2003 (5) TMI 12 - HC - Income Tax

Capital gain on the sale of plot - case of the assessee is that he is not liable to be assessed on the alleged sale of plot as there was no transfer to the purchaser in terms of section 2(47). According to the assessee, the conditions embodied in the agreement do not come within the ambit of section 2(47) as there was no transfer of the plot in favour of the purchasers - (i) Whether, Tribunal was justified in concluding that the ap pellant had transferred the property in dispute within the meaning of section 2(47) during the assessment year 1991-92? On giving anxious consideration to the agreement and general power of attorney, we find that there is nothing in it so as to hold that possession was delivered to the purchaser. Indeed, the Tribunal has not considered this material aspect of the case and, therefore, it will be appropriate to send back the case to the Tribunal

Summary

Issues:
1. Interpretation of section 2(47) of the Income-tax Act, 1961.
2. Whether possession of property was handed over to the purchaser.
3. Validity of the order passed by the Tribunal.

Analysis:

Issue 1: Interpretation of section 2(47) of the Income-tax Act, 1961
The case involved the interpretation of section 2(47) of the Income-tax Act, 1961, specifically regarding the definition of 'transfer' in relation to a capital asset. The appellant contested that the transaction in question did not constitute a transfer within the meaning of this section as there was no possession handed over to the purchaser. The Assessing Officer had assessed the appellant for capital gains based on the sale of a plot, but the appellant argued that the conditions of the agreement did not align with the definition of transfer under section 2(47) of the Act.

Issue 2: Whether possession of property was handed over to the purchaser
The Commissioner of Income-tax (Appeals) had ruled in favor of the appellant, stating that no transfer took place during the assessment year as possession of the property was not handed over to the purchaser. The Commissioner highlighted that the Assessing Officer's case relied on a power of attorney that was not irrevocable, thus not constituting a transfer under section 2(47) of the Act. The Tribunal, however, based on a general power of attorney, held that the transaction was indeed a transfer as per the Act.

Issue 3: Validity of the order passed by the Tribunal
The High Court, after a detailed analysis of the agreement and power of attorney, found that there was no evidence to suggest that possession was delivered to the purchaser. The Court concluded that the Tribunal had not considered this crucial aspect of the case and decided to remand the matter back to the Tribunal for fresh adjudication on the factum of delivery of possession or enjoyment of the property by the purchaser through any other means. Consequently, the High Court set aside the Tribunal's order and allowed the appeal to the extent indicated, with no order as to costs.

In summary, the High Court's judgment focused on the interpretation of the Income-tax Act, specifically section 2(47), and the crucial aspect of possession delivery in determining whether a transfer had occurred. The Court emphasized the importance of considering all relevant factors in assessing capital gains and remanded the case back to the Tribunal for further examination.