2015 (4) TMI 334 - HC - Income Tax

Computation of capital gain - whether date of indexation must be reckoned as the date on which the final agreement was registered and not the date on which the flat was promised to be handed over to the Assessee? - Held that - There is no dispute about the facts. The Tribunal found that the flat was agreed to be sold to the present Assessee in the year 1994 and a letter in that behalf was addressed and handed over. The formalities of transfer and handing over of physical possession were postponed to the date of final payment. That was because the agreed price of ₹ 94,40,000/- was not paid in one go or at the time of the allotment letter. A substantial payment was made between 1994-95. Once the last payment alone and which was in the sum of ₹ 9 lacs and odd was made that the document was executed, registered and possession was handed over. Therefore, in the given facts, the Tribunal found that when major payments have been made up to the financial year 1994-95 and only a small sum remained to be paid, which was paid later on, then, the date of indexation should be 24th February, 1994 and not what the Revenue determined in this case. That the Assessee later on sold his flat and that transaction resulted in a loss that while working out that loss this indexation from 1994 was claimed. That was denied and on the above ground but which the Commissioner and the Tribunal have not found to be tenable. No substantial question of law - Decided against revenue.

Summary

Issues Involved:
Appeal against Income Tax Appellate Tribunal order for Assessment year 2005-06 regarding indexation date for capital gains calculation.

Analysis:
The appeal before the Bombay High Court pertained to the determination of the indexation date for calculating capital gains in a real estate transaction. The Revenue contended that the indexation date should be the date of registration of the final agreement in March 1999, not the earlier date when the flat was promised to be handed over. However, the Court disagreed with this argument. The Tribunal had found that the flat was agreed to be sold in 1994, with formalities delayed until final payment was made. Significant payments were made between 1994-95, with the final payment leading to the execution of the document, registration, and possession transfer. Therefore, the Tribunal concluded that the indexation date should be considered as 24th February 1994, based on the substantial payments made earlier. The Court upheld this finding, emphasizing that the Tribunal's decision was reasonable given the factual background and consistent with previous orders under similar circumstances.

The Court further ruled that no substantial question of law arose from the Tribunal's decision, as it aligned with the Commissioner of Income Tax (Appeals) and was based on factual findings. The Court noted that the Tribunal's conclusion was not perverse and was in line with its previous decisions in similar cases. Consequently, the Court dismissed the appeal, stating that no substantial question of law was raised, and no costs were awarded in the matter.