The Tax Publishers2021 TaxPub(DT) 0840 (Bang-Trib)

INCOME TAX ACT, 1961

Section 50C

Where enforceable agreement was entered into on 8-3-1993 by payment of major portion of sale consideration and only formal sale deed was executed on 9-3-2007 and possession of property had already been handed over full value of consideration for the purpose of computing long-term capital gain in the hands of the assessee had to be adopted on the basis of guidance value of property as on date of Sale Agreement only, not on the date of Sale Deed, dated 9-3-2007 because transfer had taken place vide Sale Agreement dated 8-3-1993.

Capital gains - Invocation of section 50 - Sale consideration being less than guidance value -

There was an Agreement of Sale executed by assessee on 8-3-1993 and total payment of Rs. 9,79,000 was made by Purchaser out of total consideration of Rs. 9,80,000 and pending balance was only Rs. 1,000 and entire payment was made by cheque and same was mentioned in sale deed dated 9-3-2007. Further, the possession of property was also handed over to purchaser mentioning sale agreement as on 8-3-1993. As sale cosideration was less than the guidance value. AO applied section 50C on the basis of Sale Deed executed by assessee on 9-3-2007 and made addition. Held: Enforceable agreement was entered into on 8-3-1993 by payment of major portion of Sale Consideration and only formal Sale Deed was executed on 9-3-2007. Assessee produced all the relevant documents for demonstrating authenticity of Sale Agreement with corroborative evidence in the form of Katha Certificate. Payment mentioned in Sale Deed towards sale consideration clearly demonstrated that these payments had been passed between parties vide Sale Agreement, dated 8-3-1993 and possession of property had already been handed over. Therefore, transfer had taken place vide Sale Agreement, dated 8-3-1993 and full value of consideration for the purpose of computing long term capital gain in the hands of the assessee had to be adopted on the basis of guidance value of property as on date of Sale Agreement only, not on the date of Sale Deed, dated 9-3-2007. Accordingly, there was no applicability of section 50C in the assessment year 2007-08.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2007-08



IN THE ITAT, BANGALORE BENCH

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