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2012 (11) TMI 1112 - AT - Income TaxAdoption of correct Market value of the property for computation of capital gain - application of section 50C where the property was sold before 1.4.2003 but the sales deed was executed on 25.11.2005 - submission of additional evidence not filed by the assessee before the AO - Held that - u/s 2(47)(v) a notional or artificial transfer takes place on the day when possession is transferred in terms of sec 53A of the Transfer of Property Act - when the vendor gives the possession of property to purchaser, it is to be considered that the transfer is complete on the date of agreement of sale - As per the sale deed the possession of the property has been given to the purchaser on the date of sale deed, hence there cannot be handing over of the same property at two times - The AO is directed to consider all the documents produced by the assessee before the CIT(A) while deciding the issue - Matter remanded back.
Issues Involved:
1. Applicability of Section 50C of the Income Tax Act, 1961. 2. Determination of the date of transfer under Section 2(47)(v) of the Income Tax Act. 3. Validity and consideration of additional evidence submitted by the assessee. 4. Correct valuation for the purpose of computing capital gains. Detailed Analysis: 1. Applicability of Section 50C of the Income Tax Act, 1961: The primary issue was whether the provisions of Section 50C, which mandates adopting the value assessed by the stamp valuation authority as the sale consideration if it is higher than the stated consideration, were applicable. The Additional Commissioner of Income Tax had issued a Show Cause Notice to adopt the sum of Rs. 4,30,70,000 as the sale consideration under Section 50C, based on the stamp duty valuation. The CIT(A), however, opined that Section 50C was not applicable since the transfer had already taken place on 13.6.2005, when the sale agreement was executed and possession was handed over, rather than on 25.11.2005, the date of the registered sale deed. The Tribunal upheld this view, emphasizing that the transfer date for the purposes of capital gains should be the date when possession was given, aligning with Section 2(47)(v). 2. Determination of the Date of Transfer under Section 2(47)(v) of the Income Tax Act: The Tribunal examined whether the transfer occurred on 13.6.2005, the date of the sale agreement, or on 25.11.2005, the date of the registered sale deed. The assessee argued that the transfer date should be 13.6.2005, as possession was handed over on that date, fulfilling the conditions of Section 2(47)(v). The Tribunal agreed, referencing the sale agreement and the rectification deed which confirmed possession was given on 13.6.2005. This was supported by an affidavit from the advocate who drafted the sale deed. The Tribunal concluded that the transfer date for capital gains purposes was indeed 13.6.2005, thereby negating the applicability of the higher SRO value as of 25.11.2005. 3. Validity and Consideration of Additional Evidence Submitted by the Assessee: The Revenue contended that the CIT(A) erred in allowing the assessee to submit additional evidence that was not presented before the Assessing Officer. The Tribunal directed the Assessing Officer to consider all documents produced by the assessee before the CIT(A), including the affidavit of the advocate and the rectification deed, while reassessing the issue. This ensures a fair reassessment considering all relevant evidence. 4. Correct Valuation for the Purpose of Computing Capital Gains: The Tribunal emphasized that the correct valuation for computing capital gains should be based on the SRO rate as of the transfer date, 13.6.2005, rather than the higher rate on 25.11.2005. The Tribunal directed the Assessing Officer to verify the SRO rate as of 13.6.2005 and reassess the capital gains accordingly. This decision aligns with the principle that the value at the time of transfer (when possession was handed over) should be considered, not the value at the time of registration. Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the Assessing Officer to reassess the capital gains based on the SRO rate as of 13.6.2005, considering all additional evidence submitted by the assessee. The Tribunal's decision underscores the importance of the actual transfer date in determining capital gains and the applicability of Section 50C.
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