2012 (12) TMI 1089 - AT - Income Tax

Addition of unexplained investment - Delivery of possession of land - Held that - Assessee had given the possession of land in February-2009 to the purchaser and the purchaser could enjoy the fruits of property only after that date - the seller may retain the deed pending payment of price and in that case there is no transfer until the price is paid and the deed is delivered - Hence the assessee has rightly treated the transfer of land in AY 2009-10 and therefore the AO was not right in taxing the income on sale of land in AY 2008-09 - Decided in favor of assessee

Summary

Issues:
Appeals from different assessees regarding orders of CIT(A) for AY 2008-09; Addition of Rs. 84,25,909 as unexplained investment; Transfer of land dispute; Capital gains tax liability for AY 2008-09 or AY 2009-10.

Analysis:
1. The appeals involved challenges to the addition of Rs. 84,25,909 as unexplained investment by the AO. The Assessee argued that the AO did not consider explanations and evidence properly. The CIT(A) upheld the addition, citing the conveyance deed executed for land transfer. However, the Assessee contended that possession was transferred in AY 2009-10, not in 2008-09, as per the deed clauses and confirmation document. The tribunal agreed, citing precedents emphasizing the intention of parties for transfer completion. The Assessee's appeal on this ground was allowed.

2. The dispute revolved around the transfer of land and the associated capital gains tax liability. The AO and CIT(A) held that the transfer occurred in 2008, taxing the Assessee accordingly. However, the Assessee argued that possession was handed over in 2009, aligning with the declaration of capital gains in AY 2009-10. The tribunal noted the sequence of events, including payment terms and possession transfer, supporting the Assessee's stance. Relying on legal precedents, the tribunal concluded that the transfer was completed in AY 2009-10, not in 2008-09, as claimed by the revenue authorities. Consequently, the Assessee's appeal on this issue was allowed.

3. Both appeals shared common facts and issues, leading to a consolidated decision. The tribunal's analysis in the lead case (ITA No. 150/Ahd/2012) applied mutatis mutandis to the second appeal (ITA No. 151/Ahd/2012). As the tribunal allowed the Assessee's appeal in the lead case for AY 2008-09, the same decision was extended to the second appeal for the same assessment year. Therefore, both appeals were allowed in favor of the Assessee.

In conclusion, the tribunal ruled in favor of the Assessee, determining that the transfer of land and associated tax liability for capital gains occurred in AY 2009-10, not in AY 2008-09 as asserted by the revenue authorities. The decision was based on the sequence of events, payment terms, and possession transfer details, aligning with legal precedents emphasizing the intention of parties in completing a transfer.