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Issues: (i) Whether the transfer of immovable property for the purpose of capital gains or loss occurred in assessment year 2015-16 on handing over of possession, and the capital loss claim was allowable in that year. (ii) Whether credit for tax deducted at source was allowable in assessment year 2015-16 when the income arising from the transaction was assessable in that year.
Issue (i): Whether the transfer of immovable property for the purpose of capital gains or loss occurred in assessment year 2015-16 on handing over of possession, and the capital loss claim was allowable in that year.
Analysis: Transfer under section 2(47)(v) of the Income-tax Act, 1961, read with the principle of part performance under section 53A of the Transfer of Property Act, 1882, is attracted when possession of the property is taken or retained in performance of the contract and the transferee is willing to perform the contract. The sale agreement and receipt of consideration preceded the handing over of possession, but the decisive fact was that possession was handed over on 18.04.2014, which fell in assessment year 2015-16. On that basis, the transaction was treated as having been transferred in that year.
Conclusion: The capital loss was allowable in assessment year 2015-16 and the disallowance was unsustainable.
Issue (ii): Whether credit for tax deducted at source was allowable in assessment year 2015-16 when the income arising from the transaction was assessable in that year.
Analysis: Under section 199(3) of the Income-tax Act, 1961, read with rule 37BA(1) of the Income-tax Rules, 1962, TDS credit is to be granted for the assessment year in which the corresponding income is assessable. Since the transfer income was assessable in assessment year 2015-16, the TDS credit had to follow the same year.
Conclusion: TDS credit was allowable in assessment year 2015-16.
Final Conclusion: The assessee succeeded on both the capital loss and TDS credit claims, and the assessment additions and denial of credit were directed to be deleted.
Ratio Decidendi: For section 2(47)(v) cases involving immovable property, the transfer is completed for tax purposes when possession is handed over in part performance of the contract, and TDS credit must be matched to the year in which the related income is assessable.
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