Section 54F claim not available on basis of Agreement to sale , Sale deed required

By | November 24, 2016
(Last Updated On: November 24, 2016)

Held

There was an agreement for purchase of land which was not carried out and matter was taken to Court, where parties entered into settlement for transfer of plot. Fact remains that no legal document having effect of transfer of immovable property was placed before Appellate Authority. Under the provisions of transfer of Transfer of Property Act, 1882 unless a registered sale deed is execuetd, title of immovable property cannot pass. Agreement to sale is not a transaction of immovable property but only a promise to enter into another agreement relating to sale of immovable property. That is why Tribunal has recorded a finding that from order of Assessing Authority it is evident that there was no sale of property in dispute for the reason that no sale deed was placed before Revenue authorities so as to claim capital gain.

HIGH COURT OF ALLAHABAD

Smt. Shobha Jain

v.

Commissioner of Income-tax, Agra

SUDHIR AGARWAL AND DR. KAUSHAL JAYENDRA THAKER, JJ.

IT APPEAL NO. 335 OF 2006

SEPTEMBER  8, 2016

R.B. Shukla for the Appellant. A.N. Mahajan, Standing Counsel and B.J. Agrawal, C.S.C. for the Respondent.

ORDER

1. Heard Sri R.B. Shukla, learned counsel for appellant and perused the record.

2. Present appeal under Section 260-A of the Income Tax Act, 1961(hereinafter referred as ‘Act’) has been filed against judgment of Income Tax Tribunal , Agra Bench, Agra(hereinafter referred as ‘Tribunal”) in ITA No. 100/Agra/2001 dated 25-8-2006 for Assessment Year 1995-96.

3. This appeal was admitted on following substantial questions of law:—

“1.Whether on the facts and in the circumstances of the case the Appellate Tribunal was legally justified in upholding the prima facie adjustment beyond the purview of section 143(1)(a) of the Act with reference to claim of deduction of Rs. 4,22,400/- under section 54F of the Act de hors the clause (iii) of proviso to the said section that permits such adjustment only “on the basis of the information available in such return accounts or documents.”
2.Whether on the facts and in the circumstances of the case the Appellate Tribunal was legally justified in taking into account the facts and evidence outside the relevant record of the impugned year, such as, letter dated 8.4.1999 while making prima facie adjustment under section 143(1)(a) of the Act.
3.Whether on the facts and in the circumstances of the case the Appellate Tribunal was legally justified in upholding the taxability of the capital gains in respect of said asset in A.Y. 1995-96 de hors the proviso to sub-section (4) of section 54F of the Act that permits assessment of capital gains in such circumstances in the assessment year relevant to the year in which period of three years expires.
4.Whether on the facts and in the circumstances of the case the Appellate Tribunal was legally justified in upholding prima facie adjustment under section 143(1) (a) of the Act by treating the investment of Rs. one lakh outside the Capital Gains Scheme despite the certificate of the bank to the contrary.”

4-5. Basically, dispute relates to disallowing assessee’s claim under Section 54-F of the Act. The Assessing Officer disallowed exemption holding that it is permissible only when residential house is purchased or constructed within stipulated period. Assessee succeeded in appeal before Commissioner Income Tax (Appeals) [hereinafter referred to as ‘CIT (A)’] but the same has been reversed by Tribunal vide impugned judgment and order by allowing appeal preferred by Revenue. Hence this appeal before this Court.

6. There was an agreement for purchase of land which was not carried out and matter was taken to Court, where parties entered into settlement for transfer of plot. Fact remains that no legal document having effect of transfer of immovable property was placed before Appellate Authority. Under the provisions of transfer of Transfer of Property Act, 1882 unless a registered sale deed is executed, title of immovable property cannot pass. Agreement to sale is not a transaction of immovable property but only a promise to enter into another agreement relating to sale of immovable property. That is why Tribunal has recorded a finding that from order of Assessing Authority it is evident that there was no sale of property in dispute for the reason that no sale deed was placed before Revenue authorities so as to claim capital gain.

7. Learned counsel for appellant, despite repeated query, could not show anything that there was transfer of property by execution of sale deed. In view thereof, finding of Tribunal that there was no capital gain since there was no sale of property, is neither perverse nor illegal. We find no error in the judgment of Tribunal. Substantial questions of law as noted above are answered against Assessee.

8. Appeal is dismissed accordingly.

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