Double taxation barred on property sale profits already taxed in intermediary hands; addition deleted for the assessee.

Addition of profit from sale of immovable property was held unsustainable where the same chain of transactions had already been taxed in the hands of intermediary parties. The record showed a sequence of agreements and transfer arrangements before the final registered sale deed, and the material before the appellate authorities established that the relevant consideration and profits had been offered to tax by those parties. As the Department produced no contrary evidence to displace that finding, taxing the same profit again in the assessee's hands would amount to double taxation. The CIT(A)'s reliance on the legal effect of the pre-existing transactions was upheld, and the addition was deleted.

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Issues: Whether the addition made on account of profit from sale of immovable property was sustainable when the same chain of transactions had already been taxed in the hands of intermediary parties, and whether taxing the amount again in the assessee's hands would amount to double taxation.

Analysis: The assessee had purchased the land earlier, and the record showed a sequence of unregistered agreements to sell and subsequent transfer arrangements through different parties before the final registered sale deed. The material placed before the appellate authorities showed that the consideration and profits arising at different stages of the chain had been reflected in the respective returns of the intermediary parties. The Tribunal noted that the Department did not bring contrary material to dislodge the finding that the gain of Rs. 14,90,01,765 had already been offered to tax by those parties. In these circumstances, bringing the same profit to tax again in the hands of the assessee would tax the same income twice. The Tribunal also found no infirmity in the CIT(A)'s reliance on the legal effect of such pre-existing rights and transactions for income-tax purposes.

Conclusion: The addition was not sustainable and was rightly deleted. The issue was decided in favour of the assessee.

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