DEVKUMAR HARESH VAIDYA, MUMBAI v. ASST CIT 5(3), MUMBAI

ITA 7325/MUM/2012 | 2007-2008
Pronouncement Date: 31-07-2013 | Result: Allowed

Appeal Details

RSA Number 732519914 RSA 2012
Assessee PAN AABPV2375C
Bench Mumbai
Appeal Number ITA 7325/MUM/2012
Duration Of Justice 7 month(s) 20 day(s)
Appellant DEVKUMAR HARESH VAIDYA, MUMBAI
Respondent ASST CIT 5(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 31-07-2013
Date Of Final Hearing 11-06-2013
Next Hearing Date 11-06-2013
Assessment Year 2007-2008
Appeal Filed On 11-12-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN JUDICIAL MEMBER ITA NO. 7325/MUM/2012 ASSESSMENT YEAR : 2007-08 DEVKUMAR HARESH VAIDYA 13/A 2 ND FLOOR MAHESHWARI MANSION 34 NAPEAN SEA RD. MUMBAI-400 026. PAN NO.AABPV 2375 C VS. ACIT 5(3) ROOM NO.577 5 TH FLOOR AAUAKAR BHAVAN M.K. ROAD NEW MARINE LINES MUMBAI. ( ASSESSEE ) (RESPONDENT) ASSESSEE BY : SHRI J.D. MISTRY AND SHRI V.V. MEHENDALE REVENUE BY : SHRI S.D. SRIVASTAVA DATE OF HEARING : 11/06/2013 DATE OF PRONOUNCEMENT : 31 / 07 /2013 O R D E R PER B. RAMAKOTAIAH AM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDERS O F CIT(A)-9 MUMBAI DATED 25.12.2012. THE ISSUE IN THE PRESENT APPEAL I S WITH REFERENCE TO YEAR OF CHARGEABILITY OF CAPITAL GAINS. THE ASSESSE E RAISED SIX GROUNDS ON THE ISSUE WHICH ARE CONSEQUENTIAL TO THE PROCEEDING S U/S 147 INITIATED IN ASSESSMENT YEAR 2007-08. A) REGARDING RE-OPENING OF THE ASSESSMENT (GROUND NO.1 AND 2) B) YEAR OF TAXABILITY (GROUND NO.3 AND 4) C) SHARE OF INCOME (GROUND NO.5) AND INITIATION OF PEN ALTY PROCEEDINGS (GROUND NO.6). ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 2 2. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE S HRI J.D. MISTRY AND CIT-DR SHRI S.D.SRIVASTAVA IN DETAIL. WE HAVE A LSO PERUSED THE PAPER BOOK PLACED ON RECORD CONSISTING OF PAGE NOS. 1 TO 158 FILED BY THE ASSESSEE AND A LETTER BY THE CIT-DR DATED 23/04/201 3 WITH THE ENCLOSURES. AT OUR INSISTENCE THE ASSESSEE ALSO FI LED COPIES OF THE PROBATES OBTAINED FROM THE HONBLE JUDICATURE OF BO MBAY. 3. BRIEFLY STATED ASSESSEE FURNISHED HIS RETURN OF INCOME FOR THE AY 2007-08 DECLARING TOTAL INCOME OF RS.24 69 626/- ON 11.10.2007 WHICH WAS ACCEPTED U/S 143(1). ASSESSEES CASE WAS RE-OPE NED BY THE AO ON THE BASIS OF INFORMATION RECEIVED FROM DDIT (INV) S URAT THAT THE PROPERTY SITUATED AT 5 MAN SINGH ROAD NEW DELHI W AS SOLD FOR A TOTAL CONSIDERATION OF RS.1 48 93 93 500/- BY 12 FAMILY M EMBERS INCLUDING THE ASSESSEE AND THE ASSESSEES SHARE OF THE SAID A MOUNT WAS RS.6 21 07708/-. ACCORDINGLY AO ISSUED NOTICE U/S 148 OF THE ACT ON 13/9/2010 ASKING ASSESSEE TO FURNISH HIS RETURN OF INCOME FOR THE PURPOSE OF RE-ASSESSMENT. IN RESPONSE TO THE SAID N OTICE THE ASSESSEE SUBMITTED A COPY OF THE RETURN OF INCOME FILED EARL IER TO BE TREATED AS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.14 8. THE AO VIDE QUESTIONNAIRE DATED 28/11/2011 ASKED THE ASSESSEE T O SHOW-CAUSE AS TO WHY THE CAPITAL GAINS SHOWN BY THE ASSESSEE IN A.Y 2006-07 AND CLAIMED EXEMPT SHOULD NOT BE BROUGHT TO TAX IN A.Y 2007-08 AND WHY THE DEDUCTION U/S.54EC SHOULD NOT BE DISALLOWED. THE A SSESSEE VIDE SUBMISSION DATED 7/12/2011 SUBMITTED THAT THE SAID AMOUNT WAS OFFERED FOR LONG TERM CAPITAL GAIN IN A.Y 2006-07. THE AO CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND NOTED THAT THE ASSESS EE WAS RELYING ON AGREEMENT TO SALE AND NOT ON THE SALE DEED. AO WAS OF THE OPINION THAT AGREEMENT WAS ONLY AN AGREEMENT FOR SALE OF PROPE RTY AND NOT THE SALE ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 3 DEED AND THE AGREEMENT TO SELL WAS NOT DATED NOR RE GISTERED. IN THE CASE OF SALE OF IMMOVABLE PROPERTIES THE SALE CAN BE SAI D TO HAVE TAKEN PLACE ON THE DATE OF EXECUTION OF THE SALE DEED AND NOT O N THE DATE OF AGREEMENT TO SELL AND IN THIS CASE THE SALE WAS E XECUTED ONLY AFTER THE PROPERTY WAS REGISTERED ON 23/8/2006. THUS HOLDING AO BROUGHT THE CAPITAL GAINS EARNED BY THE ASSESSEE ALONG WITH HA LF SHARE OF HIS FATHER ON SALE OF PROPERTY TO TAX IN A.Y 2007-08. THE ASSE SSEE WAS FOUND NOT ELIGIBLE TO AVAIL THE EXEMPTION U/S.54EC. 4. AGGRIEVED THE ASSESSEE TOOK THE MATTER BEFORE C IT(A) AND CONTENDED AS UNDER :- THE ASSESSEE ALONG WITH HIS FATHER SHRI HARESH VAI DYA (EXPIRED ON 05- 01-2006) AND SISTER MS. ANITA H. VAIDYA WERE TH E LEGAL HEIRS OF LATE MRS. DEVHUTI HARESH VAIDYA (ASSESSEES MOTHER- EXPIRED ON 18- 09-2001) ALL THE THREE HEREINAFTER REFERRED TO AS T HE VAIDVA FAMILY. MRS. DEVHUTI BEING DAUGHTER OF THE MAHESH ANANTRAL PATTANI BECAME THE OWNER / LEGAL HEIR OF THE PROPERTY BEQUE ATHED BY HER DECEASED FATHER UPON HIS FATHER ANANTRAI PATTANIS DEATH. THE FAMILY TREE AND DEVOLVEMENT IS AS UNDER; MAIN PERSON/HEAD OF FAMILY: PRABHASHANKAR PATTANI( 100%) TWO SONS OF PRABHASHANKAR PATTANI - 1. BATUKBHAI PATTAN I ( 50 % ) AND 2. ANANTRAI PATTANI - 50 %. BOTH DECEASED UPON THE DEATH OF BATUKBHAI PATTANI HIS 50 % SHARE DEVOLVED UPON HIS FAMILY MEMBERS VIZ. MRS. SAVITABEN B. PATTANI (SPOUSE)- 12.50% SHASHIKANT B. PATTANI (1ST SON) - 6.25% MRS. PRAGNA S. PATTANI (1ST SONS SPOUSE) - 6.25% JAYANT S. PATTANI (FIRST SONS SON) - 6.25% JAYKANT B. PATTANI (SECOND SON) - 6.25% MRS. ASHA J. PATTANI (SECOND SONS SPOUSE) - 6.25% SANJAY J. PATTANI (SECOND SONS SON) - 6.25% UPON THE DEATH OF ANANTRAI PATTANI HIS 50 % SHARE DEVOLVED UPON HIS FAMILY MEMBERS VIZ. MRS. YASHOMATI A. PATTANI (SPOUSE) - 16.66 %. MAHESH A. PATTANI (SON) - 11.11 %. MRS. VIDYADEVI M. PATTANI (SONS SPOUSE) -11.11 % MR. KUMAR M. PATTANI (SONS SON) - 11.11%. ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 4 MAHESH PATTANI HAD ONE SON KUMAT PATTANI AND THREE DAUGHTERS VIZ. DEVHUTI VAIDYA (ASSESSEES MOTHER) BHAVANI M EHTA AND BHUVNA DESAI. UPON THE DEATH OF THE FIRST THREE LEGAL HEIRS (OF A NANTRAI FAMILY AS ABOVE) THERE WOULD HAVE BEEN SOME UNEQUAL DISTRIBU TION OF THE RIGHTS IN THE ASSETS. HOWEVER AS THE DAUGHTERS RAI SED OBJECTION TO THE SAME AND LODGED A CASE IN THE COURT AT THE TIME OF SIGNING THE PROBATE. THEREAFTER KUMAR PATTANI (ASSESSEES MATE RNAL UNCLE) ARRIVED AT CONSENT TERMS WHEREBY HE RECEIVED 25% AND BALANCE 25% WAS DISTRIBUTED INTO THREE DAUGHTERS DEVHUTI V AIDYA (REPRESENTED BY HER FAMILY MEMBERS I.E. ASSESSEE ASSESSEES FATHER HARESH VAIDYA AND ASSESSEES SISTER ANITA VA IDYA ) BHUVNA DESAIL AND BHAVANI MEHTA IN EQUAL PROPORTIO N @ 8.33 %. THUS THE VAIDYA FAMILY WERE ENTITLED TO AN UNDIV IDED 8.33 % SHARE IN THE PROPERTY SITUATED AT 5 MAN SINGH ROAD NEW DELHI (THE PROPERTY) WHICH WAS BEQUEATHED BY LATE DEVHUTI H ARESH VAIDYA. MR. KUMAR M PATTANI GAVE AN OFFER DATED 17-10-2005 TO THE VAIDYA FAMILY INCLUDING THE ASSESSEE FOR PURCHASING THEIR SHARE OF 8.33 %. ACCORDINGLY AN AGREEMENT TO SALE DATED 25-10-2012 WAS ENTERED BETWEEN THE VAIDYA FAMILY AND M/S DUCE PROPERTIES & SERVICES PRIVATE LIMITED REPRESENTED BY THEIR DIRECTOR MR. PRAVEEN KHANDELWAL. IT MAY BE NOTED THAT VIDE CLAUSE 11 OF THE SAID AGREEMENT THE SAID PURCHASER HAD RECEIVED DEEMED P OSSESSION IN PART PERFORMANCE AS PER S.53A OF THE TRANSFER OF PR OPERTIES ACT OVER THE SAID SHARE OF 8.33 % FROM THE LEGAL HEIRS I.E. VENDORS. THE VAIDYA FAMILY RECEIVED TOTAL RS.12 00 00 000/- TO WARDS THE SALE CONSIDERATION (EACH OF THE VAIDYA FAMILY GETTING RS.4 00 00 000/- EACH). SIMULTANEOUSLY DUCE PROPERTIES ALSO EXECUT ED AN INDEMNITY BOND IN FAVOUR OF VAIDYA FAMILY FOR INDEMNIFYING THEM FROM ANY EXISTING OR FUTURE DISPUTES / CASES IF ANY. VAIDYA FAMILY ALSO SIGNED AND EXECUTED THE TWO (2) GENERAL POWERS OF A TTORNEY AND ONE (1) SPECIAL POWER OF ATTORNEY IN FAVOUR OF THE SAID PURCHASER. THEY ALSO ISSUED A RECEIPT CONFIRMING THE SALE. THE VAIDYA FAMILY ALSO HAD TO EXECUTE THEIR SEPARATE PERSONAL WILLS I N FAVOUR OF THE SAID PURCHASER FOR ENTITLING HIM TO OBTAIN PROBATE IN THEIR FAVOUR IN RESPECT OF THE SAID PROPERTY IN CASE OF UNTIMELY DE ATH OF VAIDYA FAMILY MEMBERS BEFORE THE EXECUTION OF THE FINAL S ALE DEED. KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANC ES AND LEGAL PRECEDENTS (REPRODUCED IN THE FOLLOWING PARAGRAPHS) ASSESSEE AND HIS FATHER HAD DISCLOSED CAPITAL GAINS ON SALE OF T HEIR INDIVIDUAL SHARES OF RS.4 00 00 000/- AS THE SALE PROCEEDS OF THE PROPERTY DURING THE FY2005-06 (AY-2006-07). THE RESPECTIVE A SSESSMENT OF THE SAID YEAR WAS COMPLETED U/S 143(3) OF THE ACT. ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 5 IN VIEW OF THE AFORESAID ASSESSEE HAD OBJECTED TO THE RE-OPENING AND ASSESSMENT OF CAPITAL GAINS IN THIS ASSESSMENT YEAR ON THE FOLLOWING BASIC POINTS; 1. THAT THE ASSESSEE HAD FAITHFULLY DISCLOSED THE C APITAL GAINS IN AY 2006-07 TO THE EXTENT OF HIS SHARE (I.E. 2.77 %) AT RS.4 00 00 000/- OUT OF THE SALE PROCEEDS OF THE PR OPERTY AT 5 MAN SINGH ROAD NEW DELHI. 2. THAT THEN SAID ASSESSMENT FOR AY-2006-07 HAD BEE N CONCLUDED UNDER SCRUTINY BY THE INCOME TAX OFFICER-5(3)-4 M UMBAI. 3.IN THE CIRCUMSTANCES THE INCOME FROM SALE PROCEE DS OF THE SAME PROPERTY COULD NOT BE ASSESSED TWICE I.E. IN AY-200 6-07 AND AGAIN IN AY-2007-08 AS THE SOURCE OF INCOME IS THE SAME P ROPERTY. 4.THAT AS THE ID. AO FOR AY-2006-07 HAD ALREADY SC RUTINIZED THE ASSESSEES DETAILS OF CAPITAL GAINS DURING THE SCR UTINY ASSESSMENT PROCEEDINGS FOR THAT YEAR AND -DULY ACCEPTED THE SA ME IN THE ASSESSMENT ORDER DATED 15-12-2008 THE DECISION TO T AX THE SALE PROCEEDS OF THE SAME PROPERTY AGAIN IN AY-2007-08 W OULD AMOUNT TO CHANGE OF OPINION WHICH IS NOT ACCEPTABLE AS A VALID REASON FOR REOPENING THE ASSESSMENT OF THE PRECEDING YEAR. 5. THAT THE AGREEMENT TO SALE AND CONSEQUENTLY THE TRANSFER OF PROPERTY AND RECEIPT OF THE CONSIDERATION HAD BEEN COMPLETED IN FY2005-06(AY-2 006-07). THEREFORE FOR THE PURPOSE OF INCOME TAX THE SALE WAS COMPLETE IN FY-2005-06 WHICH IS THE PR EVIOUS YEAR RELEVANT TO AY-2006-07 AND NOT AY-2007-08. 6. THAT ASSESSEES SHARE WAS ONLY TO THE EXTENT OF 2.77 % BEING 1/3 OF THE TOTAL SHARE OF THE LEGAL HEIRS WHICH WA S 8.33 % 7. THAT ASSESSEES FATHER HARESH VAIDYA (EXPIRED O N 05-01-2006) HAD ALSO RECEIVED HIS SHARE IN AY-2006-07 AND OFFE RED THE SAME TO TAX IN AY-2006-07 WHICH WAS ALSO ASSESSED U/S 143( 3) VIDE AN ORDER DATED 26-11-2008 PASSED BY HON. DCIT-7(3) MU MBAI. HENCE HIS CAPITAL GAINS ALSO COULD NOT BE ASSESSED PARTLY IN ASSESSEES HANDS. 8. THE SUBSEQUENT TRANSFER DEED WAS NOT SIGNED BY T HE ASSESSEE BUT BY HIS POWER OF ATTORNEY HOLDER (TO WHOM THE ASSESSEE HAD ALREADY SOLD THE PROPERTY) AND THEREFORE IT WAS ONL Y THE EXTENSION OF ASSESSEES (WITH LEGAL HEIRS) ORIGINAL INDEMNITY TO THE OTHER LEGAL HEIR MR. KUMAR M. PATTANI PURSUANT TO HIS OFFER DA TED 17-10-2005. IT MAY ALSO BE NOTED THAT ASSESSEE AND HIS FAMILY MEMBERS HAD ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 6 ALSO EXECUTED THEIR WILLS FOR CONFERRING ALL THEIR SHARE OF RIGHTS IN THE PROPERTY TO THE SAME HOLDER OF POWER OF ATTORNEY. 4.1 THE LD. CIT(A) REJECTED THE CONTENTIONS ON REOP ENING ON THE REASON THAT ASSESSMENT WAS RE-OPENED AS THERE WAS INFORMAT ION FROM THE ADIT AND ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08 WAS ONLY ACCEPTED UNDER SECTION 143(1). WITH REFERENCE TO MERITS THE LD. CIT(A) RELIED ON THE FACT THAT THE SALE DEED WAS DATED 23.8.2006 AND POS SESSION WAS HANDED OVER AT THAT POINT OF TIME. HE ALSO DISTINGUISHED T HAT AT THAT POINT OF TIME IT WAS ONLY AGREEMENT FOR SALE OF PROPERTY AND NOT THE SALE DEED. ACCORDINGLY HE AFFIRMED THE ORDERS OF THE AO TO TH AT EXTENT WHILE ORDERING THE BENEFIT OF INDEXATION IN COMPUTING CAP ITAL GAINS. THE ASSESSEE IS AGGRIEVED. 5. BEFORE COMING TO THE ISSUE OF JURISDICTION WE I NTEND TO DECIDE THE ISSUE ON MERITS. FIRST OF ALL AS CAN BE SEEN FROM THE SUBMISSIONS MADE BEFORE CIT(A) AND DOCUMENTS PLACED BEFORE US THERE WERE DISPUTES WITH MATERNAL UNCLE OF THE ASSESSEE SHRI KUMAR PATTANI AND MATTERS WERE PENDING BEFORE THE HON'BLE HIGH COURT FOR INTERSE RIGHTS IN THE PROPERTY. THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT PROPERTY IS IN NEW DELHI AND THE ASSESSEE HAS ONLY RIGHT IN THE UNDIVI DED SHARE IN THE PROPERTY WHICH WAS ALSO IN LITIGATION. FURTHER AS SESSEE WAS NEVER IN THE POSSESSION OF THE PROPERTY AS PROPERTY WAS IN POSSE SSION OF THE ASSESSEES MATERNAL UNCLE AND ASSESSEE AND HIS FAMI LY MEMBERS ARE ALL STATIONED IN MUMBAI. 5.2 IT SEEMS THERE WAS A GOOD OFFER FOR SELLING PROPERTY AND ACCORDINGLY SHRI K.M. PATTANI UNDERTOOK THE EXERCISE OF SETTLIN G THE DISPUTES OF VARIOUS CLAIMS AND VIDE LETTER DATED 17.10.2005 THE RE WAS AN OFFER FOR THE SALE OF THE DELHI PROPERTY. THE OFFER WAS AS UN DER :- DT. 17 TH OCTOBER 2005 ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 7 WITHOUT PRE JUDICE OFFER SUBJECT: OFFER FOR THE RESOLUTION OF THE SALE OF THE DELHI PROPERTY DEAR HARESHBHAI ANITA AND DEVKUMAR IN ORDER TO RESOLVE ALL THE ISSUES INCLUDING THE PR OBATE PETITION PENDING IN THE BOMBAY HIGH COURT REGARDING MY FATHE RS WILL AND OTHER MOVABLE AND IMMOVABLE PROPERTY / ASSETS I AM MAKING THE FOLLOWING OFFER. MY OFFER TO ALL OF YOU AS THE HEIRS OF LATE MRS. DE VHUTI HARESH VAIDYA IS THAT I SHALL OUT OF THE SALE PROCEEDS OF DELHI P ROPERTY PAY JOINTLY TO ALL OF YOU A SUM OF RS.12 CRORES. IN ADDITION THERE TO I SHALL TRANSFER TO YOUR NAMES 8236 PLUS BONUSES TOTALLING TO 12354 SHARES OF ZANDU PHARMACEUTICAL WORKS LTD. THAT ARE LISTED IN SCHEDULE I THE PROBATE PETITION FILED IN THE BOMBAY HIGH COURT. THIS WILL COVER ALL THE RIGHTS OF MRS. DEVHUTI H. V AIDYA (OR HER HEIRS) IN THE DELHI PROPERTY AND IN THE MOVABLE AND IMMOVA BLE ASSETS/ PROPERTIES INCLUDING THOSE MENTIONED IN THE WILLS O F LATE MR. MAHESH A. PATTANI THE PROPERTIES MENTIONED IN THE WILLS O F LATE SMT. YASHOMATI A. PATTANI AND LATE SMT. VIDYADEVI M. PAT TANI AND PROPERTIES CO-OWNED BY LATE MRS. DEVHUTI HARESH VAI DYA WITH KUMAR M PATTANI. FOR DISTRIBUTION THE ABOVE OFFER-WILL-BE DIVIDED I NTO THREE EQUAL-PARTS I.E. 4 CRORES AND 4118 SHARES EACH. YOU SHALL GIVE YOUR CONSENT IN WRITING FOR THE PROB ATE BEING ISSUED BY THE HONBLE BOMBAY HIGH COURT. PLEASE CONFIRM WITHIN 2 DAYS THAT THE ABOVE OFFER I S ACCEPTABLE TO YOU. PLEASE NOTE THAT THIS IS THE BEST OFFER THAT I CAN GIVE YOU. THERE IS NO SCOPE FOR ANY FURTHER NEGOTIATIONS. YOURS SINCERELY SD/- KUMAR PATTANI 5.3 ALONG WITH THIS LETTER THERE WAS ALSO AN AGREE MENT OF SALE WHICH WAS UNDATED BUT MONTH WAS MENTIONED AS OCTOBER 200 5 SENT ALONG WITH THE OFFER. THERE WAS NO OPTION GIVEN TO THE ASSESSE E AND HIS FAMILY ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 8 MEMBERS. THEREFORE THE ASSESSEES FAMILY ACCEPTED THE OFFER AND ENTERED INTO AN AGREEMENT TO SELL TO M/S. DUCE PROPERTY AND SERVICES PVT. LTD. NEW DELHI WHICH HAPPENED TO BE A GROUP COMPANY OF U LTIMATE BUYER M/S. MINERALS MANAGEMENT SERVICES INDIA P. LTD. TH E ASSESSEE ALONG WITH AGREEMENT TO SELL ALSO ISSUED RECEIPT FOR RS.1 2.00 CRORES SIGNED BY SHRI HARESH J. VAIDYA FATHER OF THE ASSESSEE ANI TA H. VAIDYA SISTER OF THE ASSESSEE AND BY ASSESSEE ACCEPTING DEMAND DRAFT S DATED 22/10/2005 FOR RS.4.00 CRORES EACH. THE ASSESSEE AL SO ISSUED GENERAL POWER OF ATTORNEY TO SHRI PRAVEEN KHANDELWAL WHO WAS DECLARED AS ATTORNEY FOR THE PURPOSE OF THIS TRANSACTION AND SP ECIFIC POWER OF ATTORNEY IN FAVOUR OF THE SAME SHRI PRAVEEN KHANDE LWAL AND ALSO INDEMNITY BONDS IN FAVOUR OF M/S. DUCE PROPERTY AND SERVICES PVT. LTD. AND A DECLARATION COMMUNICATED FROM KUMAR PATTANI T O SHRI HARESH VAIDYA ALONG WITH WILL EXECUTED WITH REFERENCE TO 2 .77% OF UNDIVIDED SHARE IN THE PROPERTY BY EACH CO-OWNER SEPARATELY ALL IN THE MONTH OF OCTOBER2005 ON 24 TH AND 25 TH OCTOBER. ALL AGREEMENTS I.E. AGREEMENT TO SELL GENERAL POWER OF ATTORNEY SPECIAL POWER OF A TTORNEY INDEMNITY BONDS INDICATE THAT THE ASSESSEE AND HIS FAMILY MEM BERS HAVE AGREED TO THE SALE TRANSACTION COMPRISING RIGHT TITLE INTER EST IN RESPECT OF UNDIVIDED SHARE BEING 8.33% IN THE PROPERTY BEING N O.5 MAN SINGH ROAD NEW DELHI. THE CLAUSE 11 TO 18 OF THE AGREEME NT TO SELL ARE AS UNDER :- 11. THAT ON SIGNING OF THIS AGREEMENT FOR SALE TH E VENDEE SHALL BE DEEMED TO BE IN POSSESSION OF THE SAID PROPERTY IN PART PERFORMANCE OF THIS AGREEMENT FOR SALE AS STIPULAT ED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. 12. THAT THE VENDORS DOTH HEREBY ASSURE TO THE VEN DEE THAT TO THE BEST OF THEIR KNOWLEDGE THE SAID PROPERTY IS FREE F ROM ALL ENCUMBRANCES CHARGES LIENDS ATTACHMENTS MORTGAG E TRUSTS WHATSOEVER OR HOWSOEVER AND THERE IS NO LITIGATION OR ANY OTHER PROCEEDINGS PENDING RELATING TO THE SAID PROPERTY ( SAVE AND EXCEPT THOSE MENTIONED IN THIS AGREEMENT). FROM THE DATE OF EXECUTION OF ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 9 THIS AGREEMENT FOR SALE AND TILL SUCH TIME THE SALE DEED IS EXECUTED IN FAVOUR OF THE VENDEE THE VENDORS SHALL NOT ALIEN ATE TRANSFER ASSIGN MORTGAGE CREATE ANY CHARGE OR ENCUMBRANCE OVER THE SAID PROPERTY IN ANY MANNER WHATSOEVER. 13. THE VENDORS FURTHER UNDERTAKE THAT THIS AGREEMENT TO SELL IS FINAL AND IRREVOCABLE AND THEY SHALL NOT ENTER INTO ANY OTHER AGREEMENT OR TRANSACTION RELATING TO THEIR SHARE WI TH ANY OTHER PERSON. 14. THE VENDORS WILL GIVE NECESSARY AUTHORIZATIONS / POWER OF ATTORNEY IN FAVOUR OF THE VENDEE AND WILL EXTEND AL L NECESSARY HELP FOR SETTLING THESE ISSUES. HOWEVER ALL COST AND E XPENSES INCURRED BY POWER OF ATTORNEY HOLDER ON BEHALF OF THE VENDOR S SHALL BE BORNE AND PAID BY THE VENDEE. 15. ALL EXPENSES SUCH AS STAMP DUTY REGISTRATION CHARGES CHARGES FOR CONVERSION OF THE PROPERTY FROM LEASE HOLD TO F REE HOLD AND MUTATION OF PROPERTY IN THEIR NAME AND FOR EXECUTIO N /REGISTRATION OF THE SALE DEED SHALL BE BORNE BY THE VENDEE ALONG. 16. THE VENDEE SHALL HAVE THE OPTION TO PURCHASE T HE PROPERTY IN ITS OWN NAME OR JOINTLY WITH ANY OTHER PERSON OR THROUG H ANY OTHER INDIVIDUAL(S) TRUST(S) COMPANY/COMPANIES OR OTHER ENTITIES OR GROUP OF PERSONS WHO/WHICH MAY BE NOMINATED BY IT AT ITS ABSOLUTE DISCRETION. 17. THE VENDORS HEREBY AUTHORIZE THE VENDEE OR ITS NOMINEES TO REPRESENT HER AND/OR BE SUBSTITUTED IN HER PLACE IN THE PARTITION SUIT IN DELHI PENDING IN THE COURT OF SHRI RAKESH PANDIT CIVIL JUDGE FILED BY MAHESH A. PATTANI AND OTHERS AGAINST THE OTHER M EMBERS OF THE FAMILY FOR THE PARTITION OF THE PROPERTY BY METES A ND BOUNDS. 18. THAT THIS AGREEMENT SHALL BE GOT ADJUDICATED F OR PROPER STAMP DUTY AND SHALL BE PRESENTED FOR REGISTRATION WITHIN THE STIPULATED PERIOD AS PER THE PROVISIONS OF LAW AND THE PARTIES SHALL BE PERSONALLY BE PRESENT AT NEW DELHI BEFORE THE SUB R EGISTRAR OF ASSURANCES. 5.4 AS CAN BE SEEN FROM THE ABOVE THIS AGREEMENT F OR SALE WAS FINAL AND IRREVOCABLE AND VENDEE I.E. M/S. DUCE PROPERTY AND SERVICES PVT. LTD. SHALL HAVE THE OPTION TO PURCHASE THE PROPERTY IN I TS OWN NAME OR WITH ANY OTHER PERSON. AS PART OF THE SETTLEMENT THE AS SESSEE ALSO SIGNED A ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 10 CONSENT TERM FOR OBTAINING PROBATES WITH REFERENCE WILL WHICH ARE DISPUTED WITH REFERENCE TO INTERSE RIGHTS AMONG THE 12 FAMILY MEMBERS. THEREAFTER NECESSARY PERMISSION FOR CONVERSION OF PROPERTY TO FREE HOLD WAS OBTAINED FROM LAND AND DEVELOPMENT OFFICE DELHI AND CONVEYANCE DEED WAS EXECUTED ON 21.08.2006 AND THEN SELLING P ROPERTY TO M/S. MINERALS MANAGEMENT SERVICES INDIA P. LTD. ON 23.08 .2006. ON BEHALF OF THE ASSESSEE AND HIS FAMILY MEMBERS SHRI PRAVEEN K HANDELWAL EXECUTED DOCUMENTS WHICH SUPPORTS ASSESSEES CONTENTION THA T THEY HAVE HANDED OVER THE RIGHTS AND TITLE OF THE UNDIVIDED S HARE TO M/S. DUCE PROPERTY AND SERVICES PVT. LTD. IN THE LIGHT OF THE SE FACTS AVAILABLE ON RECORD AS FAR AS THE ASSESSEE AND HIS FAMILY MEMBE RS ARE CONCERNED THEY HAVE TRANSFERRED THE PROPERTY I.E. UNDIVIDED A ND INDETERMINABLE SHARE/RIGHTS IN THE PROPERTY. AS FAR AS THE ASSESSE E SHARE IN THE PROPERTY WAS CONCERNED NOT ONLY THE ASSESSEE BUT HIS SISTER AND FATHER HAS RECEIVED EQUAL SHARE OF 8.33% AND AS FAR AS THESE A SSESSEES ARE CONCERNED THE TRANSACTION CONCLUDED ON 25.10.2005 WHEN THEY ENTERED INTO AGREEMENT OF SALE ISSUING GENERAL POWER OF ATT ORNEY AND SPECIAL POWER OF ATTORNEY CONSENT TERMS WITH SHRI K. PATT ANI WHICH ULTIMATELY HELPED IN GETTING PROBATE OF WILL. EXECUTION OF IN DEMNITY BONDS AND WILL BY EACH CO-OWNER DO INDICATE THAT AS FAR AS ASSESSE E IS CONCERNED THE TRANSACTION WAS CONCLUDED BY 25/10/2005. THEREFORE THERE IS NO MERIT IN THE CONTENTIONS OF THE REVENUE THAT THE TRANSAC TION WAS CONCLUDED IN AUGUST 2006. 5.5 THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATRABHUJ DWARKADAS KAPADIA VS. CIT (260 ITR 491) HAS HELD : CLAUSES (V) AND (VI) WERE INTRODUCED IN SECTION 2( 47) OF THE INCOME-TAX ACT 1961 WITH EFFECT FROM APRIL 1 198 8. THEY PROVIDE THAT TRANSFER INCLUDES (I) ANY TRANSACTIO N WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERF ORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 AND (II) ANY TRANSA CTION ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 11 ENTERED INTO IN A MANNER WHICH HAS THE EFFECT OF TR ANSFERRING OR ENABLING THE ENJOYMENT OF AN IMMOVABLE PROPERTY. THEREFORE IN THESE TWO CASES CAPITAL GAINS WOULD B E TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFEC TIVE OR COMPLETE UNDER THE GENERA LAW. UNDER SECTION 2(47) (V) ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION TO BE TAKEN OVER OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF TH E NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). IN ORDER TO ATTRACT SECTION 53A THE FOLLOWING CONDITIONS NEED TO BE FU LFILLED. THERE SHOULD BE A CONTRACT FOR CONSIDERATION; IT SHOULD B E IN WRITING; IT SHOULD BE SIGNED BY THE TRANSFEROR; IT SHOULD PE RTAIN TO TRANSFER OF IMMOVABLE PROPERTY; THE TRANSFEREE SHOU LD HAVE TAKEN POSSESSION OF THE PROPERTY; LASTLY THE TRANS FEREE SHOULD BE READY AND WILLING TO PERFORM HIS PART OF THE CON TRACT. EVEN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WIT HOUT TRANSFER OF TITLE COULD FALL UNDER SECTION 2(47)(V) . SECTION 2(47)(V) WAS INTRODUCED IN THE ACT FROM THE ASSESSM ENT YEAR 1988-89 BECAUSE PRIOR THERETO IN MOST CASES IT WA S ARGUED ON BEHALF OF THE ASSESSEE THAT NO TRANSFER TOOK PLA CE TILL EXECUTION OF THE CONVEYANCE. ASSESSEES USED TO ENTE R INTO AGREEMENTS FOR DEVELOPING PROPERTIES WITH BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUILDERS THEY USED TO CON FER PRIVILEGES OF OWNERSHIP WITHOUT EXECUTING CONVEYANC E AND TO PLUG THAT LOOPHOLE SECTION 2(47)(V) CAME TO BE INT RODUCED IN THE ACT. THE ASSESSEE AN INDIVIDUAL HAD AN UNDIVIDED SHARE IN A PROPERTY. BY AGREEMENT DATED AUGUST 18 1994 THE A SSESSEE HEREIN AGREED TO SELL TO A BUILDER HIS SHARE OF THE IMMOVABLE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 1 85 63 2 20 WITH A RIGHT TO THE BUILDER TO DEVELOP THE PROPERTY IN ACC ORDANCE WITH THE RULES AND REGULATIONS FRAMED UNDER THE MAHARASH TRA HOUSING AND AREA DEVELOPMENT ACT. FOR THAT PURPOSE THE ASSESSEE AGREED UNDER CLAUSE 8 TO EXECUTE A LIMITED POWER OF ATTORNEY AUTHORISING THE BUILDER TO DEAL WITH THE PROPERTY AND ALSO OBTAIN PERMISSIONS AND APPROVALS FROM THE URBA N LAND CEILING AUTHORITY BOMBAY MUNICIPAL CORPORATION AND CRZ AUTHORITIES. UNDER CLAUSE 9 OF THE AGREEMENT IT WAS INTER ALIA PROVIDED THAT ON THE BUILDER OBTAINING ALL NECESSAR Y PERMISSIONS AND APPROVALS AND UPON RECEIPT OF NO- O BJECTION CERTIFICATE UNDER CHAPTER XXC OF THE INCOME-TAX ACT THE ASSESSEE SHALL GRANT AN IRREVOCABLE LICENCE TO ENTE R UPON THE ASSESSEES SHARE OF THE PROPERTY. UNDER CLAUSE 11 O F THE AGREEMENT IT WAS PROVIDED THAT AFTER THE BUILDER W AS GIVEN AN IRREVOCABLE LICENCE TO ENTER UPON THE ASSESSEES SHARE OF ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 12 THE PROPERTY AND AFTER THE BUILDER HAVING OBTAINED ALL NECESSARY APPROVALS THE BUILDER WAS ENTITLED TO DE MOLISH BUILDINGS NOS. I TO 3 AND BUILDING NO. 10 AND ANY O THER BUILDINGS ON THE PROPERTY SUBJECT TO SETTLING THE CLAIMS OF THE TENANTS. UNDER CLAUSE 14 OF THE AGREEMENT THE ASSE SSEE WAS ENTITLED TO RECEIVE PROPORTIONATE RENT TILL THE PA YMENT OF THE LAST INSTALLMENT AND TILL THAT TIME THE ASSESSEE W AS BOUND TO PAY ALL OUTGOINGS. UNDER CLAUSE 20 OF THE AGREEMENT IT WAS AGREED THAT THE SALE SHOULD BE COMPLETED BY EXECUTI ON OF CONVEYANCE. TILL DATE THERE WAS NO CONVEYANCE. BY MARCH 31 1996 THE BUILDER HAD PAID ALMOST THE ENTIRE SALE P RICE OF RS. 1 85 63 220 EXCEPT FOR THE SMALL AMOUNT OF RS. 9 98 000. HOWEVER THE BMC ISSUED A COMMENCEMENT CERTIFICATE PERMITTING CONSTRUCTION OF A BUILDING UP TO THE PLI NTH LEVEL ONLY ON NOVEMBER 15 1996. IN THE MEANTIME THE PLAN CAM E TO BE AMENDED. ULTIMATELY THE POWER OF ATTORNEY WAS EXEC UTED ON MARCH 12 1999. THE ASSESSEE PAID THE CAPITAL GAINS IN THE ASSESSMENT YEAR 1999-2000 BUT THE ASSESSING OFFICER HELD THAT IT WAS PAYABLE IN THE ASSESSMENT YEAR 1996-9 7 AND THIS WAS UPHELD BY THE TRIBUNAL. ON FURTHER APPEAL: HELD THAT SECTION 2(47)(V) READ WITH SECTION 45 IN DICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UND ER THE GENERAL LAW. IN THIS CASE THE TEST HAD NOT BEEN AP PLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT TEST HAD NOT BEEN APPLIED PARTICULARLY WHEN THE AGREEMENT IN QU ESTION READ AS A WHOLE SHOWED THAT IT WAS A DEVELOPMENT AGREEMENT. ONCE UNDER CLAUSE 8 OF THE AGREEMENT A L IMITED POWER OF ATTORNEY WAS INTENDED TO BE GIVEN TO THE D EVELOPER TO DEAL WITH THE PROPERTY THEN THE DATE OF THE CONTRA CT VIZ. AUGUST 18 1994 WOULD BE THE RELEVANT DATE TO DECI DE THE DATE OF TRANSFER UNDER SECTION 2(47)(V) AND IN WHI CH EVENT THE QUESTION OF SUBSTANTIAL PERFORMANCE OF THE CONTRACT THEREAFTER WOULD NOT ARISE. THIS POINT HAD NOT BEEN CONSIDERED BY ANY OF THE AUTHORITIES BELOW. THE ASSESSEE HAD PAID THE CA PITAL GAINS TAX FOR THE ASSESSMENT YEAR 1999-2000. FROM MERE SUBSTANTIAL COMPLIANCE OF THE AGREEMENT ONE COULD NOT INFER TRANSFER IN THE ACCOUNTING YEAR ENDING MARCH 31 19 96. THERE WERE MISTAKES APPARENT ON THE FACE OF THE RECORD I N THE ORDER OF THE TRIBUNAL. ACCORDING TO THE TRIBUNAL THE LET TER DATED FEBRUARY 18 1999 SHOWED THAT THE BUILDER CAME INT O POSSESSION ON THE DAY NEXT TO MARCH 31 1996 I.E. APRIL 1 1997. THE DAY NEXT TO MARCH 31 1996 WOULD BE APRI L 1 1996 AND NOT APRIL 1 1997 AND EVEN IF APRIL 1 1 997 WERE ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 13 TAKEN AS A TYPING MISTAKE IT COULD ONLY BE READ AS APRIL 1 1996 AND IF APRIL 1 1996 WAS THE DATE ON WHICH T HE DEVELOPER CAME INTO POSSESSION THEN THE POSSESSION WAS RECEIVED BY THE DEVELOPER DURING THE FINANCIAL YEAR 1996-97 CORRESPONDING TO THE ASSESSMENT YEAR 1997-98. THERE FORE THIS FINDING OF THE TRIBUNAL WAS ERRONEOUS. TAKING INTO ACCOUNT THE TOTALITY OF THE CIRCUMSTANCES THE TRIBU NAL WAS NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEE HAD TRANS FERRED THE PROPERTY DURING THE PREVIOUS YEAR RELEVANT TO THE A SSESSMENT YEAR 1996-97. 5.6 RESPECTFULLY FOLLOWING THE ABOVE PRINCIPLES IT CAN BE CONCLUDED THAT THE ASSESSEE HAS TRANSFERRED ITS UNDIVIDED SHA RE BEING 1/3 RD OF 8.33% IN THE PROPERTY ALONG WITH OTHERS WHEN HE ENT ERED INTO IRREVOCABLE SALE AGREEMENT. AS PROPERTY WAS ULTIMATELY REGISTER ED BY THE POWER OF ATTORNEY HOLDER AND ASSESSEE IS NO WAY CONNECTED WI TH THE ULTIMATE SALE DEED THE CONTENTIONS OF THE REVENUE THAT THE TRANS ACTION CAN BE CONCLUDED ONLY AFTER REGISTRATION HAS NO MERIT. IN FACT THIS CONTENTION WAS CONTRARY TO THE PROVISIONS OF THE ACT. IN ORDER TO BLOCK THE LOOP HOLE OF CONSIDERING THE TRANSACTION AS FINAL ONLY AFTER REGISTRATION THE IT ACT WAS AMENDED SO AS TO BRING INTO TAX THE CAPITAL GAI N IN THE YEAR IN WHICH POSSESSION WAS HANDED OVER TO THE BUYER AS PART PER FORMENCE OTHERWISE NO CAPITAL GAIN COULD BE LEVIED TILL REGISTRATION W AS DONE. IN THIS CASE WHAT THE ASSESSEE WAS HAVING IS ONLY AN UNDIVIDED S HARE IN THE PROPERTY IN DELHI WHICH WAS AGREED TO SOLD TRANSFERRED/ AS SIGNED TO M/S. DUCE PROPERTY AND SERVICES PVT. LTD. WE CAN CONCLUDE THA T THE TRANSFER IS COMPLETE AS PER CLAUSE -11 OF THE AGREEMENT FOR SA LE. 5.7 SIMILAR SITUATION WAS ALSO CONSIDERED BY THE CO -ORDINATE BENCH IN THE CASE OF SMT. RAJSHREE BIHANI VS. ITO [2011] 16 TAXMANN.COM 44(KOL) WHEREIN IT WAS HELD AS UNDER :- IT WAS TO BE HELD THAT THE ASSESSEE SOLD HER 1/3 RD UNDIVIDED SHARE IN PLOT OF LAND VIDE AGREEMENT OF SALE DATED 28.12. 2000 ENTERED INTO WITH THE PURCHASER IN PART PERFORMANCE OF THE CONTR ACT AFTER HANDING ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 14 OVER THE POSSESSION OF THE LAND ON 28.12.2000 VIDE POSSESSION LETTER DATED 28.12.2000. IT MEANT THAT THE ASSESSEE FULFIL LED THE CONDITIONS OF THE PROVISION OF SECTION 2(47)(V) AND THE SAID T RANSACTION FELL WITHIN THE AMBIT OF TRANSFER. ONCE THIS WAS A TRAN SFER EFFECTED AS ON 28.12.2000 THE PROVISIONS OF SECTION 50C WHICH AR E WITH EFFECT FROM 1.4.2003 FOR AND FROM THE ASSESSMENT YEAR 2003 -04 WOULD NOT APPLY TO THE INSTANT TRANSACTION. THE ASSESSEE ALSO MADE INVESTMENT OF THE SALE CONSIDERATION OF PLOT OF LAND OF HER SH ARE IN PURCHASE OF RESIDENTIAL FLAT FOR A TOTAL COST OF RS.23.50 LAKH VIDE DEED OF AGREEMENT FOR SALE DATED 23.3.2001 AND POSSESSION O F THE FLAT WAS ALSO DELIVERED TO THE ASSESSEE ON 27.4.2001 THE CO NDITIONS FOR EXEMPTION U/S. 54 WERE FULFILLED AND THE ASSESSEE W AS ELIGIBLE FOR EXEMPTION. ACCORDINGLY THE ISSUE UNDER CONSIDERATI ON WAS TO BE ALLOWED IN FAVOUR OF THE ASSESSEE IN ENTIRETY. THEREFORE IN THIS CASE ALSO AS ASSESSEE HAD ALREAD Y RECEIVED CONSIDERATION AND HANDED OVER POSSESSION OF RIGHTS MERE EXECUTION OF CONVENIENCE DEED THAT TOO BY GENERAL POWER OF ATTO RNEY HOLDER WHO ACQUIRES IT FROM ASSESSEE IN SUBSEQUENT YEAR CAN N OT SHIFT THE DATE OF TRANSFER TO NEXT ASSESSMENT YEAR. 5.8 THE ASSESSEE HAS ALREADY OFFERED CAPITAL GAINS IN ASSESSMENT YEAR 2006-07 WHICH WAS ALSO ACCEPTED UNDER SECTION 143(3 ) BY THE AO THEREFORE THERE IS NO MERIT IN THE REVENUES CONTE NTIONS TO BRING IT TO TAX IN THE YEAR 2007-08. NOT ONLY THAT OTHER CO-SHARER S ALSO OFFERED THE INCOMES IN THE SAME ASSET. YEAR. 6. THE LD. CIT-DR IN REPLY TO THE QUESTION RAISED B Y THE BENCH ON EARLIER OCCASION HAS ALSO STATED IN WRITING AS UNDE R :- MOREOVER AS PER THE SAID AGREEMENT ONLY THE ASS ESSEE HAS RIGHT TO MAINTAIN ITS POSSESSION OVER THE ALLEGED PROPERT Y. IN THIS REGARD RELEVANT PART OF THE SAID AGREEMENT OF PARA NO. 12 IS REPRODUCED AS UNDER: FROM THE DATE OF EXECUTION OF THE AGREEMENT FOR SA LE AND TILL SUCH TIME THE SALE DEED IS EXECUTED IN FAVOUR OF DU CE PROPERTIES & SERVICES PVT. LTD THE ASSESSEE SHALL NOT ALIENATE TRANSFER ASSIGN MORTGAGE CREATE ANY CHARGE OR EN CUMBRANCE OVER THE SAID PROPERTY IN ANY MANNER WHATSOEVER. ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 15 IN VIEW OF ABOVE THE ASSESSEE HAD THE POSSESSION O VER THE ALLEGED PROPERTY TILL THE DATED OF EXECUTION OF SALE DEED A ND M/S. MINERAL MANAGEMENT SERVICES INDIA PT LTD. HAS TAKEN THE POS SESSION FROM THE ASSESSEE AFTER THE EXACTION OF THE SALE DEED. AS CAN BE SEEN FROM THE ABOVE THE WORDING OF THIS EXTRACT OF PARA-12 VARIES FROM ACTUAL PARA-12 EXTRACTED IN THE ORDER E LSEWHERE WHICH INDICATES THAT THE AO WAS PREJUDICED TO TAX IN THE YEAR 2007-08 ONLY TO DENY THE DEDUCTION UNDER SECTION 54EC WHICH WAS RE STRICTED DUE TO AMENDMENT TO LAW LATER. HOWEVER ASSESSEE HAS NO IN CLINATION OF RESTRICTION UNDER SEC. 54EC WHEN IT ENTERED INTO T RANSACTION IN AY 2006- 07 AND OFFERED CAPITAL GAIN. ACCORDINGLY BY INVEST ING THE AMOUNT AS PER PROVISIONS THEN EXISTING TO CLAIM DEDUCTION ASSESSE E OFFERED CAPITAL GAIN. THIS DEDUCTION WAS ALSO ACCEPTED UNDER SECTION 143( 3) AFTER SCRUTINY BY AO. THEREFORE THERE IS MERIT IN ASSESSEES CONTEN TION THAT SAME AMOUNT CAN NOT BE BROUGHT TO TAX IN TWO SEPARATE ASSESSMEN T YEARS. THEREFORE THE GROUNDS RAISED BY THE ASSESSEE ON THE MERITS OF THE ISSUE ARE UPHELD. 7. THE ASSESSEE IS ALSO CONTESTING THE ISSUE ON RE- OPENING OF THE ASSESSMENT. AS BRIEFLY STATED THE LD. CIT(A) UPHE LD THE SAME FOR THE REASON THAT THE PROCEEDINGS HAVE BEEN ACCEPTED UNDE R SECTION 143(1) AND THERE WAS INFORMATION FROM THE INVESTIGATION WI NG ON THE BASIS OF WHICH THERE WAS SATISFACTION TO THAT EXTENT. WE AGR EE WITH THE FINDINGS TO THAT EXTENT. HOWEVER WHAT WE CANNOT AGREE IS THE A CTION OF THE AO IN COMING TO THE SATISFACTION FOR RE-OPENING THE ASSE SSMENT. FIRST OF ALL THE ASSESSEE HAS ALREADY DECLARED CAPITAL GAINS IN ASSE SSMENT YEAR 2006-07 AND SAME WAS ALSO ACCEPTED. THEREFORE AO CANNOT CO ME TO A CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT WHEN THE INCOME WAS ALREADY OFFERED AND ASSESSED TO TAX THE TRANSACTION BEING SAME. MOREOVER THERE IS NO MENTION OF ASSESSEES NAME IN THE COMMUNICATI ON RECEIVED AS RECORDED BY AO IN THE REASONS FOR REOPENING. WE OB SERVE THAT AO HAS NO PROPER REASONS TO FORM A BELIEF THAT INCOME ESCAPED ASSESSMENT. EVEN THE COMMUNICATION PLACED ON RECORD BY THE LD. CIT-D R VIDE LETTER DATED ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 16 APRIL 23 2013 DO INDICATE THAT THE MAIN PURPOSE O F ENTIRE COMMUNICATION WAS WITH REFERENCE TO DENIAL OF BENEF IT UNDER SECTION 54EC. PARA-12 TO 16 OF THE REPORT RECEIVED FROM DDI T SURAT IS ONLY ON THE CLAIM OF SEC.54EC AND RECOMMENDATION FOR CONSID ERING THE TRANSACTION IN THE LATER YEAR. THIS LETTER CANNOT B E CONSIDERED AS PROPER FOR EXERCISING JURISDICTION FOR REOPENING WHEN THE ASSESSEE VALIDLY TAKEN TRANSFER OF HIS RIGHTS IN ASSESSMENT YEAR 2006-07 A ND CLAIMED BENEFIT UNDER SECTION 54EC WHICH WAS ALSO ALLOWED BY AO AF TER DUE EXAMINATION OF THE RECORD IN THE SCRUTINY ASSESSMEN T PROCEEDINGS. THEREFORE THERE CANNOT BE ANY BONAFIDE BELIEF ON T HE PART OF THE AO FOR COMING TO CONCLUSION THAT INCOME HAS ESCAPED ASSESS MENT. 8. IT IS ALSO SEEN THAT AO HAS DISPUTED THE SHARE O F ASSESSEES RIGHTS AND ADDED PART OF THE AMOUNT RECEIVED BY ASSESSEES FATHER BASED ON THE RECITALS ON THE SALE AGREEMENT. HOWEVER THE TIME O F TRANSACTION IE. OFFER BY SHRI PATTANI AND ACCEPTANCE BY THREE FAMILY MEMB ERS TO SELL THEIR INDIVIDUAL SHARE AND RECEIPT OF CONSIDERATION ACCOR DINGLY WAS TOTALLY IGNORED. SHRI HARESH VAIDYA FATHER OF THE ASSESSEE WAS ALIVE AT THE TIME OF THESE TRANSACTIONS IN OCTOBER 2005 AND ALSO AT T HE TIME OF CONSENT TERMS FOR PROBATE OF THE WILL. SUBSEQUENTLY IN JAN UARY 2006 SHRI VAIDYA PASSED AWAY BUT AS ALREADY STATED M/S. DUCE PROPER TY AND SERVICES PVT. LTD. HAS NOT ONLY OBTAINED INDEMNITY BONDS AND BUT ALSO WILL FROM EACH SIGNATORY TO PROTECT THEIR RIGHTS IN PURCHASING THE UNDIVIDED SHARE FROM THE THREE PARTIES. SUBSEQUENTLY WHEN SHRI HARESH VAIDYA PASSED AWAY HIS SHARE WAS ASSIGNED TO TWO CHILDREN I.E. THE ASS ESSEE AND HIS SISTER AND ACCORDINGLY RECITALS WERE MADE IN THE DOCUMENT WHICH WAS SIGNED BY POWER OF ATTORNEY HOLDER OF M/S. DUCE PROPERTY A ND SERVICES PVT. LTD. THEREFORE AS FAR AS ASSESSEE AND FATHER OF THE ASS ESSEE ARE CONCERNED THEY HAVE ENTERED INTO TRANSACTION IN OCT. 2005 FOR SALE OF THEIR UNDIVIDED SHARE IN PROPERTY BUT NOT PROPERTY ITSEL F. IN VIEW OF THIS RE- ITA NO.7325/M/12 A.Y.07-08 DEV KUMAR H. VAIDYA 17 OPENING OF THE ASSESSMENT IN ASSESSMENT YEAR 2007-0 8 IS NOT ACCORDING TO LAW AND FACTS. FOR THESE REASONS GROUND NO.1 TO 5 ARE ALLOWED. 9. GROUND NO.6 IS PRE-MATURE AS IT WAS ONLY INITIAT ION OF PENALTY BUT NOT CONCLUSION OF PROCEEDINGS THEREFORE THE GROUN D IS CONSIDERED AS PRE-MATURE AND REJECTED. 10. IN THE RESULT ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-07- 2013. SD/- SD/- (DR. S.T.M. PAVALAN) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI DATED: 31 /07 /2013. JV. COPY TO: THE ASSESSEE THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.