2019 (2) TMI 1351 - AT - Income Tax

Transfer Date Key for Taxation: Tribunal favors Assessee, finds property transfer within relevant assessment year.

M/s. Elegant Infraworld Pvt. Ltd. Versus The Income Tax Officer, Ward-1 (2), Ghaziabad.

The Tribunal ruled in favor of the Assessee, determining that the transfer of the property occurred on 30.01.2009, falling within the preceding assessment ... Short term capital gain - part-payment of sale consideration by cheque at the time of entering into an Agreement to Sell - HELD THAT:- The Agreement to Sell is not required to be registered as per Section 2(47)(vi) of the I.T. Act because the conditions of this provision are satisfied in the present case. The decisions relied upon by the Assessee squarely apply to the facts and circumstances of the case, particularly decision in the case of Shri Chandra Prakash Jain vs. ACIT [2014 (5) TMI 819 - ALLAHABAD HIGH COURT] to prove that the transfer of impugned property was completed on 30.01.2009 on the day of execution of Agreement to Sell and handing-over possession to the purchaser. Therefore, the transfer in relation to capital asset have completed on 30.01.2009 which pertain to preceding A.Y. 2009-2010, therefore, no capital gain could be assessed in assessment year under appeal i.e., 2010-2011. - Decided in favour of assessee. Issues Involved:1. Determination of the date of transfer of the property for the purpose of calculating short-term capital gains.2. Deduction of Rs. 1.50 crores as expenditure incurred wholly and exclusively in connection with the transfer under Section 48 of the Income Tax Act.Issue-Wise Detailed Analysis:1. Determination of the Date of Transfer:The primary issue in this case is whether the short-term capital gain is taxable in the assessment year 2010-2011. The Assessee argued that the date of transfer should be considered as 30.01.2009 when the Agreement to Sell was executed, and possession of the property was handed over to the purchaser. According to the Assessee, this transaction took place in the preceding assessment year 2009-2010, and hence, no capital gain arises in the assessment year under appeal.The Assessee relied on Section 2(47)(vi) of the Income Tax Act, which includes any transaction that has the effect of transferring or enabling the enjoyment of any immovable property. The Assessee also cited several judicial precedents, including the Hon'ble Jurisdictional Allahabad High Court in the case of Chandra Prakash Jain vs. ACIT (2014) 270 CTR 192 (Alld.), which held that the transfer of capital assets by virtue of an agreement of sale amounts to transfer under Section 2(47)(vi).The Appellate Tribunal noted that the Agreement to Sell dated 30.01.2009 and the possession letter confirmed that the Assessee handed over physical possession of the property to the purchaser. The Tribunal also observed that the substantial payment was made at the time of execution of the Agreement to Sell, indicating that the transaction was not an afterthought.The Tribunal concluded that the transfer of the property was completed on 30.01.2009, which pertains to the preceding assessment year 2009-2010. Therefore, no capital gain could be assessed in the assessment year 2010-2011. The Tribunal set aside the orders of the authorities below and deleted the entire addition, allowing Ground No.1 of the Assessee's appeal.2. Deduction of Rs. 1.50 Crores as Expenditure:The second issue was whether the Assessee was entitled to a deduction of Rs. 1.50 crores as expenditure incurred wholly and exclusively in connection with the transfer under Section 48 of the Income Tax Act. The Assessee made an alternative claim for this deduction.However, since the Tribunal held that no capital gain is taxable in the assessment year under appeal, this issue became academic and irrelevant for the assessment year in question. Therefore, the Tribunal did not propose to decide on this ground.Conclusion:The appeal of the Assessee was allowed, with the Tribunal ruling that the transfer of the property took place on 30.01.2009, falling in the preceding assessment year 2009-2010. Consequently, no short-term capital gain was assessable in the assessment year 2010-2011. The Tribunal did not address the alternative claim for deduction of Rs. 1.50 crores due to the primary issue's resolution.