2015 (4) TMI 2 - AT - Income Tax

Tribunal rules on property sale capital gains assessment for tax year, disallows relief under section 54.

The Tribunal upheld the decision that capital gains from the property sale should be assessed in the year 2006-07, not 2007-08, based on the transfer of ... Computation of capital gain - year of assessability of the capital gains received by the assessee on the sale of property - Held that:- The possession of the property has been handed over to the purchaser on September 3, 2005. The evidences produced by the assessee, such as, filing of telephone bills and ration card etc. are not the conclusive material. The fact remains that the sale deed was executed on September 3, 2005 and consideration was also received in September, 2005. From the clauses of the sale deed dated September 3, 2005, it is clear that the possession was also handed over in the assessment year 2006-07 itself. Therefore, in our considered view, the Commissioner of Income-tax (Appeals) has rightly confirmed the action of the Assessing Officer in holding that the capital gain on the sale of the property was to be assessed in the assessment year 2006-07. We accordingly confirm the order of the Commissioner of Income-tax (Appeals) - Decided against assessee. Issues Involved:1. Year of assessability of capital gains.2. Addition of Rs. 53,75,000 related to the claim for relief under section 54 of the Income Tax Act.Detailed Analysis:1. Year of Assessability of Capital Gains:The primary issue revolves around whether the capital gains from the sale of a property should be assessed in the assessment year 2006-07 or 2007-08. The assessee filed a return for the assessment year 2007-08, admitting a total income of Rs. 23,20,013. However, the Assessing Officer (AO) observed that the property sale transaction occurred in the financial year 2005-06, thus contending that the capital gains should be assessed in the assessment year 2006-07. The AO noted that the physical possession of the property was handed over on September 3, 2005, as per the sale deed, and hence, the capital gains should be taxed in the assessment year 2006-07.The Commissioner of Income-tax (Appeals) upheld the AO's decision, emphasizing that the sale deed executed on September 3, 2005, indicated the transfer of property rights and receipt of sale consideration by the assessee. The Commissioner also dismissed the additional evidence provided by the assessee, such as telephone bills and a letter from Viceroy Hotels, as unreliable and insignificant.The Tribunal agreed with the lower authorities, stating that the clauses in the sale deed confirmed the transfer of possession and rights in the property in the financial year 2005-06. The Tribunal held that the capital gains should be assessed in the assessment year 2006-07, thus dismissing the assessee's appeal on this issue.2. Addition of Rs. 53,75,000 Related to Section 54 Relief:The AO made an addition of Rs. 53,75,000 to the assessee's income, disallowing the claim for relief under section 54 of the Income Tax Act for two residential properties. The AO allowed relief only for one property of higher value, located at Banjara Hills, Hyderabad. The Commissioner of Income-tax (Appeals) sustained this addition, and the Tribunal did not delve into the merits of this issue due to the absence of any specific ground raised by the assessee.Judgment:The Tribunal dismissed the appeals of the assessee on both issues. It upheld the decisions of the lower authorities, confirming that the capital gains should be assessed in the assessment year 2006-07 and sustaining the addition of Rs. 53,75,000 related to the section 54 claim. The appeals of the other co-owners, who had similar contentions, were also dismissed, following the same rationale.Conclusion:All three appeals were dismissed, with the Tribunal pronouncing the judgment in the open court on January 9, 2013.