TaxTMI 
TaxTMI 
2026 (7) TMI 872
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....AY 2016-17 in ITA No.2058/Hyd/2025, wherein the impugned order has been assailed on the following grounds of appeal before us: "GROUND 1 Relevant Sections of Income Tax Act: under section 143(3) Issue: The Assessment Unit made an addition of amount of Rs. 3,23,25,000/-towards capital gains and did not give cognizance to the fact that the major part of the sale consideration of the subject property of capital gains was received in the ensuing financial year and was subject to tax in the next Assessment Year i.e Assessment Year 2017-18. Ground of Appeal: The Assessment Unit is not justified in making the addition of Rs. 3,23,25,000/- towards capital gains for Assessment year 2016-17 GROUND 2 Relevant Sections of Income Tax Act: under section 143(3) Issue: The Assessment Unit made the addition of capital gains of Rs. 3,23,25000/- in toto, whereas the appellant share was only 25.65% which works out to Rs. 82,91,491/-. The Assessment unit did not gave cognizance to the submission made by the Assessee that a Memorandum of Recording a Family Settlement deed existed wherein the Appellant was entrusted wi....
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....n HDFC Bank: Rs. 14 lakhs. It was stated by him that the balance sale consideration of Rs. 3,56,25,000/- was received by him in the immediately succeeding year, viz., (i) Cheque No.003924: Rs. 56,25,000/-; and (ii) Funds transfer (FT) Ref. No. 000000485122: Rs. 3,00,00,000/-. Also, it was stated that the aforesaid amount of Rs. 3,56,25,000/- that was received in the succeeding year was disclosed in the return of income for the succeeding year, i.e., AY 2017-18. 4. Apropos the transaction of the sale of shares of M/s. Greavescot (1125 shares) @Rs.124.75 per share, it was stated that as the capital gain arising therefrom was exempt under section 10(38) of the Act, the same was not offered for tax during the year under consideration. 5. Ostensibly, the AO did not find favor with the explanation of the assessee for not offering the capital gains on the transfer of the subject property to tax during the year under consideration. It was observed that as the property was transferred vide a registered agreement, dated 28/03/2016, the capital gain arising on the said sale consideration was liable to be disclosed in the year under consideration itself. 6. At this stage, ....
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.... 6.1.1 The assessee has raised the following main contentions: The capital gain is not taxable in AY 2016-17 but in AY 2017-18, as 95% of the consideration was received in FY 2016-17 and possession was linked to receipt of full consideration. The assessee was only entitled to 25.65% of the total consideration based on a family settlement deed executed on 06.04.2016. The AO did not consider the submissions fully and the reassessment order in AY 2017-18 erroneously excluded capital gains. 6.2. Remand Report and Assessee's Rejoinder: 6.2.1 The remand report submitted by the AO reiterates that the entire sale consideration was received by the assessee in his HDFC Bank account. The AO has highlighted that: The agreement for sale was executed and registered on 28.03.2016, falling in FY 2015-16, and hence taxable in AY 2016-17. The sale deed mentions only the assessee as the vendor, while the other family members are confirming parties, with no mention of any prior family settlement TAX DEPAR The family settlement deed relied upon by the assessee is post-dated (06.04.2016) and does not alter the fact that th....
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....ture of post-sale arrangements, and do not dilute the taxability of the capital gain in the hands of the person executing the sale. Many Judicial precedents support the view that capital gains arise in the hands of the transferor, irrespective of internal family arrangements. 6.5 AO's Procedural Compliance 6.5.1 The assessee's claim that no adequate opportunity was provided is not borne out by the records. The AO has provided multiple opportunities during the course of assessment and again during remand proceedings. The issuance of show-cause notice dated 17.02.2024 is duly recorded. The adjournment request made against the notice dated 01.03.2024 does not invalidate the earlier notices, especially when sufficient time and opportunities were otherwise given. 6.5.2 The allegation that the remand report was mechanical or non-analytical is also not tenable, as the AO has provided pointwise responses to each submission of the assessee. 6.6 Conclusion 6.6.1 The capital gains on the full consideration of Rs. 3,75,00,000 are rightly taxable in AY 2016-17 in the hands of the assessee, being the sole transferor as per the registered....
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....5. The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of the delay of 166 days by the Income-Tax Appellate Tribunal, Raipur Bench, had observed that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal. We thus, in terms of our aforesaid observations, condone the delay of 58 days involved in the filing of the present appeal. 15. Coming to the merits of the case, we find that the controversy involved in the present appeal lies in a narrow compass, viz., (i) that whether or not the sale transaction of the subject property had taken place during the year under consideration, i.e., the period relevant to the AY 2016-17; and (ii) that whether or not the assessee's share in the sale consideration was restricted only to the extent of 25.65%. 16. Coming to the first aspect, i.e., the year in which the subject property had been transferred, we deem it apposite to refer to the registered agreement to sell, dated 28/03/2016, vide which the sale transaction has ....
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.... to comprehend as to how the same would support his case. We say so, for the reason that, as in the present case before us, the assessee had already executed a registered sale agreement, dated 28/03/2016; therefore, the same, as per section 2(47)(i) r.w. "Explanation 2" of the Act brings the said transaction within the meaning of "transfer" during the year under consideration. We thus, in terms of our aforesaid observations, are of a firm conviction that, as the assessee had executed the registered agreement for sale, dated 28/03/2016, the transaction of transfer of the property without any choice has to be related to the said date. At this juncture, we deem it apposite to observe that as the computation of capital gains and the transfer of property have to go hand in hand and cannot be divorced and considered separately, therefore, based on the fact that the subject property had been transferred by the assessee vide a registered agreement to sell, dated 28/03/2016, the long term capital gains (LTCG) arising therefrom along with the consequential tax liability has to be determined in the hands of the assessee during the year under consideration itself. 17. Coming to the second f....
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....closed in his hands capital gain of Rs. 42,91,489/-. However, as we have herein above observed that the transfer of the subject property stood concluded based on the registered agreement to sell, dated 28/03/2016 in the year under consideration, i.e., period relevant to the AY 2016-17, therefore, no part of the capital gains arising on the sale of the said transfer transaction is liable to be assessed in the hands of the assessee in the succeeding year, i.e., AY 2017-18. Also, we may herein observe that as certain taxes pertaining to the aforesaid transfer transaction are stated to have been paid/collected/deducted in the hands of the assessee in AY 2017-18, we herein direct that the credit of the said amounts be allowed in the hands of the assessee while computing his tax liability pertaining to the subject sale transaction during the year under consideration, i.e., AY 2016-17. Our aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of Income Tax Officer vs. Bachu Lal Kapoor Kewal Ram (1966) 60 ITR 74 (SC). The Hon'ble Supreme Court in its order had observed that if the assessment proceedings initiated under section 34 of the 1922 Act culmina....