Transfer by part performance fixed in assessment year 2015-16, allowing capital loss and matching TDS credit.

Transfer of immovable property under section 2(47)(v) arises when possession is handed over in part performance of a contract under section 53A of the Transfer of Property Act; on the facts, possession was delivered on 18.04.2014, so the transfer was treated as occurring in assessment year 2015-16 and the capital loss was allowed for that year. TDS credit had to be granted in the same assessment year because credit follows the year in which the related income is assessable under section 199(3) and rule 37BA(1).

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Issues: (i) Whether transfer of the immovable property took place in the assessment year 2015-16 for the purpose of computing capital loss under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882; (ii) Whether credit for tax deducted at source was allowable in assessment year 2015-16 under section 199(3) of the Income-tax Act, 1961 read with rule 37BA(1) of the Income-tax Rules, 1962.

Issue (i): Whether transfer of the immovable property took place in the assessment year 2015-16 for the purpose of computing capital loss under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882.

Analysis: Transfer under section 2(47)(v) is attracted when possession of immovable property is taken or retained in part performance of a contract of the nature contemplated by section 53A of the Transfer of Property Act, 1882. The relevant material showed that though the agreement and consideration payment were in the earlier year, possession was handed over on 18.04.2014, falling in the previous year relevant to assessment year 2015-16. On that basis, the transaction was treated as having resulted in transfer in assessment year 2015-16.

Conclusion: The issue was decided in favour of the assessee. The capital loss was held allowable in assessment year 2015-16.

Issue (ii): Whether credit for tax deducted at source was allowable in assessment year 2015-16 under section 199(3) of the Income-tax Act, 1961 read with rule 37BA(1) of the Income-tax Rules, 1962.

Analysis: Credit for tax deducted at source is to be granted for the assessment year in which the corresponding income is assessable. Since the income from the transfer was held assessable in assessment year 2015-16, the related TDS credit was also required to be allowed for that year.

Conclusion: The issue was decided in favour of the assessee. TDS credit was directed to be allowed for assessment year 2015-16.

Final Conclusion: The assessment year 2015-16 was accepted as the year of transfer for the property transaction, and the related capital loss and TDS credit were both directed to be given effect accordingly.

Ratio Decidendi: For a transfer of immovable property to fall within section 2(47)(v), possession in part performance must be handed over; once transfer is held to arise in a particular assessment year, TDS credit must follow the year in which the corresponding income is assessable under section 199(3) and rule 37BA(1).

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