2023 (7) TMI 1196 - AT - Income Tax

Property transfer appeal denied, oral agreement not recognized as valid transfer. Written documents prevail in ITAT ruling.

Allam Adavaiah Versus ACIT, Circle – 15 (1), Hyderabad

The ITAT dismissed the appeal, affirming the lower authorities' decisions. Capital gains were taxed in AY 2004-05 based on the registered sale deed dated ... Capital gain on sale of land - transfer of capital asset u/s 2(47) - year of assessment - AO held that the land was to be taxed to capital gains in the A.Y: 2004-2005 and not inA.Y:1995-1996 - HELD THAT:- Case of the assessee for transfer of immovable property through the oral agreement do not fall in any of the limb of section 2(47) of the Act. The present case is neither a case of sale nor exchange nor relinquishment or extinguishment of any right in the year 1994 or 1995. Infact, the registered sale deed document was executed by the assessee in favour of the purchaser on 29.08.2003 and therefore, the transfer had taken place in the A.Y. 2003-04. Therefore, the view taken by the lower authority cannot be faulted with. In the remand proceedings before the Assessing Officer no evidence of transfer of the land had been filed by the assessee except the letter issued by M/s. Janapriya Projects. Even the said letter does not bear the date of taking over the possession of the subject matter of land and this letter also undated. In the said letter, it was mentioned that the possession was taken over through the Irrevocable General Power of Attorney in the year 1994, however, no such Power of Attorney in respect to the survey no.671 was produced before the lower authority or before us by the assessee. In the said letter of Janapriya Engineers before the Court of law, however, no such evidence was filed before us showing that the land falling in survey no. 671 was subject matter of legal litigation before any Court of Law. Assessee had neither brought on record the evidences of land dispute before us nor before the lower authorities evidencing that the land falling under survey no. 671 was the capital asset in the records of Janapriya Engineers Syndicate w.e.f. 1994. Considering the case from any point of view, we do not find any reasons to interfere with the order of the ld.CIT(A). - Decided against assessee. Issues Involved:1. Validity of the oral agreement for transfer of property.2. Applicability of Section 2(47) of the Income Tax Act, 1961.3. Determination of the assessment year for taxing capital gains.4. Relevance of the confirmation letter from Janapriya Projects.5. Admissibility of oral evidence against registered documents.Detailed Analysis:1. Validity of the Oral Agreement for Transfer of Property:The assessee contended that the land in Survey No. 671 was transferred through an oral agreement in 1994, with possession handed over to Janapriya Projects. However, the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected this claim, stating that an oral agreement cannot be treated as a valid transfer under Section 2(47) of the Income Tax Act, 1961, and Section 53A of the Transfer of Property Act. The ITAT upheld this view, emphasizing that no written contract was produced to substantiate the transfer claim.2. Applicability of Section 2(47) of the Income Tax Act, 1961:The assessee argued that the transfer fell within the definition of 'transfer' under sub-clauses (i), (ii), and (vi) of Section 2(47). The ITAT examined these provisions and concluded that the case did not meet the criteria for 'sale, exchange, or relinquishment of the asset,' 'extinguishment of any rights therein,' or any transaction enabling the enjoyment of the property. The ITAT emphasized that the transfer through an oral agreement does not fall under any limb of Section 2(47).3. Determination of the Assessment Year for Taxing Capital Gains:The AO and CIT(A) determined that the capital gains should be taxed in the assessment year (AY) 2004-05, as the registered sale deed was executed on 29.08.2003. The ITAT upheld this decision, rejecting the assessee's claim that the transfer occurred in AY 1995-96 based on the oral agreement. The ITAT noted that no evidence was provided to prove the transfer in 1994-95, and the registered sale deed indicated the transfer occurred in 2003-04.4. Relevance of the Confirmation Letter from Janapriya Projects:The assessee relied on a confirmation letter from Janapriya Projects stating that possession was taken in 1994. The CIT(A) and ITAT found this letter insufficient as it lacked specific details and was not supported by additional evidence. The ITAT highlighted that no records showed the land as a capital asset in Janapriya Projects' books in 1994-95, and the letter did not mention the exact date of possession.5. Admissibility of Oral Evidence Against Registered Documents:The ITAT reiterated that no oral evidence could be given against a registered document as per Section 93 of the Indian Evidence Act. The registered sale deed executed in 2003 took precedence over the oral agreement claim. The ITAT emphasized that in case of conflict, the contents of the written document prevail over oral statements or agreements.Conclusion:The ITAT dismissed the appeal, affirming the lower authorities' decisions. The capital gains were rightly taxed in AY 2004-05 based on the registered sale deed dated 29.08.2003. The oral agreement was not recognized as a valid transfer under Section 2(47) of the Income Tax Act, and the confirmation letter from Janapriya Projects was deemed insufficient to prove the transfer in 1994. The ITAT upheld the principle that written documents take precedence over oral evidence in property transfer cases.