By Jagdish T. Punjabi
Chartered Accountant
[2018] 94 taxmann.com 39 (Nagpur-Trib.)
Shailendra Kamalkishore Jaiswal vs. ACIT
ITA No.: 18/Nag/2015
A.Y.: 2010-11.
Dated: 11th May, 2018.
FACTS
For assessment year
2010-11, the assessee, engaged in business of trading in country liquor, filed
his return of income on 31.3.2011 declaring therein a total income of Rs.
32,70,730. The assessee is also a
director of M/s Infratech Real Estate Pvt. Ltd.
The Assessing Officer (AO) obtained information that the assessee has
purchased an immovable property for a consideration of Rs.48,57,000.
The AO asked the
assessee to furnish details in respect of this transaction and also made
inquiry with the office of the Sub-Registrar.
From the submissions and the inquiry, the AO observed that on 6th
June, 2009, the assessee has purchased a plot of land from Infratech Real
Estate Pvt. Ltd. for a consideration of Rs. 48,57,000. The registered sale deed
stated that the consideration was paid vide cheque no. 573883 drawn on Canara
Bank, Badkas Chowk, Nagpur. However, the transaction was not recorded either in
the books of the assessee nor in the books of Infratech Real Estate Pvt. Ltd.
In the course of
assessment proceedings, the assessee submitted that Infratech Real Estate Pvt.
Ltd. needed finance and on approaching the finance company, Infratech Real
Estate Pvt. Ltd. was informed that the finance company would not be able to
sanction more than Rs. 1 crore in single name and therefore, Infratech Real
Estate Pvt. Ltd. had transferred the plot of land in the name of the assessee
for Rs. 48,57,000. Loan obtained by the
assessee from the finance company was transferred to Infratech Real Estate Pvt.
Ltd. The cheque issued to them was not
encashed by them. It was contended that
the property is not received without consideration. Not satisfied with the
explanations furnished by the assessee, the AO made an addition of Rs.
48,57,000 by invoking the provisions of section 56(2)(vii)(b) of the Act.
Aggrieved, the
assessee preferred an appeal to the CIT(A) who upheld the action of the AO.
Aggrieved, the
assessee preferred an appeal to the Tribunal.
HELD
At the outset, the
Tribunal noted that the addition in this case has been made u/s. 56(2)(vii)(b)
of the Act. It held that the provisions of section 56(2)(vii)(b) of the Act bring
into the ambit of income from other sources, stamp duty value of an immovable
property, to the transferee, which is received without consideration. This was
brought into statute book by Finance Act, 2010, w.e.f. 1st October
2009. Hence, prior to this date such transactions were not coming under income
u/s. 2(24) of the Act.
It observed that,
it is evident that the above said provisions of the Act are applicable to
transactions which are entered into after 1st October 2009. It also
noted that Circular no.5/2010 issued by the CBDT clearly mentions that “these
amendments have been made applicable w.e.f. 1st October 2009 and
will accordingly apply for transaction undertaken on/or after such date“.
The Tribunal held that from the above provisions of law and CBDT circular, it
is clear that transfer of immovable property without consideration will be
taxable in the hands of transferee if the transaction took place after 1st
October 2009. There was no provision of law to tax such transaction prior to 1st
October 2009.
The impugned
transaction was entered into on 6th June 2009, as per registered
sale deed. Hence, there is no dispute that the impugned transaction is not hit
by the provisions of section 52(6)(vii)(b) of the Act. It is settled law that
CBDT circulars are binding upon Revenue authorities. It observed that no
contrary decision has been brought to its notice that the said amendment is
applicable retrospectively.
The Tribunal did
not adjudicate the other limbs of argument canvassed by the assessee since it
held that the assessee succeeds on this argument itself. The Tribunal set aside
the order of the CIT(A) and decided the issue in favour of the assessee.
The appeal filed by the assessee was
allowed.
