The Income Tax Appellate Tribunal (ITAT), Mumbai Bench deleted the addition on the ground that the registrar had charged stamp duty as per prevailing market value for the property.
The assessee, Ajay Jagdishnarain Agarwal filed his return of income, declaring total income to the tune of Rs.81,99,170/- for the AY 2015-16. The return was processed u/s 143(1) of the Act. The assessment was selected for scrutiny. Notices u/s.143(2) and 142(1) were issued and served upon the assessee. The assessee was the partner of M/s Gokul Construction Company, City Life Developers, Agarwal Construction Co., Krish Enterprises, Orchid Enterprise, Punit Construction Co., Geopreneur Realty Co., and Aditya GP Realty Co., engaged in the construction business.
The income of the assessee was mainly from income from the house property, income from salary, share profit under income from business or profession and income from other sources. In the relevant AY, the assessee purchased the property by virtue of conveyance deed registered. The market value of the said property was of Rs. 9,75,27,000/-. The transaction value of Rs. 70,20,570/- and stamp duty in sum of Rs. 48,79,000/- was paid. The income of the assessee was assessed in view of the provisions u/s 56(2)(vii) of the Income Tax Act and his share in sum of Rs.2,85,42,477/- was added to the income of the assessee, the total income of the assessee was assessed in sum of Rs 3,67,41,642/-. Feeling aggrieved, the assessee filed appeal before the CIT(A), who allowed the claim of the assessee.
The revenue has challenged the order of the CIT(A) on the grounds that the assessee could not furnish any documentary evidence for providing that the said property was purchased by the assessee’s father JN Agarwal in 1974 itself. As per Section 53A of the Transfer of Property Act, the transfer will be completed only when full sale consideration is received by the seller, property is registered in the name of purchaser and possession was given to the purchase. In the case of the assessee, the above said there conditions were not fulfilled in the year 1974 whereas the said conditions were fulfilled in the year 2014.
The coram of Accountant Member, Rajesh Kumar and Judicial Member, Amarjit Singh noticed that the property was purchased by Jagdish Narian Agarwal in the year 1974 after paying the full consideration. The original owners/vendors confirmed the transaction and the parties had given requisite confirmation before the district collector. They transferred the possession of the said land to Late Shri Jagdishnarian Agarwal. Original owners and confirmation parties also executed the Power of Attorney in favour of Late Shri Jagdishnarian Agarwal in which all rights were given to him.
The ITAT further observed that The property was exclusively under the ownership and possession of the Shri Jagdishnarian Agarwal, which was acquired by the appellant or other legal heir on demise of his father Shri Jagdish Narian Agarwal. The property was under litigation for a long time and the compensation was given for the settlement. The property was registered with the name of Shri Jagdishnarian Agarwal till the pending of the litigation, however, the same was came with the name of the appellant and other legal heirs by virtue of conveyance deed in the FY 2014-15. The registrar had charged stamp duty and prevailing market value for the said property.
Therefore, the Tribunal while upholding the order of the CIT(A) opined that land was not a fresh purchase. Hence, deleted the additions raised in view of the provisions u/s 56(2)(vii)(b) of the Act in sum of Rs.2,85,42,770/-.
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