2023 (3) TMI 860 - AT - Income Tax

Capital gain - Taxability in the hands of GPA holder - delivery of possession of impugned property - Transfer u/s 2(15) - HELD THAT - After considering the recitals mentioned in the sale agreement cum GPA and sale deed, there is no dispute that the assessee purchased the property for a consideration of Rs.5,00,000/- and took possession of the property on 04.04.2007 itself and sold the property to Shri K.Anil Kumar on 04.01.2011. Therefore, the oral contention of the assessee that he acted only as an agent on behalf of the owners is not at all acceptable since the recitals clearly established the sale transaction between the assessee and sellers. No hesitation to come to conclusion that the sale deed executed by the assessee on 04.01.2011 is not in the capacity of GPA holder on behalf of the original owners. There is no recital in the sale deed executed by the assessee on 04.01.2011 that the sale consideration was received by the assessee on behalf of the original owners. He has also not placed any evidence to establish that he has repaid the amount to the original owners. Therefore, the capital gains arising out of the transfer occurred on 04.01.2011 should be charged in the hands of the assessee only. AO as well as the Ld.CIT(A) has rightly taxed the capital gains in the hands of the assessee after allowing deduction of indexed cost of acquisition. Estimation of the value of the impugned property as per fair market value - Special provision for full value of consideration in certain cases u/s 50C - HELD THAT - As per sale agreement cum GPA executed on 04.04.2007, the assessee purchased the property for Rs.5,00,000/- and sold the property for Rs.17,00,000/-. But as per the sale deed, the stamp duty value of the property is Rs.20,00,000/-. Therefore, as per section 50C of the Act, the AO has correctly computed the capital gains against the sale consideration of Rs.20,00,000/- after allowing indexed cost of acquisition at Rs.6,54,090/- and arrived at the long term capital gains. Assessee appeal dismissed.

Issues Involved:
1. Validity of the assessment order.
2. Delivery of possession and deemed transfer under Section 2(47)(v) of the IT Act, 1961.
3. Assessee's status as GPA holder and implications on capital gains.
4. Substitution of guideline value under Section 50C of the Act.

Summary of Judgment:

Issue 1: Validity of the Assessment Order
The assessee contended that the assessment order dated 22.11.2018 was erroneous both in law and on facts. However, grounds 1 and 5 were deemed general in nature and did not require specific adjudication.

Issue 2: Delivery of Possession and Deemed Transfer
The assessee argued that possession was to be given only at the time of execution of a regular conveyance deed, and hence there was no deemed transfer within the meaning of Section 2(47)(v) of the IT Act, 1961. The Tribunal, after considering the recitals in the sale agreement cum GPA and sale deed, concluded that the assessee took possession of the property on 04.04.2007 and sold it on 04.01.2011. Therefore, the oral contention that the assessee acted only as an agent was not acceptable. The Tribunal upheld the CIT(A)'s decision that the sale deed executed by the assessee was not in the capacity of GPA holder and that the capital gains should be charged in the hands of the assessee.

Issue 3: Assessee's Status as GPA Holder
The assessee claimed that he executed the registered conveyance deed only in the status of GPA holder and that the sale consideration was received on behalf of the original owners. The Tribunal found no evidence to support this claim and noted that the recitals in the sale deed did not indicate that the sale consideration was received on behalf of the original owners. Consequently, the Tribunal upheld the assessment of capital gains in the hands of the assessee.

Issue 4: Substitution of Guideline Value
The assessee challenged the substitution of the guideline value of Rs.20,00,000/- in place of the recorded consideration of Rs.17,00,000/-. The Tribunal noted that as per Section 50C of the Act, the AO correctly computed the capital gains based on the stamp duty value of Rs.20,00,000/-. The Tribunal upheld the CIT(A)'s decision, which aligned with the provisions of Section 50C, and dismissed the grounds raised by the assessee.

Conclusion:
The Tribunal dismissed the appeal of the assessee and upheld the orders passed by the AO and CIT(A), confirming the assessment of long-term capital gains in the hands of the assessee based on the stamp duty value. The judgment was pronounced in the open court on 17th March, 2023.

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