1987 (3) TMI 170 - AT - Income Tax

Summary

Issues Involved:
1. Determination of the date of transfer of immovable property for capital gains tax purposes.
2. Applicability of capital gains tax on the Hindu Undivided Family (HUF) or its coparceners post-partition.
3. Effect of the rectification deed on the transfer date and capital gains tax liability.

Detailed Analysis:

1. Determination of the Date of Transfer of Immovable Property for Capital Gains Tax Purposes:

The primary issue in this case was to ascertain the exact date of transfer of the immovable property to determine the assessment year for capital gains tax. The appellant argued that the sale took place on 6-8-1975 when the agreement with the firm of Umakaran and Tejkaran was executed. The appellant contended that the sale relates back to the date of the agreement, thus, any capital gains should have been assessed for the assessment year 1976-77. However, the revenue argued that the transfer of property took place only on 23-4-1980 when the sale deed was executed and registered, making the relevant assessment year 1981-82.

The Tribunal upheld the revenue's contention, stating that under Section 54 of the Transfer of Property Act and Section 17(b) of the Registration Act, the title to the property passes only through a duly executed and registered document. The Tribunal emphasized that the value of the immovable property being more than Rs. 100 necessitated a registered document for the transfer of title. Therefore, the transfer took place only on 23-4-1980 when the sale deed was executed and registered, making the assessment year 1981-82 the correct year for capital gains tax.

2. Applicability of Capital Gains Tax on the Hindu Undivided Family (HUF) or Its Coparceners Post-Partition:

The appellant argued that since a partition had taken place on 13-10-1980 and was recognized by the revenue under Section 171 of the IT Act, any capital gains arising from the transaction should be assessed in the hands of the erstwhile coparceners and not the HUF. The Tribunal rejected this argument, noting that the sale took place on 23-4-1980, prior to the partition of the HUF. The Tribunal held that at the point of sale, the HUF was not partitioned, and therefore, the capital gains were rightly included in the income of the HUF for the assessment year 1981-82.

3. Effect of the Rectification Deed on the Transfer Date and Capital Gains Tax Liability:

The appellant contended that the rectification deed executed on 4-2-1981, which corrected the description of the sale consideration, should be considered as the effective date of transfer, thereby making the relevant assessment year 1982-83. The Tribunal rejected this argument, stating that the rectification deed only corrected the mode of satisfaction of the sale consideration and did not affect the passing of the title itself. The original sale deed dated 23-4-1980, which was registered on 26-5-1980, was considered the effective date of transfer. Therefore, the capital gains tax was rightly assessed for the assessment year 1981-82.

Conclusion:

The Tribunal dismissed the appeal, upholding the revenue's contention that the transfer of immovable property took place on 23-4-1980 when the sale deed was executed and registered. The capital gains tax was correctly included in the income of the HUF for the assessment year 1981-82. The rectification deed did not alter the date of transfer, and the partition of the HUF post-sale did not affect the tax liability of the HUF for the relevant assessment year.