9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (10) TMI 1087 - AT - Income TaxAddition u/s 56(2)(x) - determine the date from which the deed of conveyance is operative - scope of Section 56(2)(x) of the Income Tax Act, which was inserted by the Finance Act, 2017 - HELD THAT - We find that as decided in Gejo (D) Th.Lrs. Ors 2024 (1) TMI 1333 - SUPREME COURT while examining the provisions of section 47 of the Registration Act, 1908, which provides that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration, held that when a compulsory registerable document is registered according to Registration Act, it shall operate from a date before the date of its registration. The Hon ble Supreme Court further held that if in a given case, a sale deed is executed and the entire agreed consideration is paid on or before execution of the sale deed, after it is registered, it will operate from the date of its execution. As the sale deed operates from the date on which it is executed and if any changes are made with the consent of both parties the same also relates back to the date of the execution of the sale deed. Therefore, having considered the provisions of section 47 of the Registration Act, 1908,as interpreted by the Hon ble Supreme Court in the judgment cited supra, we are of the considered view that the deed of conveyance in the present case shall operate from the date of its execution, i.e. 31.03.2017. Thus, since the deed of conveyance was executed amongst the parties in respect of immovable property on 31.03.2017, the provisions of section 56(2)(x), which were inserted by Finance Act, 2017 w.e.f. 01.04.2017, are not applicable to the present case and the said section can be only applicable to the facts wherein the sale deeds are executed on or after 01.04.2017 pursuant to which immovable property is received by any person. Assessee appeal allowed.
Issues Involved:
1. Applicability of Section 56(2)(x) of the Income Tax Act, 1961 to transactions executed before its effective date. 2. Determination of the operative date of a deed of conveyance under the Registration Act, 1908. 3. Validity of the assessment order in light of the valuation process and the third proviso to Section 56(2)(x). Issue-wise Detailed Analysis: 1. Applicability of Section 56(2)(x) of the Income Tax Act, 1961: The primary issue in the appeal was whether Section 56(2)(x) of the Income Tax Act, which was inserted by the Finance Act, 2017 and effective from 01.04.2017, could be applied to transactions executed prior to this date. The assessee argued that the agreements for acquiring rights in the property were executed on 31.03.2017, before the effective date of the section, and thus, the section should not apply. The Revenue, however, contended that since the registration of the deed occurred after 01.04.2017, the section was applicable. The Tribunal analyzed the provisions of Section 56(2)(x)(b) and its provisos, concluding that the section applies to transactions executed on or after 01.04.2017. Since the deed of conveyance was executed on 31.03.2017, the section did not apply, and grounds 1(a) and 1(b) of the assessee's Cross Objection were allowed. 2. Determination of the Operative Date of a Deed of Conveyance: A critical aspect was determining whether the deed of conveyance was operative from the date of execution (31.03.2017) or registration (April 2017). The Tribunal referred to the Supreme Court's interpretation of Section 47 of the Registration Act, 1908, which states that a registered document operates from the date of its execution if all conditions, such as payment of consideration, are met. The Tribunal cited the Supreme Court's decision in Kanwar Raj Singh (D) Th.Lrs. vs. Gejo (D) Th.Lrs.&Ors., which clarified that a sale deed operates from the date of execution when the consideration is fully paid before registration. Thus, the Tribunal held that the deed of conveyance in this case operated from 31.03.2017, precluding the applicability of Section 56(2)(x). 3. Validity of the Assessment Order and Valuation Process: The assessee also contended that the third proviso to Section 56(2)(x) required the Assessing Officer (AO) to refer the valuation of the properties to a Valuation Officer, which was not done, rendering the assessment order invalid. However, since the Tribunal had already decided that Section 56(2)(x) was not applicable due to the execution date of the deed, the question of valuation became academic. Consequently, the Tribunal did not address this issue further, and the other grounds raised by the assessee in its Cross Objection were left open. Conclusion: The Tribunal allowed the Cross Objection by the assessee, determining that Section 56(2)(x) of the Income Tax Act was not applicable to the transactions in question due to their execution date. The Revenue's appeal was dismissed as infructuous, as the primary issue was resolved in favor of the assessee. The Tribunal's decision underscored the importance of the execution date in determining the applicability of tax provisions and the operative date of registered documents under the Registration Act.
|
