2021 (7) TMI 1427 - HC - Income Tax

Additional substantial questions of law - Computation of t ax on capital gains in terms of S. 45 r/w S. 48 - Whether unregistered agreement can be construed as a document effecting transfer of the subject properties in terms of S. 2(47)? - HELD THAT - According to us, the aforesaid additional substantial questions of law appear to be involved and therefore, the same are framed as additional substantial questions of law (2) and (3), in addition to the substantial question of law framed on 21.06.2016 whilst admitting this appeal. After framing the aforesaid additional substantial questions of law, we post this matter for final disposal on 22.07.2021 subject to overnight part heard, so that the Respondents have reasonable opportunity of dealing with the aforesaid additional substantial questions of law.

Summary

Issues:
1. Interpretation of unregistered agreement under Income Tax Act
2. Tax liability on capital gains without accrued income

Interpretation of unregistered agreement under Income Tax Act:
The appellant argued that the unregistered agreement dated 31/12/2008 should be considered a document effecting transfer of properties under Section 2(47) of the Income Tax Act, citing the law laid down by the Hon'ble Apex Court in a previous case. The court acknowledged the additional substantial questions of law raised by the appellant and framed them as questions (2) and (3) in addition to the substantial question of law framed earlier. The court noted that the earlier substantial question of law might also encompass the newly framed questions to some extent, as it was somewhat general in nature. The matter was scheduled for final disposal on 22.07.2021 to allow the respondents time to address the additional substantial questions of law.

Tax liability on capital gains without accrued income:
The second issue revolved around whether the appellant could be held liable to pay tax on capital gains under Section 45 read with Section 48 of the Income Tax Act, despite no income having accrued to the appellant as per the agreement dated 31/12/2008. This question was also considered by the court as an additional substantial question of law. The court decided to post the matter for final disposal on 22.07.2021, providing the respondents with an opportunity to address these new legal issues.