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Tax Publishers ITO v. Rakhi Agrawal [ITA No. 94/Jab/2018, dt. 27-10-2020] : 2020 TaxPub(DT) 4451 (Jab-Trib.) To Sustain addition under section 56(2)(vii)(b)(ii) whether transfer be reckoned from date of agreement or date of registration? *Facts:* Assessee with her sons purchased a land on 30-3-2013 for Rs. 50.92 lakhs the agreement of which was registered on 24-4-2013. The stamp value of the land was Rs. 2.81 crores. It was the case of the revenue that the conveyance was completed only on 24-4-2013, i.e., F.Y. 2013-14/A.Y. 2014-15 where section 56(2)(vii)(b)(ii) deems the stamp value as the value taxable under income from other sources thus the difference of Rs. 2.30 crores was brought to tax by the assessing officer under income from other sources. On appeal the Commissioner (Appeals) concurred with the contentions of the assessee that the sale was completed on 30-3-2013, i.e., pertaining to F.Y. 2012-13/A.Y. 2013-14 where in the deeming clause under section 56(2)(vii)(b)(ii) was not in existence thus the additions could not be sustained. Aggrieved the revenue went in higher appeal -- The prime debate on the case was should the purchase/transfer be recognized to have happened on 30-3-2013 or on 24-4-2013 as the two pertain to two different financial/assessment years. Held against the revenue/in favour of the assessee that the logical reading of section 56(2)(vii)(b)(ii) of "receives" could only refer to not only physical receipt but also a transfer of the property. Transfer without receipt or receipt without transfer will render the intent of the provision otiose. The sale should have been reckoned from the date of execution of the deed, i.e., on 30-3-2013 which pertains to F.Y. 2012-13/A.Y. 2013-14. Since the deeming clause was not in existence in that assessment year the case of the revenue fails. A de facto transfer and de facto ownership is what is necessary to fulfill 56(2)(vii). This happened on 30-3-2013. It was de jure ownership on 24-4-2013 which was conferred. The decisions of CIT v. Podar Cement (P.) Ltd. (1997) 226 ITR 625 (SC) : 1997 TaxPub(DT) 1265 (SC), CIT v. Mormasji Mancharji Vaid (2001) 250 ITR 542 (Guj) (FB) : 2001 TaxPub(DT) 1442 (Guj-HC) were relied on by the assessee for impressing that the date of transfer 30-3-2013 should be the reckoning date. Revenue relied on CIT v. Balbir Singh Maini (2017) 398 ITR 531 (SC) : 2017 TaxPub(DT) 4346 (SC) which relates to section 53A part performance provisions. *Referred:* Ram Saran Lall v. Mst. Domini Kuer, AIR 1961 SC 1747 *Editorial Note:* An agreement is effective from the time it is registered. But this cannot be a read too stretched to deny beneficial ownership or de facto ownership under the Income tax act. This was the principle which was read in this decision. De jure ownership date need not be the deciding factor in all cases. Reference be made to para 4.4.1 for below fine print reading -- In fact, the substituted section 56(2)(vi)(b) of the Act by Finance Act, 2013, with effect from 1-4-2014, itself makes it clear per first proviso thereto that where the date of agreement and of its registration is not the same, the stamp value as on the former date shall be adopted for the purpose of the provision. Though exception to the rule is made per the second proviso where a part of the sale consideration has been paid in cash (legal tender), the provision, in substance, seeks to give primacy to the date of the agreement, where it is, as in the instant case, subsequently registered. This also sums up the assessee's case.

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ITO v. Rakhi Agrawal [ITA No. 94/Jab/2018, dt. 27-10-2020] : 2020 TaxPub(DT) 4451 (Jab-Trib.)

To Sustain addition under section 56(2)(vii)(b)(ii) whether transfer be reckoned from date of agreement or date of registration?

Facts:

Assessee with her sons purchased a land on 30-3-2013 for Rs. 50.92 lakhs the agreement of which was registered on 24-4-2013. The stamp value of the land was Rs. 2.81 crores. It was the case of the revenue that the conveyance was completed only on 24-4-2013, i.e., F.Y. 2013-14/A.Y. 2014-15 where section 56(2)(vii)(b)(ii) deems the stamp value as the value taxable under income from other sources thus the difference of Rs. 2.30 crores was brought to tax by the assessing officer under income from other sources.

On appeal the Commissioner (Appeals) concurred with the contentions of the assessee that the sale was completed on 30-3-2013, i.e., pertaining to F.Y. 2012-13/A.Y. 2013-14 where in the deeming clause under section 56(2)(vii)(b)(ii) was not in existence thus the additions could not be sustained. Aggrieved the revenue went in higher appeal --

The prime debate on the case was should the purchase/transfer be recognized to have happened on 30-3-2013 or on 24-4-2013 as the two pertain to two different financial/assessment years.

Held against the revenue/in favour of the assessee that the logical reading of section 56(2)(vii)(b)(ii) of "receives" could only refer to not only physical receipt but also a transfer of the property. Transfer without receipt or receipt without transfer will render the intent of the provision otiose. The sale should have been reckoned from the date of execution of the deed, i.e., on 30-3-2013 which pertains to F.Y. 2012-13/A.Y. 2013-14. Since the deeming clause was not in existence in that assessment year the case of the revenue fails.

A de facto transfer and de facto ownership is what is necessary to fulfill 56(2)(vii). This happened on 30-3-2013. It was de jure ownership on 24-4-2013 which was conferred.

The decisions of CIT v. Podar Cement (P.) Ltd. (1997) 226 ITR 625 (SC) : 1997 TaxPub(DT) 1265 (SC), CIT v. Mormasji Mancharji Vaid (2001) 250 ITR 542 (Guj) (FB) : 2001 TaxPub(DT) 1442 (Guj-HC) were relied on by the assessee for impressing that the date of transfer 30-3-2013 should be the reckoning date.

Revenue relied on CIT v. Balbir Singh Maini (2017) 398 ITR 531 (SC) : 2017 TaxPub(DT) 4346 (SC) which relates to section 53A part performance provisions.

Referred: Ram Saran Lall v. Mst. Domini Kuer, AIR 1961 SC 1747

Editorial Note: An agreement is effective from the time it is registered. But this cannot be a read too stretched to deny beneficial ownership or de facto ownership under the Income tax act. This was the principle which was read in this decision. De jure ownership date need not be the deciding factor in all cases.

Reference be made to para 4.4.1 for below fine print reading --

In fact, the substituted section 56(2)(vi)(b) of the Act by Finance Act, 2013, with effect from 1-4-2014, itself makes it clear per first proviso thereto that where the date of agreement and of its registration is not the same, the stamp value as on the former date shall be adopted for the purpose of the provision. Though exception to the rule is made per the second proviso where a part of the sale consideration has been paid in cash (legal tender), the provision, in substance, seeks to give primacy to the date of the agreement, where it is, as in the instant case, subsequently registered. This also sums up the assessee's case.