1978 (9) TMI 90 - AT - Income Tax

Summary

Issues:
- Appeal by Revenue against deletion of short term capital gain addition
- Interpretation of the term "transfer" under section 2(47) of the IT Act, 1961
- Ownership of plots allotted by Delhi Development Authority
- Valuation of exchanged plots
- Assessment of capital gain in the hands of the assessee
- Decision of the Appellate Assistant Commissioner (AAC)
- Appeal before the Tribunal

Analysis:
The judgment involves an appeal by the Revenue against the deletion of a short term capital gain addition made by the Income Tax Officer (ITO) for the assessment year 1974-75. The respondent assessee, an individual deriving income mainly from salary, was allotted plots of land by the Delhi Development Authority in 1971, which were later exchanged in 1973. The ITO treated this exchange as a transfer within the meaning of section 2(47) of the IT Act, 1961, and assessed a sum as capital gain in the hands of the assessee.

The assessee contended that the ownership of the plots vested in the Delhi Development Authority as no lease deeds were executed, and therefore, no capital gains should be included. The Appellate Assistant Commissioner (AAC) accepted these contentions and deleted the addition of capital gain. The Revenue, aggrieved by this decision, appealed before the Tribunal.

During the appeal before the Tribunal, the Revenue argued that the exchange of plots fell within the definition of 'transfer' under section 2(47) of the Act and that the capital gain assessment was correct. On the other hand, the assessee relied on the AAC's order.

The Tribunal, in its analysis, noted that while the term "transfer" includes the exchange of an asset or any right therein, it must involve a capital asset as defined in section 2 of the Act. The Tribunal observed that no lease deeds were executed until the exchange in 1973, and the ownership of the plots vested in the Delhi Development Authority until that point. Therefore, the Tribunal agreed with the AAC's decision that no capital gain was involved in the case and dismissed the appeal by the Revenue.

In conclusion, the Tribunal upheld the AAC's decision, emphasizing that the ownership of the plots remained with the Delhi Development Authority until the exchange in 1973, and no interest passed to the assessee or his father until the lease deed was executed. Consequently, the Tribunal dismissed the Revenue's appeal, affirming that no capital gain was applicable in this scenario.