2017 (12) TMI 1171 - HC - Income Tax

Capital gains - sale agreement between the vendor and the vendee and applied the provisions of Section 2(47)(v) - Held that - After considering the provisions of Section 2(47) of the Income Tax Act and Section 53A of the Transfer of Property Act and the decision of this Court in the case of D.Kasthuri Vs. CIT 2010 (2) TMI 153 - HIGH COURT of MADRAS it was held that the capital gains arose to the assessees on the basis of the sale agreement between the vendor and the vendee and applied the provisions of Section 2(47)(v) of the Income Tax Act and the transfer is complete in all aspects. The Tribunal noted the findings rendered by the Commissioner of Income Tax (Appeals) held that the observation of the Commissioner of Income Tax (Appeals) that the assessee had complied with the provisions in the financial year 2008-09 and paid capital gains and that there were no long term capital gains taxable in the assessment year 2010-11 to be just and proper. The above finding rendered by the Tribunal is on re-appreciation of the factual position as recorded by the Commissioner of Income Tax (Appeals). In respect of other co-owners, similar orders were passed by the Commissioner of Income Tax (Appeals) and they had attained finality, as the Revenue did not prefer appeals against those orders. We are of the considered view that the above questions framed by the Revenue stating to be the substantial questions of law would not arise for consideration in these appeals, as the entire matter is fully factual. There is no error of law committed by the Tribunal warranting interference by this Court. - Decided against revenue.

Summary

Issues:
1. Interpretation of transfer of property in assessment years 2009-10 and 2010-11.
2. Application of Sections 53A and 17(1A) of the Transfer of Property Act, 1882.
3. Assessment of capital gains in the relevant assessment years.
4. Applicability of Section 50C in the case.

Analysis:
1. The appeals were filed by the Revenue challenging the deletion of long-term capital gains for the assessment year 2010-11, where the transfer occurred in the financial year 2008-09 based on an unregistered sale agreement. The Revenue argued that the transfer only took place upon registration of the sale deed in 2009. The property was leased to M/s.Voltas Limited, and possession was given to the purchaser upon registration of the sale deed.

2. The assessees, co-owners of the property, filed their income tax return for the assessment year 2010-11, disclosing their income. The Assessing Officer reopened the assessments, as the facts regarding the property transfer were not initially disclosed. The property was originally owned by Mr. P.N. Chettiar, and after his demise, his legal heirs executed a power of attorney in favor of Mr. S. Saravanan, who then executed the sale deed in 2009.

3. The Assessing Officer applied Section 50C of the Income Tax Act, concluding that the property was sold during the financial year 2009-10, despite possession being given earlier based on the sale agreement. Capital gains were deemed taxable in the hands of the assessees, leading to orders dated 17.3.2014 and 14.3.2014.

4. The assessees appealed to the Commissioner of Income Tax (Appeals), who considered the sale agreement and the transaction in 2008-09. The Commissioner held that capital gains arose based on the sale agreement, applying relevant provisions of the Income Tax Act and the Transfer of Property Act. The Tribunal upheld the Commissioner's findings, noting that the factual position supported the absence of long-term capital gains for the assessment year 2010-11.

5. As the Revenue did not appeal against similar orders passed for other co-owners, the Tribunal found no error of law warranting interference. The Tribunal dismissed the tax case appeals, stating that the questions raised by the Revenue were primarily factual and did not constitute substantial questions of law. Consequently, the appeals were dismissed, and no costs were awarded.