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I-T - Benefit of exemption claimed u/s 54EC(1)(b) cannot be allowed in absence of properly-registered documentary evidences proving ownership over plot of land: ITAT

 

By TIOL News Service

AHMEDABAD, AUG 30, 2018: THE ISSUE IS - Whether in absence of proper registered documentary evidences proving ownership over plot of land sold, the benefit of exemption claimed u/s 54EC(1)(b) can not be allowed. YES IS THE VERDICT.

Facts of the case

The assessee an Individual, had filed return for relevant AY. During assessment, the AO noticed that assessee had claimed exemption u/s 54EC(1)(b) of the act of long term capital gain arising from sale of two non-agricultural plots. The AO further noted that one of sold property was purchased by the assessee from Shri Kiritkumar Khodabhai Patel on May 30, 1984 under sale agreement executed on plain paper and this document was not registered with any sub-registrar. He had further noticed that second property was shown as purchased for Rs. 19,500/- on July 13, 1990, however nowhere on the document the name of the assessee was mentioned as purchaser of the land. In spite of giving a number of opportunities, the assessee failed to substantiate the ownership of the property with relevant evidences. Consequently, the AO disallowed the exemption claimed u/s. 54EC(1)(b) of the act and assessed the income as income from other sources. On appeal, CIT(A) sustained the addition made by the AO.

On appeal, the Tribunal held that,

++ in spite of giving a number of opportunities, the assessee failed to substantiate the ownership of immovable property with registered document. The assessee failed to prove his claim of ownership with recognized document as required in the case of purchase of immovable property. Any of the right relating to immovable property, be it a sale, exchange or relinquishment or extinguishments of any rights or compulsory acquisition relate to can be transferred subject to the provisions of the Indian Registration Act, 1908. Section 17 of the Indian Registration Act lays down very clearly that the documents which purports or operates to create, declare, assign, limit or extinguish, whether in the present or in future, any right, title or interest, whether vested or contingent, to or in immovable property shall be registered. No substance was found in the submission of the assessee that how the properties under the registered ownership of other persons can be considered as owned by the assessee. It was observed that the assessee failed to prove his claim of ownership with recognized document as required in the case of purchase of immovable property. The assessee has never owned these plots. There was no evidence to prove that the plot was owned by the assessee. The assessee is claiming certain facts which were in his exclusive knowledge without any relevant documentary evidences. Hence the appeal of the assessee is dismissed.

(See 2018-TIOL-1371-ITAT-AHM)


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