E.A. Sreeramaiah, Bangalore v. ITO, Bangalore

ITA 774/BANG/2009 | 2005-2006
Pronouncement Date: 17-03-2010 | Result: Allowed

Appeal Details

RSA Number 77421114 RSA 2009
Bench Bangalore
Appeal Number ITA 774/BANG/2009
Duration Of Justice 7 month(s) 18 day(s)
Appellant E.A. Sreeramaiah, Bangalore
Respondent ITO, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 17-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 17-03-2010
Date Of Final Hearing 10-03-2010
Next Hearing Date 10-03-2010
Assessment Year 2005-2006
Appeal Filed On 30-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE DR. O.K. NARAYANAN VICE PRESIDENT AND SHRI GEORGE GEORGE K ACCOUNTANT MEMBER ITA NO. 774(BNG)/09 (ASSESSMENT YEAR : 2005-06) SHRI E.A. SREERAMAIAH NO.29 SHANKAR MUTT ROAD SHANKARPURAM BANGALORE-560 004 VS. INCOME TAX OFFICER WARD 3(3) BANGALORE. APPELLANT. RESPONDENT. APPELLANT BY : SHRI R. CHANDRASHEKAR ADVOCATE. RESPONDENT BY : SMT. V.S. SREELEKHA ADDL. CIT-III O R D E R PER SHRI GEORGE GEORGE K J.M. : THIS APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II BANGALORE DT.1.7.2009 F OR THE ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE RAISED IN THIS APPEAL FOR CONSIDE RATION IS WHAT IS THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE AND THE CO-O WNER FOR THE PURPOSE OF COMPUTING CAPITAL GAINS WHETHER IT IS RS.8 07 500 DECLARED B Y THE ASSESSEE OR IT IS RS.12 25 500 ADOPTED BY THE ASSESSING OFFICER. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS : 3.1 THE ASSESSEE AN INDIVIDUAL FILED RETURN OF INCO ME FOR THE A.Y. 2005-06 DECLARING AN INCOME OF RS.2 43 156. THE ASSESSING AUTHORITY COMPLETED THE ASSESSMENT UNDER SECTION 143(3) ON 29.6.2007. THE ASSESSEE AN D HIS DAUGHTER-IN-LAW SMT. E.S. PADMASREE HAD ENTERED INTO AN AGREEMENT TO SELL TH E PROPERTY WHICH WAS PURCHASED JOINTLY AND WHICH BEARS SITE NO.95 (OLD NO.8) SIT UATED AT SINGASANDRA VILLAGE BEGUR HOBLI BANGALORE WITH SRI G. SHANKAR AND SRI KRISH NA REDDY WHO WERE THE DIRECTORS IN ITA NO.774 (BNG)/08 - 2 - M/S. AISHWARYA SHELTORS (P) LTD. IT WAS STATED THA T THE ASSESSEE AND OTHER OWNER RECEIVED ENTIRE AGREED SALE CONSIDERATION OFRS.8 07 500 AS AGREED ON 25.8.2004 AND THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO T HE AGREEMENT HOLDERS. THE ASSESSEE AND OTHER JOINT OWNER ALSO EXECUTED GPA IN FAVOUR OF SRI G. SHANKAR AND A DECLARATION WAS ALSO EXECUTED TO FURTHER ASSURE THE PURCHASERS THAT THEY ARE PUT IN POSSESSION OF THE PROPERTY. THE GPA HOLDERS EXECUT ED A SALE OF SITE ON 4.11.2004 IN FAVOUR OF SRI KANDI SETTY SRIDHAR RAO THROUGH A RE GISTERED SALE DEED. NEITHER THE APPELLANT NOR THE OTHER CO-OWNER WAS A PARTY TO THE SALE DEED EXECUTED ON 4.11.2004. SALE WAS EXECUTED BY SRI G. SRIDHAR POWER OF ATTOR NEY HOLDER WHERE IN M/S. AISHWARYA SHELTORS (P) LTD. IN WHICH SRI G. SHANKE R WAS DIRECTOR ALSO JOINED AS A CONFIRMING PARTY. THE TOTAL CONSIDERATION THAT WAS RECEIVED BY SRI G. SHANKER WAS RS.12 25 000. THE ASSESSEE HAD COMPUTED CAPITAL GA IN TAKING THE SALE CONSIDERATION AT RS.8 07 500 AS RECEIVED BY THE ASSESSEE AND OTHER O WNER OF THE PROPERTY. THE ASSESSING AUTHORITY HAS TAKEN THE CONSIDERATION AT RS.12 25 000 AND HAS WORKED THE CAPITAL GAINS. 4. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY AND MADE FOLLOWING SUBMISSIONS IN WRITING : 4. THE APPLICANT HAD COMPUTED CAPITAL GAIN TAKI NG THE SALE CONSIDERATION OF RS.8 07 500 AS RECEIVED BY THE APP LICANT AND OTHER OWNER OF THE PROPERTY. THE LEARNED ASSESSING AUTHORITY HAS TAKEN THE CONSIDERATION AT RS.12 25 000 AND HAS WORKED THE CA PITAL GAINS. THE APPELLANT SUBMITS THAT HE AND OTHER OWNER OF THE PR OPERTY RECEIVED ONLY RS.8 07 500 AS SALE CONSIDERATION OF THE PROPERTY A ND ON RECEIPT OF FULL CONSIDERATION THEY PUT THE AGREEMENT HOLDER IN POS SESSION OF THE PROPERTY WHICH HIS EVIDENCED BY THE DECLARATION AN D ANY EXCESS AMOUNT WAS RECEIVED BY M/S. AISHWARYA SHELTORS (P) LTD. I N FACT THE PAYMENT AS PER THE SALE DEED DT.4.11.2004 WAS MADE IN FAVOUR O F M/S. AISHWARYA ITA NO.774 (BNG)/08 - 3 - SHELTORS (P) LTD. AND TO CONFIRM THE SAME. M/S. A ISHWARYA SHELTORS (P) LTD. BECAME A PARTY TO THE SALE DEED TO CONFIRM THE SAME. THE APPELLANT SUBMITS THAT AS COULD BE SEEN FROM THE SALE DEED DT .4.11.2004 AT PAGE 3 THE ENTIRE SALE CONSIDERATION WAS PAID TO THE APPEL LANT AND OTHER OWNER ON THE DATE OF ENTERING INTO SALE AGREEMENT WHICH PROV ES THAT THE BALANCE WAS RECEIVED BY THE CONFIRMING PARTY. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE B Y THE ASSESSEE DISMISSED THE APPEAL OF THE ASSESSEE. THE RELEVANT PORTION OF TH E CIT(A) ORDER READS AS BELOW : I AM IN AGREEMENT WITH THE ASSESSING OFFICERS OB SERVATION THAT THE DOCUMENT CONTAINING CONTRACTS FOR TRANSFER FOR CONS IDERATION AT ANY IMMOVABLE PROPERTY WOULD NOT BE LEGALLY VALID UNLES S IT WOULD BE REGISTERED BY THE COMPETENT AUTHORITY. IN THE APP ELLANTS CASE THE GPA IS A PHOTOCOPY WITHOUT BEARING THE SIGNATURE OF TRA NSFEROR AND TRANSFEREE AND IT IS ALSO NOT AN ATTESTED COPY. TH ERE IS NO SIGNATURE OF EITHER WITNESSES OR THE ADVOCATE BEFORE WHOM DECLAR ATION WAS MADE. THUS THE GPA ITSELF LACKS LEGAL REQUIREMENT. THE APPELLANT DID NOT PRODUCE THE ORIGINAL GPA BEFORE THE AO OR AT THE TI ME OF APPEAL HEARING FOR VERIFICATION. THUS THE GENUINENESS OF GPA DOCU MENT ITSELF IS DOUBTFUL AND CANNOT BE RELIED UPON. AS A MATTER OF FACT THE TRANSFER OF POSSESSION OF THE SAID PROPERTY IS NOT VALIDLY DONE AND HENCE NO TRANSFER HAS TAKEN PLACE. AT THE TIME OF APPEAL H EARING THE AR OF THE APPELLANT WAS ASKED TO FURNISH THE CONFIRMATION FRO M THE CONFIRMING PARTY IN RESPECT OF RECEIVING OF SALE CONSIDERATION AND ENTRY IN THEIR BOOKS OF ACCOUNT HOWEVER HE EXPRESSED HIS INABILI TY TO PRODUCE SUCH DETAILS. IN VIEW OF THESE FACTS THE AO WAS JUSTIF IED IN REJECTING THE APPELLANTS CLAIM AND CONSIDERED RS.12 25 000 WOULD BE THE SALE CONSIDERATION RECEIVED BY THE APPELLANT JOINTLY WIT H THE OTHER OWNER AS PER THE SALE DEED DT.4.11.2004. HENCE THE ADDITION OF RS.6 12 500 BEING 50% OF RS.12 25 000 IN THE HANDS OF THE APPELLANT I S CONFIRMED. AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL BEFORE US. THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING 27 PAGES. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. PER CONTRA THE LEARNED DEPARTM ENTAL REPRESENTATIVE DREW SUPPORT FROM THE FINDINGS / CONCLUSIONS OF THE CIT(A). 5. WE HAVE HEARD RIVAL SUBMISSION AND CAREFULLY PER USED THE FOLLOWING DOCUMENTS AND PARTICULARS FURNISHED BY THE ASSESSEE IN THE PA PER BOOK FILED BY HIM. ITA NO.774 (BNG)/08 - 4 - 1. COPY OF THE AGREEMENT TO SELL DT.14.2.2004. 2. COPY OF GENERAL POWER OF ATTORNEY DT.25.8.2004. 3. COPY OF DECLARATION DT.25.8.2004. 4. COPY OF ABSOLUTE SALE DEED DT.4.11.2004. AS PER THE TERMS OF THE SALE AGREEMENT DT.14.2.2004 ENTERED BETWEEN THE ASSESSEE AND SRI G. SHANKAR (DIRECTOR OF M/S. AISHWARYA SHEL TORS (P) LTD.) THE ASSESSEE AND HER DAUGHTER (CO-OWNER) IS TO BE PAID TOTAL CONSIDE RATION OFRS.8 07 500 FOR THE IMPUGNED PROPERTY. THE RELEVANT CLAUSE WHICH DETA ILS THE PAYMENTS TO BE MADE (PAGE 3 OF THE AGREEMENT OF SALE) CLEARLY STIPULATES THAT ENTIRE SALE CONSIDERATION IS TO BE PAID WITHIN SIX MONTHS. THE ASSESSEE AND THE OTHER CO-OWNERS RECEIVED THE ENTIRE SALE CONSIDERATION OF RS.8 07 500 AS AGREED ON 25.8.2004 AND THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE AGREEMENT HOLDERS. 6. ON PERUSAL OF THE SALE DEED WE FIND THE PAYMENT AS PER THE SALE DEED DT.4.11.2004 WAS MADE IN FAVOUR OF M/S. AISHWARYA S HELTORS (P) LTD. AND TO CONFIRM THE SAME M/S. AISHWARYA SHELTORS (P) LTD. BECAME A PA RTY TO THE SALE DEED. THE FINDING OF THE ASSESSING OFFICER THAT A GENERAL POWER OF AT TORNEY (IN SHORT GPA) EXECUTED IN FAVOUR OF SRI G. SHANKAR IS A COLOURABLE DEVICE IS NOT BASED ON ANY EVIDENCE. SRI G. SHANKAR EXECUTED THE SALE DEED AS A GPA HOLDER AND M/S. AISHWARYA SHELTORS (P) LTD. ACKNOWLEDGED THE RECEIPT OF CONSIDERATION OF RS.12 25 000. THE FIRST APPELLATE AUTHORITY REASONING THAT GPA IS REQUIRED TO BE REG ISTERED AND IS A DOUBTFUL DOCUMENT IS WITHOUT ANY BASIS SINCE THE CIT(A) HAS FAILED T O APPRECIATE THE VERY DOCUMENT OF SALE ON WHICH RELIANCE HAS BEEN PLACED WAS SIGNED A ND EXECUTED BY THE GPA HOLDER AND ITA NO.774 (BNG)/08 - 5 - THE REGISTERING AUTHORITY HAS RECOGNIZED THE GPA IN FAVOUR OF SRI G. SHANKAR. THE DOCUMENT OF SALE CLEARLY STATES THE CONSIDERATION W AS RECEIVED BY M/S. AISHWARYA SHELTORS (P) LTD. WHEREIN SRI G. SHANKAR IS A DIRE CTOR AND THEREFORE THE CONCLUSION OF THE CIT(A) THAT THE SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE JOINTLY WITH THE CO-OWNER AS PER THE SALE DEED DT.4.11.2004 IS NOT B ASED ON ANY MATERIAL. 7. FOR THE AFORESAID REASONS WE DIRECT THE LEARNED ASSESSING AUTHORITY TO ADOPT SALE CONSIDERATION OF RS.8 07 500 AS RECEIVED BY TH E ASSESSEE AND THE OTHER CO-OWNER FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN IN R ESPECT OF THE IMPUGNED PROPERTY. 8. IN THE RESULT THE APPEAL FILED BY T HE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH 2010. SD/- SD/- (O.K.NARAYANAN) ( GEORGE GEORGE K ) VICE PRESIDENT JUDICIAL MEMBER BANGALORE DT.17-03-2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT BANGALORE. 6. GUARD FILE ITAT BANGALORE. 7. GUARD FILE ITAT NEW DELHI. * GPR BY OR DER ASSISTANT R EGISTRAR