TaxTMI 
TaxTMI 
2026 (3) TMI 627
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....rty for the relevant Assessment year?" 2. "Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of sale of immovable property despite of information on Insight Portal regarding assessee having carrying out transaction relating to sale of immovable property which remained unexplained due to assessee failing to furnish its return of income in the A.Y 2018-19 and the same has escaped assessment?" 3. "Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of Profits and gains from Business of the assessee on sale of the property, despite of assessee's admitting the fact during the assessment proceedings that no business activity was carried on, except the sale of immovable property by the assessee and ignoring the AO's finding that the books have not been audited for F.Y. 2013-14, no return was filed and no income was offered or loss was declared for A.Y. 2014-15 relevant to F.Y. 2013-147" 4. The appellant craves leave to amend or alter or add a new ground which may be necessary." 3. The brief fac....
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....out any substantive rebuttal to the contentions raised on behalf of the assessee. 5. The Ld. AR argued and filed a paper book containing pages 1 to 103 which has been placed on record. In connection with his argument the relevant part of the written submission of the Ld. AR is reproduced as below:- "8. The Agreement for sale was entered for the office premises No. 201 & 202 (having area of 7480 Sq. Ft) on 13.10.2013 for a sales consideration of Rs. 10,95,88,000/- and out of the said consideration Rs. 8.09 Crore was received before execution of the said agreement and balance was received before 31 March 2014 except for Rs. 45,00,000/- which was not received and has been written off as a Bad Debts in F.Y 2015-16 itself due to defect in supplies. Copy of the Agreement for sale dated 13th Oct, 2013 as "Annexure-A" and ledger account for the same alongwith copy of the Bank Statement reflecting the said receipts for sales consideration is enclosed herewith and marked as "Annexure- B & B-1". Also, possession was handed over in 2013-14. The deed of assignment was executed on 03.08.2017, copy of the deed is enclosed and marked as "Annexure-C". All the above documents were submit....
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.... profits derived therefrom was held to be assessable to tax as an adventure in the nature of trade. 13. Kind attention is solicited to the fact that there were no business transaction (Sale of Stock) during the year under consideration, only Interest Income of Rs. 20,410/- had accrued and hence there was LOSS of meagre amount of Rs. 4,590/-. In support of the submission copy of the Bank Statement for the period 01.04.2017 to 27.07.2023 was submitted before the Ld. AO during the course of assessment to substantiate there were no sales of stock during the year. It is only due to registration of the assignment deed during the year, information was flagged in the INSIGHT system for A.Y 2018-19 and hence proceeding was initiated u/s 148A and order for the proceeding was passed. 14. The Data reflected in the system was for "Sale by any person of immovable property", the amount of Rs. 10,95,88,000/-. Here attention is invited to the fact that the said property is only a stock of the Firm and not immovable property (Capital Assets) of the Firm and hence the profit, if any, would be taxable in the year property was handed over to the purchaser and consideration received un....
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....return for F.Y. 2013-14. In this background, it is difficult to accept the proposition that the sale shall be recognized in the year in which registration deed is made. In fact, even in the case of transfer of capital asset, registration of deed is no condition for recognition of transfer. As evident from section 2(47) of Income Tax Act, 1961, transfer is triggered whenever part payment is received and possession of the property is handed over. Registration of deed is not precondition for recognizing transfer of a capital asset. This proportion is even more true in the case of sale of stock in trade. 15. The case law relied by the AO have been found different from the facts of the present case. The AO had placed reliance on the judgment in the case CIT Vishnu Trading & Investment Co. (2003) 259 ITR 724 (Raj)) relied upon the SC judgment in the case of CIT v. Poddar Cement Pvt. Ltd, [1997] 226 ITR 625. At page 653, their Lordships observed as under "Following the view taken by their Lordships, we are of the view that for taxing the capital gain, registration of the sale deed is not necessary under the provisions of the Income-tax Act." 15.2 In this case Ho....
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.... the Transfer of Property Act, 1882 the ownership of the property is said to be transferred once the possession is completed and sales can be recognised in the books as well as for tax purpose in the year in which possession was handed over. The Hon'ble Bombay High Court held that Section 45, read with section 2(47) of the Income-tax Act, 1961 Capital gains - Year in which assessable Assessment year 1996-97 Assessee an individual entered into an agreement dated 18-8-1994, in which he agreed to sell to 'Floreat' his share of immovable property - For that purpose, assessee agreed to execute a limited power of attorney, authorising Floreat to deal with said property and also to obtain permissions and approvals from various authorities for further developments On obtaining all permissions assessee agreed to grant an irrevocable licence to Floreat to enter upon assessee's share of property By 31-3-1996 Floreat paid almost entire amount of consideration and obtained all permissions However, since Bombay Municipal Corporation issued a commencement certificate permitting construction of a building up to plinth level only, plan came to be amended and ultimately power of atto....
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....e Ld. AR advanced his argument and respectfully relied on the order of the Coordinate Bench of ITAT-Mumbai, B-Bench in the case of Navketan Premises Pvt Ltd vs. DCIT, ITA No. 4228/Mum/2024 date of pronouncement 06/08/2025. The observation of the Coordinate Bench in relevant paragraph is reproduced as below:- "17. The legal position on this point is equally well-settled. Section 2(47)(v) read with section 53A of the Transfer of Property Act leaves no room for ambiguity. Once possession is handed over in part performance of a written agreement for consideration and the transferee is willing to perform their obligations, the transaction qualifies as a transfer for the purpose of taxation. The formal registration of the agreement at a later date, being merely a procedural formality, cannot defer the taxability of the transaction. 18. The Revenue's conduct in this case is also materially significant. Having assessed the income in AY 2014-15 and failed to pursue its appeal against the Id.CIT(A)'s order deleting the addition in that year, it cannot now seek to revive the same addition in a subsequent year based on an inconsistent and contradictory factual positio....
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.... the Transfer of Property Act. A fortiori, in the case of stock-in-trade, revenue recognition is aligned with the accrual of income and handing over of possession in accordance with commercial principles. The Ld. AO has not disputed receipt of consideration in F.Y. 2013-14 nor the handing over of possession in that year. In absence of any accrual or receipt of income in A.Y. 2018-19, the addition merely on the basis of data reflected in the Insight Portal cannot be sustained. We also find merit in the reliance placed by the Ld. AR on the decision of the Coordinate Bench of ITAT Mumbai in Navketan Premises Pvt. Ltd. (supra), wherein it has been categorically held that once possession is handed over in part performance of the contract and consideration is received, the transfer is complete for taxation purposes and subsequent registration does not defer taxability. The Bench further emphasized that the same income cannot be taxed twice and the doctrine of consistency must be respected. The ratio laid down therein squarely applies to the present facts. The reliance placed by the Ld. AO on judicial precedents relating to capital gains is misplaced and distinguishable on facts. In....