2019 (1) TMI 1587 - AT - Income Tax

Addition under head LTCG - transfer of property u/s 2(47)(vi) of IT Act r.w.s. 53A of TPA - year of taxability - registered sale deed VS registered sale deed - assessee state that possession was given to the intended purchaser - property was being held by M/s. Voltas on long lease who filed a civil suit for extending the lease period - HELD THAT - The assessee along with other co-owners entered into an agreement on 2.5.2008 with one Shri S. Saravanan to sell his share of property which constitutes1/3rd of the total extent for a consideration of . 3, 07, 55, 540/- and no proof of payment were mentioned in the sale agreement. The sale agreement was not registered with the Government authorities. Possession was not handover as the property was occupied by M/s. Voltas Limited. The assessee also gave a power of attorney to Shri S. Saranavan on 29.4.2008. The assessee claims that the deemed transfer took place as per the date of sale agreement in the financial year 2008-09 and the capital gain is assessable in the assessment year 2009-10. Admittedly the assessee has not registered the sale agreement in this case. We are of the considered opinion that since the sale/transfer took place only on the date of sale deed executed on 27.4.2009 the capital gain is taxable in the assessment year 2010-11. Under the above facts and circumstances we set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to decide the issue afresh in view of the judgement of the Hon ble Supreme Court in the case of CIT v. Balbir Singh Maini 2017 (10) TMI 323 - SUPREME COURT . Thus the ground raised by the Revenue is allowed for statistical purposes.

Summary

Issues:
- Addition made under the head "income from long term capital gains"

Analysis:

The appeal was against the Commissioner of Income Tax (Appeals) order relevant to the assessment year 2010-11. The primary issue was the deletion of an addition under the head "income from long term capital gains." The Revenue contended that the assessee did not comply with the provisions of section 2(47)(vi) of the Income Tax Act, 1961, regarding possession and registration requirements under the Transfer of Property Act. The Revenue argued that the property was in possession of M/s. Voltas, making it impossible for the assessee to fulfill the mandatory condition of physical possession under section 53A of the Transfer of Property Act. The Revenue emphasized the necessity of registering the agreement as per the amended law and cited relevant legal provisions. The Revenue sought to reverse the CIT(A)'s decision based on the Supreme Court's ruling in a similar case.

On the other hand, the assessee's counsel supported the CIT(A)'s order, presenting a judgment from the Madras High Court that was relied upon in the appellate order. The Tribunal examined the case, considering the property's history, the agreement with Shri S. Saravanan, and the registration status of the sale agreement. The Tribunal noted that the sale deed was registered on 27.4.2009, and possession was not transferred as the property was occupied by M/s. Voltas. The Tribunal reviewed previous decisions and directed the Assessing Officer to delete the addition based on the Tribunal's earlier rulings. Despite the High Court confirming similar Tribunal decisions, the Tribunal emphasized the Supreme Court's judgment in CIT v. Balbir Singh Maini, which highlighted the necessity of registering agreements post-amendment in the Transfer of Property Act. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the matter for fresh consideration in light of the Supreme Court's ruling, allowing the Revenue's appeal for statistical purposes.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, emphasizing the importance of registering agreements post-amendment in the Transfer of Property Act as per the Supreme Court's precedent in CIT v. Balbir Singh Maini.