING TO BE INVALID AND SECOND ONE WAS REGARDIN G DATE OF TRANSFER OF THE PROPERTY WHICH WAS RELEVANT WITH RE GARD TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 54 / 54F O F INCOME-TAX ACT 1962 (IN SHORT 'THE ACT'). WHEREAS ON THE FIRST IS SUE MEMBERS CONSTITUTING THE ORIGINAL BENCH WAS UNANIMOUS IN TH EIR VIEW THAT THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1830/MDS/09 1830/MDS/09 1830/MDS/09 1830/MDS/09 46 REOPENING WAS VALIDLY DONE ON THE SECOND ISSUE TH ERE WAS A DIFFERENCE OF OPINION ON THE DATE OF THE TRANSFER A ND THIS WAS REFERRED TO THE THIRD MEMBER BY HONBLE PRESIDENT UNDER SECT ION 255(4) OF THE ACT. 2. HONBLE VICE-PRESIDENT SITTING AS THE THIRD MEM BER HAS AGREED WITH THE VIEW OF THE ACCOUNTANT MEMBER THAT THE TRA NSFER OF THE PROPERTY HAPPENED ON 28.11.1999. THUS IN VIEW OF THE MAJORITY OPINION WE UPHOLD THE ORDER OF LD. CIT(APPEALS) TH AT INVESTMENT MADE BY THE ASSESSEE ON 9.12.1998 IN THE RESIDENTIA L PROPERTY WAS WELL WITHIN THE TIME PERIOD MENTIONED FOR AVAILING DEDUCTION UNDER SECTION 54 / 54F OF THE ACT. 3. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 24 TH FEBRUARY 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 24 TH FEBRUARY 2012. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/D.R./GUAR D FILE