2001 (2) TMI 63 - HC - Income Tax

Summary

Issues involved: Interpretation of section 53A of the Transfer of Property Act, 1882; Assessment of capital gain for the year 1994-95; Levy of interest under sections 234A, 234B, and 234C.

Interpretation of section 53A of the Transfer of Property Act, 1882:
The petitioner entered into an agreement for the sale of her property and received the consideration specified in the agreement. The petitioner claimed that the transfer of possession in 1993 constituted a transfer for the purpose of section 2(47) of the Income-tax Act. The petitioner argued that the essential requirements of section 53A were satisfied as possession was delivered to the firm with whom the agreement was made. The subsequent sale of portions of the property by the firm did not negate the initial transfer. The court upheld that the petitioner had indeed transferred the property to the firm in accordance with section 53A.

Assessment of capital gain for the year 1994-95:
The petitioner initially reported a capital gain for the assessment year 1994-95 but later revised the net capital gain, claiming that the actual transfers occurred in the subsequent year. The Assessing Officer rejected this claim, leading to a revision petition under section 264 of the Income-tax Act. The court found that the petitioner had correctly reported the capital gain for the year 1994-95 based on the transfer of possession in 1993, in line with section 53A of the Transfer of Property Act.

Levy of interest under sections 234A, 234B, and 234C:
The petitioner challenged the levy of interest on the income added in her assessment for the year 1994-95, arguing that interest can only be levied on the income declared, not assessed. Citing relevant case law, the court ruled in favor of the petitioner, stating that interest under sections 234A, 234B, and 234C can only be imposed on the income that has been returned, not on the income assessed.

In conclusion, the court allowed the writ petition in part, upholding the transfer of property under section 53A and setting aside the levy of interest on the assessed income.