Case Law Details
Gautam Jhunjhunwala Vs ITO (ITAT Kolkata)
in the light of the definition of ‘transfer’ as defined u/s. 2(47) of the Act it is clear that when any right in respect of any capital assets is extinguished and that right is transferred to someone, it would amount to transfer of a capital asset. In the light of the aforesaid definition and taking into consideration the facts of the present case we note that the assessee executed an agreement to sell for Rs. 30 lacs consideration in respect of its capital asset on 16.09.2011 for transferring the old residential house/original asset in question and a sum of Rs. 1 lac in cheque was received as advance consideration though encashed only on 21.11.2011, we note that the said cheque has not bounced/dishonoured. So, as per the ratio decidendi of the Hon’ble Supreme Court decision in Sanjeev Lal, supra, we note that in the light of the aforesaid facts and in view of the definition of the term ‘transfer’ it can be concluded that some right in respect of capital asset (old asset) in question had been transferred in favour of the vendee and, therefore, some right which the assessee had in respect of the capital asset in question had been extinguished because after execution of the agreement to sell, it would not open to the assessee to sell the property to someone else in accordance with law. As observed by the Hon’ble Supreme Court a right in personam had been created in favour of the vendee in whose favour the agreement to sale had been executed and who had also paid Rs. 1 lac by way of advance/earnest money. It is not the case of the AO/Ld. CIT(A) that the vendee as per agreement to sale is not the vendee when the registration of conveyance deed was executed on 26.12.2011 and, therefore, as per the ratio laid by the Hon’ble Supreme Court in Sanjeev Lal (supra), we find force in the claim made by the assessee to claim exemption u/s. 54 of the Act and we hold that once an agreement to sale is executed in favour of vendee, the said vendee gets a right to get the property transferred in his favour by filing a suit under Specific Performance Act and, therefore, some right in respect of the said property (old residential property) belonging to the assessee had extinguished and some rights have been created in favour of the vendee/transferee when the agreement to sale has been executed. Thus, a right in respect of the capital asset (old residential property in question) has been transferred by the assessee in favour of the vendee/transferee on 16.09.2011 and, therefore, since purchase of the new property on 04.10.2010 which fact has been disputed by the AO/Ld. CIT(A) the purchase of the property is well within one year from the date of transfer as per sec. 2(47) of the Act, therefore, we allow the appeal of the assessee. We also note that the Ld. CIT(A) erred in understanding the ratio decidendi laid by the Hon’ble Supreme Court in Sanjeev Lal, supra and, therefore, he erred in passing the impugned order, so we set aside the order of the Ld. CIT(A) and we allow the appeal of the assessee and direct AO to grant exemption u/s. 54 of the Act in accordance to law.
FULL TEXT OF THE ITAT JUDGMENT
This appeal preferred by the assessee is against the order of Ld. CIT(A)-7, Kolkata dated 12.01.2017 for AY 2012-13.
2. The sole issue is against the decision of the Ld. CIT(A) confirming the action of AO in disallowing the claim of assessee for exemption u/s. 54 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) to its LTCG of Rs. 15,04,361/-.
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