| Oct-08-2021

The facts mentioned in the sale deed cannot be the ground for availing Capital gain exemption

 In Shri Jayaseelan v. The Income Tax Officer, Ward 2, Tiruvannamalai, [I.T.A No.1455/Chny/2018 dated September 24, 2021], Shri Jayaseelan (“the Appellant”) has filed the current appeal being aggrieved against the order dated March 5, 2018 passed by the ld. Commissioner of Income Tax (Appeals) (“the CIT(A)”) for the assessment year 2014-15 wherein  the claim of the Appellant claiming benefit under section 54 of the Income Tax Act,1961 (“the IT Act”) was rejected.

Factually, the Appellant sold his property and claimed exemption under Section 54F of the IT Act in his income tax return. The Assessing Officer (“AO”) however rejected the claim observing that as per the property’s registered document the transferors acknowledged the receipt of rupees 11 lakhs in cash from the Appellant on the date of execution of the document i.e., on July 04, 2016 and the possession was also handed over on July 04, 2016. According to the AO when the property was sold on May 06, 2013 and purchased the property on June 04, 2016 which is two years beyond the transfer of the capital asset, the Appellant is not entitled to the benefit under Section 54 of the IT Act.

The Appellant submitted that he has purchased the property within 2 years. Further, submitted that the seller of the property gave confirmation that they have received the amount of ₹.10,00,000/- on April 08, 2015 and the possession was also given. Therefore, the transfer took place on April 08, 2015 and the Appellant is entitled for the benefit under Section 54 of the IT Act.

On the other hand, the department has submitted that the Xerox copy of the agreement submitted by the Appellant dated April 08, 2015 is not a genuine one and there is no signature of the Appellant.  Further, submitted that the sale deed dated July 04, 2016 clearly mention that the sellers have been received full consideration on the date of sale and possession was also given on the same day. Furthermore, submitted that the recital in the registered sale deed is a conclusive proof that the alleged agreement shown by the Appellant dated April 08, 2015 is only an after-thought and submitted that the Appellant is not eligible for the benefit under Section 54 of the IT Act.

The Hon’ble ITAT, Chennai observed that the sale agreement which does not bear the signature of the Appellant and also translated a copy of the sale agreement into English dated April 08, 2015 and found that nowhere in the sale agreement it is mentioned that the possession was given to the Appellant.

As per the sale deed dated July 04, 2016 the entire amount was received by the sellers on July 04, 2016 and possession was also handed over to the Appellant on July 04, 2016.

Under the above facts and circumstances the Court opined that the sale agreement dated April 08, 2015 is not genuine. Accordingly, the benefits under Section 54 of the IT Act cannot be granted to the Appellant for the main reason that the sale deed clearly mentions that the entire sale consideration was received on the same day, and possession was also handed over.

In view of the above, the Court found no reason to interfere with the order of the CIT(A). Thus, dismissed the ground raised by the Appellant.

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