2013 (8) TMI 243 - HC - Income Tax

Exemption u/s. 54F - Tribunal declined to grant exemption - Held that - definition of the word transfer under section 2 47 of the Act includes situation where transaction involving allowing of possession of any immovable property in part performance of the contract. But that should be made good on material placed on record and through cogent evidence. The claim of the assessee that there was transfer of possession to her under the agreement dated 15.09.2004 has not been made out on acceptable material facts before the three authorities and the finding of all the three authorities is that there is nothing to indicate that assessee was in possession of the subject land even as on 15.09.2004 - No question of law arises - Decided against assessee.

Summary

Issues:
1. Entitlement to exemption under section 54-F of the Income Tax Act.
2. Validity of possession transfer date for exemption eligibility.
3. Acceptance of documentary evidence for possession transfer.
4. Justification of denial of exemption under section 54-F based on evidence.

Entitlement to Exemption under Section 54-F:
The dispute revolves around the eligibility of the assessee for exemption under section 54-F of the Income Tax Act. The assessee claimed exemption following the sale of agricultural land, asserting it as a long-term capital asset. However, the assessing authority contended that the property was held for less than 36 months, thus disqualifying the assessee from the exemption.

Validity of Possession Transfer Date for Exemption Eligibility:
The key contention was the possession transfer date concerning exemption eligibility. The assessing authority noted the property was purchased in 2005 and sold in 2008, indicating a short-term capital gain. The assessee argued possession was transferred earlier, citing an agreement from 2004. The appellate authorities scrutinized the transaction timeline and the lack of substantial evidence supporting possession transfer before the sale deed date.

Acceptance of Documentary Evidence for Possession Transfer:
The Appellate Commissioner and Tribunal questioned the credibility of the agreement dated 2004 presented by the assessee. The authorities highlighted discrepancies, such as the significant time gap between the agreement and registration of the sale deed, lack of agricultural operations on the land, and absence of mention in the sale deed. The unreliability of the unregistered agreement led to the dismissal of the claim for exemption under section 54-F.

Justification of Denial of Exemption under Section 54-F based on Evidence:
The Tribunal upheld the previous decisions, emphasizing the absence of credible evidence supporting the claim of possession transfer before the sale deed registration. The Tribunal concluded that the documentary evidence provided by the assessee was insufficient to substantiate the possession transfer claim. Consequently, the appeal was dismissed based on the factual findings regarding possession transfer and the lack of legal grounds for interference.

In conclusion, the judgment dismissed the appeal, as the factual findings did not warrant an examination of the legal questions raised by the appellant regarding exemption under section 54-F of the Income Tax Act.