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Issues Involved:
Taxability of capital gains of Rs. 1,75,500 in the Assessment Year (A.Y.) 1982-83. Issue-wise Detailed Analysis: 1. Agreement for Sale and Possession: The assessee agreed to sell his residential house for Rs. 1,30,000, executed an agreement on 13-2-1982, and delivered possession to the buyer on the same date. The full sale amount was deposited in a bank account. 2. Society's Permission: As per the Sweta Park Co-operative Housing Society Ltd.'s bye-laws, the assessee needed the society's permission to complete the transaction. The society declined permission on 28-3-1982, leading the assessee to explore other buyers. 3. Customs Department Raid: On 15-4-1982, the Customs Department raided the premises and seized materials. The bank account containing the sale amount was attached, with prohibitory orders issued. These orders were withdrawn on 2-6-1982. 4. Income Tax Officer's Actions: The ITO initiated assessment proceedings against the buyer and prohibited the assessee from transferring the house or withdrawing from the bank account. This prohibition was lifted on 18-3-1987. 5. Society's Dues and Arbitration Suit: The society demanded outstanding dues and filed an arbitration suit for recovery. A special general meeting on 11-10-1986 resolved to permit the transfer, which was completed on 11-10-1986. The arbitration suit was withdrawn on 24-10-1986. 6. Assessee's Return and ITO's Assessment: For A.Y. 1982-83, the assessee filed a return declaring no capital gains due to the society's withholding permission. The ITO, under instructions from the IAC, charged capital gains tax on Rs. 1,75,000, considering the sale price at market rate and deducting purchase value and deductions under Section 80T. 7. CIT(A)'s Decision: The CIT(A) upheld the ITO's decision, stating the sale was complete on 13-2-1982 when the full consideration was received and possession transferred. 8. Assessee's Arguments: The assessee argued the sale was incomplete without the society's permission, which was granted only on 11-10-1986. The title remained with the assessee, and the consideration was treated as advance money. Reliance was placed on various legal precedents supporting this view. 9. Department's Arguments: The Department argued that the receipt of Rs. 1,30,000 constituted full consideration, resulting in the relinquishment of the assessee's rights. No further formalities were required for capital gains tax. The provisions of the Registration Act did not apply, and courts have upheld transfers without conveyance and registration. 10. Tribunal's Decision: The Tribunal concluded that the taxable event occurred on 11-10-1986, relevant to A.Y. 1987-88, not in the year under consideration. Title to immovable property passes on the execution and registration of a conveyance deed, not merely by delivery of possession. 11. Legal Precedents: The Tribunal referenced several cases, concluding that an agreement to sell does not create interest in favor of the purchaser. Effective conveyance is required for capital gains. The transfer of shares and loan was inseparable from the sale, and the society's permission was essential. 12. Amendment to Section 2(47): The Department cited the amendment to Section 2(47) as retrospective, including transactions involving possession in part performance of a contract. The Tribunal disagreed, stating the amendment should not defeat the society's rights. 13. Distinguishing Cases: The Tribunal distinguished the cases cited by the Department, noting they were not applicable to the instant case. 14. Assessee's Rights under Sections 53 and 54: The Tribunal noted that the attachment of sale proceeds by authorities defeated the assessee's rights under Sections 53 and 54, further justifying the non-chargeability of capital gains tax in A.Y. 1982-83. 15. Conclusion: The Tribunal held that capital gains tax was not chargeable in the year under consideration. The addition made by the ITO was deleted, and the appeal was allowed, setting aside the order under appeal. 16. Final Order: The order under appeal was set aside, the appeal allowed, and the addition deleted.
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