I.t.a v. Commissioner Of Income Tax, Chandigarh And Another

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Date of Decision:29.01.2013 1. I.T.A. No.153 of 2012 Smt. Shail Moti Lal Vs. .....Appellant Commissioner of Income Tax, Chandigarh and another .....Respondents 2. I.T.A. No.154 of 2012 Sh. Sanjeev Lal Vs. .....Appellant Commissioner of Income Tax, Chandigarh and another .....Respondents CORAM:- HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:-Mr. Akshay Bhan, Advocate for the appellant. Ms. Urvashi Dhugga, Advocate for the respondents. HEMANT GUPTA, J.(Oral) This order will dispose of two appeals bearing I.T.A. No.153 of2012 and I.T.A. No.154 of 2012. For the sake of convenience, the facts arebeing taken from I.T.A. No.153 of 2012. The present appeal under Section 260-A of the Income Tax Act,1961 (for short `the Act') arises out of an order passed by the Income TaxAppellate Tribunal, Chandigarh Bench `B', Chandigarh (for short 'theTribunal') on 20.01.2012 pertaining to assessment year 2005-2006 holdingthat the appellant is not liable to deduction under Section 54 of the Act. Theassessee has claimed that the following substantial questions of law arise for I.T.A. No.153 of 2012 &I.T.A. No.154 of 2012 consideration by this Court: “(i)Whether in facts and circumstances of the case, the action ofthe ld. authorities below in denying the deduction u/s 54 ofthe Act by ignoring the fact that it is date of transfer which isto be considered and not the date of registration of the saledeed for computing the time period for the purposes ofallowability of deduction u/s 54 of the Act is legallyunsustainable in the eyes of law?the ld. authorities below in denying the deduction u/s 54 ofthe Act by ignoring the fact that it is date of transfer which isto be considered and not the date of registration of the saledeed for computing the time period for the purposes ofallowability of deduction u/s 54 of the Act is legallyunsustainable in the eyes of law? (ii)Whether in fact and circumstances of the case, the action ofthe authorities below in acting on its own presumptions andignoring the law laid down with respect to the date ofregistration being insignificant for the purposes ofcomputation of capital gains and section 54 of the Act islegally unsustainable in the eyes of law?the authorities below in acting on its own presumptions andignoring the law laid down with respect to the date ofregistration being insignificant for the purposes ofcomputation of capital gains and section 54 of the Act islegally unsustainable in the eyes of law? (iii)Whether in facts and circumstances of the case, the action ofthe ld. Courts below in denying deduction on account ofamount spent on construction of new asset despite the factthat the details of the payments made to various persons hasbeen made available on record and by ignoring substantialdocumented evidence placed on record is legallyunsustainable in the eyes of law?the ld. Courts below in denying deduction on account ofamount spent on construction of new asset despite the factthat the details of the payments made to various persons hasbeen made available on record and by ignoring substantialdocumented evidence placed on record is legallyunsustainable in the eyes of law? (iv)Whether in fact and circumstances of the case, the action ofthe authorities below erred in ignoring the requirement of lawthat the assessee is required to construct a new house and notthat the assessee should utilize the amount which he obtainedby way of sale consideration for the purpose of meeting thecost of the new asset and is therefore legally unsustainable inthe eyes of law?the authorities below erred in ignoring the requirement of lawthat the assessee is required to construct a new house and notthat the assessee should utilize the amount which he obtainedby way of sale consideration for the purpose of meeting thecost of the new asset and is therefore legally unsustainable inthe eyes of law? (iv)Whether in fact and circumstances of the case, the action ofthe authorities below erred in ignoring the requirement of lawthat the assessee is required to construct a new house and notthat the assessee should utilize the amount which he obtainedby way of sale consideration for the purpose of meeting thecost of the new asset and is therefore legally unsustainable inthe eyes of law?the authorities below erred in ignoring the requirement of lawthat the assessee is required to construct a new house and notthat the assessee should utilize the amount which he obtainedby way of sale consideration for the purpose of meeting thecost of the new asset and is therefore legally unsustainable inthe eyes of law? (v)Whether in fact and circumstances of the case, the action ofthe authorities below, the impugned orders Annexure A-1 toA-3 are legally sustainable in the eyes of law?”the authorities below, the impugned orders Annexure A-1 toA-3 are legally sustainable in the eyes of law?” The appellant entered into an agreement to transfer rights in property bearing House No.267, Sector 9-C, Chandigarh on 27.12.2002after receipt of earnest money of Rs.15 lacs. In pursuance of the said agreement, the sale deed was executed on 24.09.2004 when the entire saleconsideration amounting to Rs.1.32 crores was received. The appellant purchased another property bearing HouseNo.528, Sector 8, Chandigarh vide sale deed dated 31.04.2003 and claimeddeduction from the levy of capital gain in respect of sale considerationreceived from the transfer of property in Sector 9, Chandigarh. The learnedTribunal held that the appellant is not entitled to deduction as the propertywas purchased on 30.04.2003 i.e. Before one year of transfer of right in theimmovable property on 24.09.2004. Learned counsel for the appellant relies upon Section 2(47) ofthe Act to contend that the transfer is effected when the possession ofproperty is taken or retained in part performance of the contract. Therefore,the appellant is entitled to deduction from the capital gains as the appellanthas transferred the property on the date of agreement i.e. 27.12.2012. The basic question is; as on on what day, the assesee hastransferred rights in property. The appellant has received only Rs.15 lacs asthe amount of earnest money out of total sale consideration of Rs.1.32 lacs.The balance payment was received only on 24.09.2004. A finding of facthas been recorded by the Tribunal that there was no delivery of possessionprior to 24.09.2004 nor the entire sale consideration received prior toexecution of the sale deed. In view of the said fact, the date of agreement to sell can not betreated as date of transfer of immovable property. Even in terms of Section54 of Transfer of Property Act, 1882, an agreement to sell does not createany interest in the immovable property. With the execution of the I.T.A. No.153 of 2012 &I.T.A. No.154 of 2012 -4- agreement, it cannot be said that the appellant transferred any right in favour of the purchaser. Consequently, we do not find that any substantial question of law arises in the present appeal appeal. Dismissed. ( HEMANT GUPTA ) JUDGE January 29, 2013renu/Vimal ( RITU BAHRI ) JUDGE