Capital gains on GPA-based property transfer deleted where assessee was not the 2010 transferor and control had already passed earlier.

Long-term capital gains were deleted because the assessee was not the transferor in the 2010 sale deed; the property had already been dealt with through a 2007 sale-cum-GPA arrangement, and the GPA holders executed the later conveyance. The Tribunal treated the earlier arrangement as sufficient to place control with the GPA holders and held that the assessee was not liable for capital gains on the 2010 transaction. It also upheld admission of additional legal grounds by the CIT(A), following the principle that questions of law going to the root of assessment may be entertained. The rental income discrepancy was noted in the record, but the discussion focused on the capital gains issue.

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Issues: (i) Whether the CIT(A) was justified in admitting the additional grounds; (ii) Whether long-term capital gains could be assessed in the assessee's hands on the facts of the property transaction.

Issue (i): Whether the CIT(A) was justified in admitting the additional grounds.

Analysis: The additional grounds went to the root of the taxability issue and involved questions of law arising from documents already on record. The assessee's plea was that the later sale deed was executed by the GPA holders and not by her, and that the material facts necessary to examine the legal issue were available before the authorities.

Conclusion: The admission of the additional grounds was upheld and the Revenue's objection failed.

Issue (ii): Whether long-term capital gains could be assessed in the assessee's hands on the facts of the property transaction.

Analysis: The registered sale-cum-GPA executed by the assessee in favour of the GPA holders transferred possession and control of the property to them, and the subsequent registered sale deed was executed by those GPA holders in favour of the assessee's husband without the assessee being a signatory. The consideration under the later sale deed flowed to the GPA holders, and no cogent material showed that the sale consideration was redirected to the assessee or that she remained the transferor for the later transaction. In the absence of evidence supporting the Assessing Officer's assumption, the capital-gains addition could not stand. The Revenue's reliance on the GPA-sale principle did not alter the position because the transaction satisfied the legal attributes relevant to transfer under section 53A.

Conclusion: Long-term capital gains were not assessable in the assessee's hands on the impugned transaction.

Final Conclusion: The addition made towards long-term capital gains was deleted, and the Revenue's appeal was rejected.

Ratio Decidendi: Where a registered sale-cum-GPA has already transferred possession and control to the GPA holders, and the later registered conveyance is executed by those GPA holders without the assessee being a transferor or shown to have received the consideration, capital gains cannot be assessed in the assessee's hands merely on assumptions.

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