1999 (12) TMI 861 - AT - Income Tax

Summary

Issues:
Assessment of capital gains in respect of the sale of a bungalow at Bangalore for the assessment year 1989-90.

Analysis:
The dispute centered around whether the property was sold in the relevant year and if the possession was handed over within the meaning of section 53A of the Transfer of Property Act. The agreement specified a phased payment schedule for the sale consideration, with a substantial amount received in the previous year. The assessee granted a general power of attorney to the purchasers for obtaining licenses and allowed them to advertise for sale of proposed flats. The absence of a possession clause in the agreement required consideration of circumstantial evidence. The department argued that possession was handed over based on the power of attorney and demolition of the bungalow before the end of the previous year. The assessee relied on letters indicating willingness to hand over possession in the subsequent year. The Tribunal considered the totality of facts and circumstances to conclude that possession was handed over to the vendees before 31st March 1989.

The Tribunal noted that the vendees were authorized to apply for permissions on behalf of the vendor and that the demolition of the bungalow supported the revenue's claim of possession transfer. The exchange of letters was considered an afterthought as possession had been taken over earlier. The completion of formalities and execution of the power of attorney favored the revenue's position. The agreement to execute sale deeds in the builder's name for stamp duty savings did not negate possession transfer. The Tribunal upheld the revenue's assessment of capital gains under the Explanation to section 2(47) of the Income-tax Act, 1961, dismissing the appeal as no other grounds were argued.

In conclusion, the Tribunal's decision affirmed the revenue's assessment of capital gains, emphasizing the significance of possession transfer and considering the totality of facts and circumstances in determining the outcome of the case.