9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 223 - HC - Income TaxCapital gain - real owner of property - Addition in the hands of AOP or members of AOP - whether the respondent-assessee members of the AOP were taxed in their respective hands and not the respondent- AOP with regard to the sale of property in question in the year 2007 relevant to the assessment year 2008-09 ? - Tribunal upheld the order passed by the CIT (A), holding that the members of the AOP were the real owners of the property in question and therefore, the income was liable to be taxed in the members hands HELD THAT - As the facts are clear in as much as though it is true that the respondent-AOP purchased the property in auction from the Income Tax Department in the year 1994 and the conveyance deed was executed in the year 2005 but in the meanwhile the respondent-assessee allotted the share in the property in question to its members for the contribution made by it in the year 1999. This fact is not disputed by the appellant-Revenue and accordingly, the members of the AOP became the owner of the property in question qua their respective shares in which the allotment was done by the AOP. Therefore it cannot be said that the AOP continued to be the owner of the property as Association of Person is formed by the members for their joint interest in the property and accordingly, once the share of the respective member is allotted by the AOP then the AOP cease to be the owner of the property in question from the year 1999 with respect to the shares which were allotted by issuing the allotment letter. No substantial question of law arising out of the impugned order passed by the Tribunal. No substantial question of law arises.
Issues Involved:
1. Taxability of income from the sale of property in the hands of the members of the assessee versus the assessee itself. 2. Classification of income from the sale of property as Capital Gain versus Business Income. 3. Appropriate Assessment Year for taxing the income from the sale of property. Summary: Issue 1: Taxability of Income from Sale of Property The High Court addressed whether the income earned from the sale of the property, Vision House, should be taxed in the hands of the members of the assessee (an Association of Persons, AOP) or the assessee itself. The Tribunal upheld the CIT (Appeal)'s finding that the members were the real owners of the property. The funds for the purchase and construction were provided by the members, and the AOP issued shares and an allotment certificate to the members, granting them rights in the property. The development and BU permissions also listed the members as owners. Consequently, the income was liable to be taxed in the hands of the members in proportion to their holdings. Issue 2: Classification of Income as Capital Gain or Business Income The CIT (Appeal) and the Tribunal both held that the income from the sale of the property should be classified as Capital Gain rather than Business Income. The CIT (Appeal) found no evidence that the purchase and sale of the property were intended for profit-making as a trading transaction. The AOP was not engaged in an organized business activity of purchasing and selling property. Therefore, the transaction was rightly offered as capital gains by the members for the Assessment Year 2008-09. Issue 3: Appropriate Assessment Year The Tribunal and the CIT (Appeal) concluded that the income from the sale of the property should be taxed in the Assessment Year 2008-09. The final conveyance deed was executed, and possession was handed over to the buyer on 22.05.2007, which fell within the financial year 2007-08. The agreement to sell and part payment in the previous financial year (2006-07) did not constitute a transfer of property. The Tribunal cited precedents where an agreement to sell without possession does not equate to a transfer under Section 2(47) of the Income Tax Act. Conclusion: The High Court found no substantial question of law arising from the Tribunal's order. The appeal was dismissed, affirming that the income from the sale of Vision House was taxable as capital gains in the hands of the members for the Assessment Year 2008-09. The AOP was not considered the owner of the property post-allotment to its members.
|
