Brief of the case
In the case of Shashi Gupta vs. ITO, the Delhi Tribunal while considering the effective date of transfer of immovable property for the purpose of taking benefit of time limit specified u/s 54 of the Act considered the date of ‘agreement to sell’ of an immovable property as effective date of transfer of property taking the view expressed by Hon’ble Apex Court on the word ‘transfer’ in the case of Sanjeev lal & Anr. Vs. CIT & Anr, wherein the Apex court held that ‘looking at the provisions of Section 2(47) of the Act, which defines the word “transfer” in relation to a capital asset, one can say that if a right in the property is extinguished by execution of an agreement to sell, the capital asset can be deemed to have been transferred.’
Fact of the case
The Assessee own 1/4th share in the residential house at B-30, Geetanjali Enclave, New Delhi – 110 030 along-with the other three co-owners, which was sold for a consideration of Rs.49,50,000/- under a sale deed dated 05-09-2006. The assessee declared long term capital gain of Rs.43,27,615/-. In respect of this gain, the assessee claimed exemption of Rs.20,40,600/- under section 54 of the Act on the ground that she has purchased a new house property at Ramprastha, Ghaziabad vide registered deed dated 04-08-2005. The A.O. observing that the purchase of property was one year before the date of sale of her share in the residential property i.e, 05-09-2006 sought to disallow the exemption claimed. The assessee in respect of the above observation of the AO contended that she had entered into an agreement to sell dated 16.04.2006 and, therefore, the claim was in accordance with section 54 of the Act. However, the AO disagreed with the said contention of the assessee and rejected her said claim. On appeal by the assessee, the CIT (A), however, turned down the appeal and upheld the disallowance on the ground that there are many glaring contradictions as well as inconsistencies in the argument and documents presented by the assessee, to the extent that document i.e. agreement to sell i.e. 16.04.2006 appears to be concocted just for the purpose to meet the valid objections raised by the AO. The assessee filed the appeal before the Tribunal against the disallowance of exemption claimed u/s 54 of the Act.
Contention of Assessee
The Ld. AR filed a synopsis of the events related to the ownership associated with the property. He submitted that all the four Co-owner having equal share agreed to sell the said property to Shri Ramesh Chandra Kalra s/o Shri K. L. Kalra, B-49, Shivalik Colony, New Delhi and Shri Ashish Rajpal s/o Shri G. D. Rajpal, B-1/53, Malviya Nagar, New Delhi-17 for a sum of Rs.1.98 Crores as per the terms and conditions mentioned in agreement dated 16.04.2006 and received the advance payment. As per the agreement the sale transaction was to be concluded on/or before 01.10.2006, by that time, the second party shall pay the remaining consideration amount. The assessee has already received a sum of Rs.20,00,000/- vide cheque no.759207 on 16.01.2005 as part consideration for her 1/4th share in the property. The sale deed could not be registered because of family dispute and the balance consideration could not be received. The assessee had purchased a new residential house property B-195, Ramprastha Surya Nagar, Ghaziabad for Rs.20,00,000/-+40,600/- vide registered deed dated 04.08.2005. Therefore the money received from Sh. Ramesh Chandra Kalra as part sale consideration was invested in purchase of new house. He further submitted that Mr. Kalra had taken the possession from the assessee on the terms and conditions as specified in agreement dated 16.04.2006 and committed to the assessee that the balance amount of Rs.29,50,000/-will be paid on or before 6 months from 16.04.2006 and/or on registered deed in favour of the Sh. Ramesh Chander Kalra and Sh Ashish Rajpal or their nominee(s) whichever is earlier. On 04.09.2006 the assessee had received the balance amount of Rs.29,50,000/- and signed the registered deed on 04.09.2006 which is registered in the name of Sh. Ashok Seth and Smt. Poonam Seth who are the nominee(s) of Sh. Ramesh Chander Kalra and Sh. Ashish RajpaL Therefore, the transaction of sale was completed in the following manner:-
