2002 (3) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation of section 2(47)(v) of the Income-tax Act, 1961.
2. Calculation of capital gains for the assessment year 1992-93.

Summary of Judgment:

Issue 1: Interpretation of section 2(47)(v) of the Income-tax Act, 1961
The primary legal question was whether the Appellate Tribunal correctly interpreted section 2(47)(v) of the Income-tax Act, 1961, in not upholding the assessment for the entire capital gains for the assessment year 1992-93. The court examined whether the transfer of possession of part of the property under an agreement could be considered a "transfer" within the meaning of section 2(47)(v). The section includes any transaction involving the allowing of possession of immovable property in part performance of a contract as referred to in section 53A of the Transfer of Property Act, 1882.

Issue 2: Calculation of capital gains for the assessment year 1992-93
The assessee had entered into an agreement to sell property and received Rs.22 lakhs for parting with possession of 1/3rd of the property during the assessment year 1992-93. The assessing authority initially calculated the capital gains based on the total consideration of Rs.57 lakhs for the entire property. However, the Tribunal accepted the assessee's contention that only the consideration received for the part of the property transferred should be considered for capital gains calculation. The Tribunal directed that the capital gains be computed proportionately based on the possession handed over.

The Revenue argued that the entire transaction should be treated as a whole and the capital gains should be calculated on the total consideration agreed upon. The court, however, upheld the Tribunal's view, stating that the transfer of possession of part of the property in terms of section 2(47)(v) constitutes a transfer, and the capital gains should be calculated based on the consideration received for that part.

The court referenced the Delhi High Court's decision in CIT v. Shakuntala Rajeshwar, which supported the principle that capital gains should be calculated on the transfer of property as it occurs, even if in parts.

Conclusion:
The court concluded that the Tribunal correctly held that the assessee should be assessed based on the transfer of possession proportionate to the consideration received. The question was answered against the Revenue, affirming the Tribunal's judgment.