2015 (12) TMI 1770 - HC - Income Tax

Assessment of income from the sale of 18 flats - selection of assessment year - transfer in terms of Section 2(47) - Held that - Tribunal was justified in holding that the income from the sale of 18 flats to M/s Audi Constructions Pvt. Ltd., is not assessable in the year 2008-2009 as on the basis of the facts on record, the learned Tribunal found that the assessee had not delivered the possession of the flats to M/s Audi Constructions Pvt. Ltd. in the subject year. Tribunal also found that it is not the case of the appellant that the agreements executed by assessee are bogus or fictitious upon appreciating the evidence on record and as such, there is no substantial question of law which can arise in the above appeals as this Court in the present appeals cannot reappreciate the evidence on record. Tribunal also refused the contention of the appellant upon appreciating the evidence on record to come to the conclusion that the provisions of Section 2(47) have not been satisfied. Substantial questions of law proposed by the appellant as such would require re-appreciation of evidence which exercise cannot be done in the above appeals under Section 260A of the Income Tax Act as the learned counsel appearing for the appellant as pointed out herein above has failed to show that there is any perversity in such findings or that any material evidence has been discarded or that the learned Tribunal has come to such conclusion by misreading the evidence on record.

Issues Involved:
1. Validity of the assessment of income from the sale of 18 flats.
2. Applicability of Section 2(47) of the Income Tax Act regarding the definition of "transfer."
3. Justification of the Commissioner of Income Tax (A)'s enhancement of sale consideration.
4. Treatment of the transaction with Mr. Armando Gonsalves.
5. Determination of the year of chargeability for capital gains tax.

Detailed Analysis:

1. Validity of the Assessment of Income from the Sale of 18 Flats:
The appeals challenge the Income Tax Appellate Tribunal's order which partly allowed the respondent's appeal. The Assessing Officer had held that the sale of 18 flats to M/s. Audi Constructions Private Limited was a colorable device to settle dues and assessed the gains arising from the transaction of assignment of rights amounting to Rs. 14,05,63,839/- in the Assessment Year 2008-2009. However, the Tribunal found that the respondent had not delivered possession of the flats to M/s Audi Construction Pvt. Ltd., and thus the provisions of Section 53A of the Transfer of Property Act did not apply. Consequently, the Tribunal deleted the addition made by the Assessing Officer regarding capital gains.

2. Applicability of Section 2(47) of the Income Tax Act:
The Tribunal examined the definition of "transfer" under Section 2(47) of the Income Tax Act and concluded that since the flats were yet to be constructed and possession was not delivered, there was no "transfer" as per Section 2(47)(v). The Tribunal noted that mere execution of the agreement without delivery of possession did not constitute a transfer. It was also observed that the agreements were genuine and not bogus.

3. Justification of the Commissioner of Income Tax (A)'s Enhancement of Sale Consideration:
The Commissioner of Income Tax (A) had upheld the Assessing Officer's order regarding the sale of 18 flats and the assignment of rights over the built-up area to M/s. Salgaonkar Mining Industries. However, the Tribunal found that the CIT (A) had illegally invoked its jurisdiction to enhance the sale consideration received by the respondent. The Tribunal set aside the order of the CIT (A) and deleted the enhancement made therein.

4. Treatment of the Transaction with Mr. Armando Gonsalves:
The Tribunal directed the Assessing Officer to re-decide the issue concerning the transaction with Mr. Armando Gonsalves in accordance with the findings for the Assessment Year 2007-2008. The Tribunal also accepted the findings of the CIT (A) regarding the commission paid to Mr. Tahir Isani.

5. Determination of the Year of Chargeability for Capital Gains Tax:
The Tribunal, relying on the judgment in Chaturbhuj Dwarkadas Kapadia V/s Commissioner of Income Tax, held that the year of chargeability is the year in which the contract is executed, provided there is a transfer of control over the property. Since there was no irrevocable license or complete control transferred to the respondents in the Assessment Year 2008-2009, the Tribunal concluded that the income from the sale of flats could not be assessed in that year.

Conclusion:
The High Court upheld the Tribunal's findings, noting that there was no perversity or misreading of evidence. The Court found that the substantial questions of law proposed by the appellant required reappreciation of evidence, which is not permissible under Section 260A of the Income Tax Act. Consequently, both appeals were dismissed.

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