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2017 (9) TMI 1861 - AT - Income TaxCapital gain computation - JDA - receipt of adjustable advance/earnest money and benefits in expectancy with in the ambit of transfer as contemplated u/s 53A of Transfer of Property Act - transfer as contemplated u/s 2(47) - HELD THAT - As decided in C.S. ATWAL VERSUS ACIT 2015 (7) TMI 878 - PUNJAB HARYANA HIGH COURT we find that the order of Ld. CIT(A) is not sustainable as the Hon'ble. Court has decided that under these circumstances the capital gain has to be restricted to the proportionate amount of sale consideration received during the year and the rest of the capital gain will be taxable in the year in which rest of the consideration is received. Therefore the Assessing Officer is directed compute capital gains tax on the basis of actual receipts during the year.
Issues:
1. Delay in filing the appeal. 2. Taxability of capital gains on receipt of advance money. 3. Application of Section 53A of Transfer of Property Act. 4. Interpretation of tripartite agreement for land transfer. 5. Consideration of future and uncertain benefits as capital gains. 6. Nexus of receipt of amounts with transfer under Income Tax Act. 7. Applicability of Punjab & Haryana High Court judgment. Issue 1: Delay in filing the appeal: The appellant filed an appeal against the order of Ld. CIT(A) for Asst. Year: 2007-08, citing a delay of 775 days due to the ill health of their counsel. The delay was condoned after the submission of an application for condonation of delay, and the Ld. AR proceeded with the arguments. Issue 2: Taxability of capital gains on receipt of advance money: The Assessing Officer calculated capital gains on an accrual basis for the appellant who received advance payments but did not complete the agreement for land transfer. The appellant contended that no capital gain accrued as the agreement was not fulfilled. However, the Assessing Officer assessed capital gains based on the total consideration mentioned in the agreement. Issue 3: Application of Section 53A of Transfer of Property Act: The appellant argued that the Assessing Officer erred in considering the advance money and future benefits as part of the transfer under Section 53A of the Transfer of Property Act. The appellant contended that the Assessing Officer failed to establish the nexus of the receipt of amounts with any transfer as per the Income Tax Act. Issue 4: Interpretation of tripartite agreement for land transfer: The appellant was a member of a cooperative society and had a plot in the society's land. A tripartite agreement was entered into for the transfer of land, where the appellant was to receive a furnished flat and monetary consideration. The agreement was not completed, leading to a dispute over the taxability of the advance payments received. Issue 5: Consideration of future and uncertain benefits as capital gains: The appellant challenged the Assessing Officer's valuation of future and uncertain benefits as consideration for the alleged transfer, arguing that no capital gain should be levied on such unquantifiable benefits. The appellant maintained that no capital gain had accrued as the transfer was not completed. Issue 6: Nexus of receipt of amounts with transfer under Income Tax Act: The appellant contended that the Assessing Officer failed to prove the connection between the receipt of amounts and any transfer as defined under the Income Tax Act. The appellant sought deletion of the assessed capital gains due to the lack of evidence establishing the link between the amounts received and a taxable transfer. Issue 7: Applicability of Punjab & Haryana High Court judgment: The case of the appellant was found to be covered by a judgment of the Punjab & Haryana High Court in a similar matter. The High Court's findings emphasized the importance of fulfilling the essential ingredients of Section 53A of the Transfer of Property Act for tax implications. The High Court's decision influenced the Tribunal's ruling to restrict capital gains to the proportionate amount of consideration received during the year, directing the Assessing Officer to compute tax based on actual receipts. This comprehensive analysis covers the various legal issues and arguments presented in the judgment by the Appellate Tribunal ITAT Amritsar.
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