INCOME TAX ACT, 1961

Section 45 Section 2(47)(v) Section 50C(1)/53A

Capital gains - Year of chargeability - Date of agreement or date of registration -

Assessee in the present batch of appeals, entered into a development agreement with M/s. V.S. Kolbhor & Associates for sale of land at Survey Nos. 676/677/679 at Talegaon Dabhade for a consideration of Rs. 93,25,000. The sale deed was registered on 03-08-2006. Assessee agreed to transfer the immovable property to V.S. Kolbhor & Associates by a written agreement on 6-5-2000 for a consideration of Rs. 93,25,000. V.S. Kolbhor & Associates took possession of the property in the year 2000 itself and performed their part of the contract by paying a sum of Rs. 62.75 lakhs there and then. Assessee's contention that the transfer took place way back on 6-5-2000 on entering into contract and handing over the possession of the property to M/s V.S. Kolbhor & Associates after receipt of substantial part of sale consideration, did not find favour with the AO. Eventually, a registered sale deed was executed on 3-8-2006. In the backdrop of the above facts, the moot question which arose in the instant case was to find out the date of transfer triggering the provisions of Chapter IV-E of the Act. AO had opined that transfer took place on execution of the sale deed on 3-8-2006 and hence capital gain became chargeable under section 45 in the previous year relevant to the assessment year 2007-08 under consideration. On the contrary, the assessee had canvassed a view that the transfer took place on 6-5-2000 and hence, the capital gain could not be charged to tax in the year under consideration. Held: Assessee's case gets covered under section 2(47)(v) read with section 53A of the Transfer of Property Act having the effect of constituting `transfer on 6-5-2000, notwithstanding the fact that the contract though required to be registered was not registered at that time and registered on 3-8-2006. The assessee handed over possession of the property to M/s. V.S. Kolbhor & Associates in the year 2000 on receiving substantial part of consideration. This, constituted transfer under section 2(47)(v) read with section 53A of the TPA attracting taxability of capital gain in the assessment year 2001-02. As the 'transfer' took place in the said earlier year, it cannot once again take place in the assessment year 2007-08 attracting taxation. Setting aside the impugned order, the transfer took place in the assessment year 2001-2002, and not 2007-08, leading to taxation of capital gain only in the earlier year and not the latter. As the CIT(A) had upheld taxability of the capital gain in the assessment year 2007-08, this court hereby overturn the same. In view of favorable decision on the main argument of the AR, the alternate claim of the assessee and the discussion made had been rendered academic, insofar as the instant appeal was concerned. Therefore, the addition of Rs. 75,01,926 made in the hands of the assessee was, therefore, deleted.

Relied:CIT v. Vatika Township (P) Lrd. (2014) 367 ITR 446 (SC) : 014 TaxPub(DT0 3934 (SC), CIT v. Vummidi Amarendra (2020) 429 ITR 99 (Mad) : 2020 TaxPub(DT) 2346 (Chen-Trib) and CIT v. Balbir Singh Maini (2017) 398 ITR 531 (SC) : 2017 TaxPub(DT) 4346 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

INCOME TAX ACT, 1961

Section 45 Section 50C, Proviso

SUBSCRIBE FOR FULL CONTENT