Case Law Details
Sanjay Bansal Vs ITO (ITAT Delhi)
The transfer/ gift deed available at pages 85-140 of the Paper Book reveals that the transfer/ gift deed is made and executed on 19.11.2008 between Shri Sanjay Bansal and Smt. Manju Garg. It is mentioned in the recital that the transferor/ donor is the allottee, lessee and in possession of the said property duly allotted by the Noida Authority; that the lease deed in respect of the property has been executed by the Noida Authority in favour of the transferor as lessee for the term of 90 years and the same is registered; that the transferor/ donor is the brother of the transferee/ donee and that they are closely related and have got love and affection to each other; that in consideration of love and affection, the transferor/ donor has agreed to gift lease hold rights/ ownership rights in respect of the said property in favour of transferee/ donee; that the transferor/ donor has obtained the permission of Noida authority vide their letter No. Noida/AGM/(IND)/2007/9120 dated 19.12.2007 to transfer/ gift the said property in favour of the transferee/donee; that the transferor/ donor has transferred and assigned all his rights, titles and interest in the said property TO HOLD the same to the transferee/ donee by virtue of this transfer/ gift deed; that this deed is without monitory consideration and the transferee/ donee has accepted the gift.
In view of the above recitals made in the transfer/ gift deed it is crystal clear that the said property was gifted by the assesee to his sister out of natural love and affection and it was in this back drop that the assessee claimed before the Ld. CIT(A) that the incidence of transfer of immovable property was not liable to tax in his hands.
The claim of the assessee before the Ld. CIT(A) was lawful. Clause (iii) of section 47 of the Act exempts from the operation of section 45 all transfers under a gift or will or an irrevocable trust. Therefore, the transaction of gift under consideration is not to be regarded as transfer for the purposes of section 45. The Hon’ble Calcutta High Court held in the case of Gillanders Arbuthnot and Co. vs. CIT [76 ITR 160 (Cal)] that the provision of section 47 have to be strictly construed which decision has been affirmed by the Hon’ble Supreme Court in 87 ITR 407 (SC). Therefore, the impugned transaction of gift is not exigible to capital gains tax.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal by the assessee is directed against the order dated 30.03.2017 of the Ld. Commissioner of Income Tax (Appeals)–1, Noida (“CIT(A)”) pertaining to assessment year 2009-10.
2. As per AIR information, the assessee had sold an immovable property for Rs. 1,72,80,000/- on 19.11.2008 during the financial year 2008-09. The Ld. Assessing Officer (“AO”) sought information under section 133(6) of the Income Tax Act, 1961 (the “Act”) by issue of notice to the assessee which was not complied with. In the absence of PAN, it could not be ascertained whether the assessee had filed return for assessment year 2009-10 and declared capital gain from the said transaction. The Ld. AO, therefore, issued notice under section 148 of the Act on 28.3.2016 after obtaining approval of Pr. CIT, Noida under section 151(ii) of the Act. The notice was served upon the assessee but no compliance was made. Subsequent notices also remained uncomplied with. The Ld. AO, therefore, formed the opinion that the assessee had nothing to explain regarding capital gain arising from sale of that property for consideration of Rs. 1,72,80,000/-. By adopting cost of index 582 during the financial year 2008-09 he calculated net capital gain at Rs. 1,43,10,928/- and completed the assessment ex-parte under section 144 read with section 148 of the Act on total income of Rs. 1,43,10,930/- on 04.11.2016.
3. Aggrieved the appeal was filed before the Ld. CIT(A). It is pertinent to extract paras 2 & 3 of the appellate order which succinctly brings out the case of the assesee presented before the Ld. CIT(A) :-
“2. The case was fixed for hearing for 21/03/2017 whereupon a letter was filed by the appellant stating that the immovable property being the subject of the impugned assessment order was not sold by the appellant but gifted and the copy of the gift deed was stated to be enclosed. The appellant was asked to clarify if the donor was an assessee and what was the source of investment in the hands of the donee. The case was adjourned for 27/03/2017. On 27/03/2017 another letter was filed by the appellant stating that the property was transferred to him by his father after his death on 13/10/1999 and thereafter the said property was gifted by the appellant to his sister on 19/11/2008. It was stated that his family did not raise any objection on this matter.
3. The appellant enclosed a copy of the letter dated 26/12/2000 from the Noida Authority whereby the lease subsistence in the name of late Hukum Chand Bansal being the father of the appellant was transferred in favour of the appellant. The appellant also enclosed a copy of indemnity bond issued in favour of the Noida Authority which is undated but was attested by an advocate M/s. R.K. Samson, Advocate on 15/05/2000 for mutation of the subject immovable property in favour of the appellant. Copies of affidavits affirmed by the mother (Smt. Darshan Devi) and two sisters of the appellant (Smt. Manju Garg and Smt. Suman Gupta) stating that they have no objection over mutation of the subject property existing in the name of the deceased father of the appellant in favour of the appellant were also filed. Based on these documents the appellant claimed that he was not liable to pay any tax on the instance of alleged gift by him to one of his full blood sisters.”
3.1 The Ld. CIT(A) did not accept the explanation offered before him that the immovable property was gifted by the assessee to his sister (para 8). In subsequent para 9, the Ld. CIT(A) held that the alleged donee Smt. Manju Garg is liable to tax on income of Rs. 1,72,80,000/- in assessment year 2009-10 under section 56(2)(vii)(b) of the Act and directed the Ld. AO to do so in para 10. In the next para 11 the Ld. CIT(A) says that in any case the Ld. AO has invoked the provision of section 50C of the Act which he approved in para 16 and confirmed the assessment order. The assessee is aggrieved.
4. This has brought the assessee before the Tribunal challenging the addition of Rs. 1,43,10,930/- made by the Ld. AO which has been confirmed by the Ld. CIT(A).
4.1 Prayer for admission of additional grounds of appeal and admission of additional evidence has not been pressed by the assessee.
5. The Ld. AR invited our attention to the copy of the transfer deed/ gift deed available at pages 85-140 of the Paper Book and submitted that Shri Sanjay Bansal the transferor/ donor/ assessee gifted the impugned property to his real sister Smt. Manju Garg in consideration of natural love and affection vide registered gift deed dated 19.11.2008.
5.1 The Ld. AR pointed out that the provisions of section 56(2)(vii)(b) are not applicable to the case of the assessee. The said provision was substituted by the Finance Act, 2010 with retrospective effect from 01.10.2009 and applies in relation to assessment year 2010-11 and subsequent years whereas the impugned transaction of transfer by way of gift took place during the financial year 2008-09 relevant to the assessment year 2009-10.
5.2 The Ld. AR argued that provision of section 50C is not relevant to the assessee’s case as it applies to a case where there is under-statement of consideration in acquisition of property. There is no such allegation in the case of the assessee.
5.3 The Ld. AR submitted that plot was allotted by Noida Authority to the father of the assessee on which his father constructed property before 1990. The father of the assessee expired on 13.10.1999. The said property was transferred in the name of the assessee by Noida Authority during the year 2000. The assessee out of natural love and affection gifted the said property to his sister vide gift deed executed and registered on 19.11.2008. The amount of Rs. 1,72,80,000/- was fixed by the Dy. Registrar, Noida for stamp duty purpose and assessee did not receive any consideration. The assessee paid stamp duty of Rs. 8,64,000/-.
5.4 The Ld. AR submitted that any transfer of capital assets under a gift is not transferable as per section 47(iii) of the Act. Therefore, capital gain provisions did not apply.
5.5 The Ld. DR on the other hand relied on para 8 of the appellate order which says that there is no recital in the transfer/gift deed that the said immovable property was gifted by the assessee.
6. We have given careful thought to the rival submissions and perused the material on record. The transfer/ gift deed available at pages 85-140 of the Paper Book reveals that the transfer/ gift deed is made and executed on 19.11.2008 between Shri Sanjay Bansal and Smt. Manju Garg. It is mentioned in the recital that the transferor/ donor is the allottee, lessee and in possession of the said property duly allotted by the Noida Authority; that the lease deed in respect of the property has been executed by the Noida Authority in favour of the transferor as lessee for the term of 90 years and the same is registered; that the transferor/ donor is the brother of the transferee/ donee and that they are closely related and have got love and affection to each other; that in consideration of love and affection, the transferor/ donor has agreed to gift lease hold rights/ ownership rights in respect of the said property in favour of transferee/ donee; that the transferor/ donor has obtained the permission of Noida authority vide their letter No. Noida/AGM/(IND)/2007/9120 dated 19.12.2007 to transfer/ gift the said property in favour of the transferee/donee; that the transferor/ donor has transferred and assigned all his rights, titles and interest in the said property TO HOLD the same to the transferee/ donee by virtue of this transfer/ gift deed; that this deed is without monitory consideration and the transferee/ donee has accepted the gift.
7. In view of the above recitals made in the transfer/ gift deed it is crystal clear that the said property was gifted by the assesee to his sister out of natural love and affection and it was in this back drop that the assessee claimed before the Ld. CIT(A) that the incidence of transfer of immovable property was not liable to tax in his hands (para 7 of CIT(A)’s order).
7.1 The claim of the assessee before the Ld. CIT(A) was lawful. Clause (iii) of section 47 of the Act exempts from the operation of section 45 all transfers under a gift or will or an irrevocable trust. Therefore, the transaction of gift under consideration is not to be regarded as transfer for the purposes of section 45. The Hon’ble Calcutta High Court held in the case of Gillanders Arbuthnot and Co. vs. CIT [76 ITR 160 (Cal)] that the provision of section 47 have to be strictly construed which decision has been affirmed by the Hon’ble Supreme Court in 87 ITR 407 (SC). Therefore, the impugned transaction of gift is not exigible to capital gains tax.
7.2 By no stretch of imagination the impugned gift of immovable property can be brought to tax in the hands of the recipient donee Smt. Manju Garg under section 56(2)(vii)(b). Firstly, the provision of section 56(2)(vii)(b) came into existence w.e.f. 01.10.2009 and therefore will apply for transaction undertaken on or after such date as explained by the CBDT in Circular No. 5 dated 03.06.2010 reported in (2010) 324 ITR (st) 293. Secondly, proviso under section 56(2)(vii) says that this clause shall not apply to any property received from any relative. The expression ‘relatives’ under Explanation (e) to section 56(2)(vii) means ‘brother or sister of the individual’. Since the impugned transaction of gift of property is between brother and sister it falls outside the ambit of the provision of section 56(2)(vii)(b) of the Act. Therefore, the question of taxability of the impugned gift in the hands of the recipient donee Smt. Manju Garg does not arise at all.
7.3 As stated earlier, invocation of section 50C to the case of the assessee is irrelevant as the said provision applies where there is under-statement of consideration in acquisition of property. There is nothing like that in the case of the assessee.
8. Accordingly, we hold that on the facts and in the circumstances of the assessee’s case bringing to tax capital gain of Rs. 1,43,10,930/- in the hands of the assessee is not sustainable. We, therefore delete the impugned addition. The assessee succeeds in his appeal.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 6th April, 2023.
