2022 (3) TMI 671 - AT - Income Tax

Capital gain on sale of land - assessee along with his four other co-owner sold the land - HELD THAT - It is admitted fact that sale deed was executed on 23.03.2012 and was presented for registration on 23.03.2012 itself. Assessee along with his four co-owner acknowledged in the sale deed that entire sale consideration of ₹ 15.00 Cores is received before on 23.01.2012. Detail of all payments is duly reflected in the sale deed - the assessee and his co-owner has acknowledged and accepted that first party (assessee and his brother) handed over the peaceful possession to the transferee. As per section 54 of Transfer of Property Act, the sale of immovable property is complete on receipt of consideration and registration of deed of transfer and paid stamp duty chargeable by State Government. Before us, the ld AR for the assessee strongly relied on 'Kabja Rashid dated 04.04.2012. The document dated 03.04.2012 (Kabja Rashid) cannot replace legality and authenticity of registered sale deed dated 23.03.2012. Thus, the document produced by assessee i.e. 'Kabja Rashid to claim the capital gain in subsequent assessment order does not inspire of confidence, which cannot substitute the evidentiary value of registered instrument. CIT(A) in accepting the plea of assessee, that sale deed was executed on 03.04.2012, is factually incorrect. In fact, the transaction of transfer of immovable property would take effect from the execution of the sale deed - mere registration number, volume number and additional book number and pages number is given to the sale deed for the purpose of identification of sale transaction. The specific registration number was recorded on the registered document on 03.04.2014. So far as, the submission of assessee and observation of CIT(A), with regard to taxing of long term capital gain in the hand of co-owners in subsequent assessment order is concern, we find that observation of ld. CIT(A) and submission the assessee are misplaced. Assessee can claim parity under law only on the basis of legally and sustainable view taken in case of co-owners. We are further view that if some wrong approach was adopted which is not in accordance with mandate of law, is accepted in case of other co-owners, the assessee cannot take benefit thereof. Therefore, the order of ld. CIT(A) is set aside.

Summary

Issues Involved:
1. Determination of the correct assessment year for capital gains taxation.
2. Reliance on Supreme Court precedents in differing factual scenarios.
3. Consistency in the approach of the Assessing Officer across different assessment years and co-owners.
4. Legitimacy of the sale transaction and the timing of possession transfer.
5. Application of Section 50C of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Determination of the correct assessment year for capital gains taxation:
The primary issue was whether the capital gains from the sale of property should be taxed in the assessment year (AY) 2012-13 or AY 2013-14. The Revenue argued that the transfer occurred on 23.03.2012, the date when the sale deed was executed, full consideration was received, and possession was handed over. The assessee contended that the transfer was completed on 04.04.2012, when actual possession was given, supported by a "Kabja Rashid" document. The Tribunal concluded that the transfer of immovable property is complete upon execution and registration of the sale deed, and mere registration details recorded later do not alter this fact. Therefore, the capital gains should be taxed in AY 2012-13.

2. Reliance on Supreme Court precedents in differing factual scenarios:
The Revenue contended that the CIT(A) wrongly relied on Supreme Court decisions in Chandra Prakash v. State of UP and M.A. Murthy v. State of Karnataka, which were not factually similar to the assessee's case. The Tribunal agreed with the Revenue, noting that the CIT(A)'s reliance on these precedents was misplaced as the factual matrix differed significantly.

3. Consistency in the approach of the Assessing Officer across different assessment years and co-owners:
The CIT(A) had deleted the addition on the grounds of non-uniformity and inconsistency, as the Assessing Officer had accepted the capital gains in AY 2013-14 for the assessee and other co-owners. The Tribunal noted that consistency in approach is essential, but a wrong approach in other cases does not justify a wrong decision in the present case. The Tribunal emphasized that legal principles and correct interpretation of the law should prevail over uniformity.

4. Legitimacy of the sale transaction and the timing of possession transfer:
The Assessing Officer held that the sale deed executed on 23.03.2012 indicated the transfer of possession and receipt of full consideration, thus completing the transfer. The assessee's claim of actual possession transfer on 04.04.2012 was deemed a tactic to avoid capital gains tax in AY 2012-13. The Tribunal found that the "Kabja Rashid" document dated 04.04.2012 could not replace the legal and evidentiary value of the registered sale deed dated 23.03.2012. Therefore, the sale transaction was legitimate and complete on 23.03.2012.

5. Application of Section 50C of the Income Tax Act:
The Assessing Officer noted a discrepancy between the sale consideration and the stamp duty valuation, invoking Section 50C. The CIT(A) directed the Assessing Officer to address this in AY 2013-14. The Tribunal upheld the application of Section 50C, directing the Assessing Officer to provide the assessee an opportunity to object to the valuation and compute the capital gains accordingly.

Conclusion:
The Tribunal set aside the CIT(A)'s order, holding that the capital gains should be taxed in AY 2012-13. It directed the Assessing Officer to rectify the assessment for AY 2013-14 to avoid double taxation and to compute the capital gains after considering the assessee's objections to the valuation. The Tribunal emphasized the importance of legal principles over uniformity in tax assessments.