2018 (12) TMI 750 - AT - Income Tax

Addition of capital gains - whether execution of the conveyance of the land is not a transfer within the meaning of section 50C - Held that - We find that the above property has been purchased by the purchasers vide agreement dated 11.10.1986 and the same was registered with Sub-Registrar, Mumbai vide registration No BOM/M Ward/GEN/895 of 86-87 dt.26.03.1987. The relevant clause of the registration clearly states about the deposits made by assessee with the society and registration of conveyance deed. Once the property is principally transferred in 1987, we find that the CIT(A) has rightly held the provisions of section 50C of the Act will not applied. We confirm the order of CIT(A) and this issue of Revenue s appeal is dismissed.

Summary

Issues:
Appeal against deletion of capital gains addition by CIT(A) - Application of section 50C - Computation of capital gains based on valuation report - Transfer of property in 1987 - Double taxation issue.

Analysis:
1. The appeal before the Appellate Tribunal ITAT Mumbai involved a dispute regarding the deletion of capital gains addition by the CIT(A). The Revenue challenged the CIT(A)'s decision based on the application of section 50C of the Income Tax Act, 1961. The primary issue revolved around the computation of capital gains, specifically concerning the valuation of property based on a report from the Valuation Officer (VO).

2. The case originated from the Assessment framed by the Dy. Commissioner of Income Tax, Central Circle 22(2), Mumbai, for the A.Y. 2009-10. The AO made an addition of capital gains amounting to ?11,55,15,100 on the sale of land. Subsequently, the PCIT set aside the assessment order and directed a revaluation of the property by the DVO. The DVO determined the fair market value at ?2,60,68,400, leading to the computation of capital gains by the AO at ?2,57,05,500.

3. The CIT(A) analyzed the transfer of the property in 1987 based on agreements and registration documents. It was established that the property was effectively transferred in 1987, and as such, the provisions of section 50C were deemed inapplicable. The CIT(A) emphasized that the transfer of the land had already occurred in 1987, and any subsequent transactions could not result in double taxation. The CIT(A) directed the AO to compute the capital gains based on the actual amount received by the assessee, which was ?1,11,00,000, instead of the higher amount adopted by the AO.

4. During the Tribunal proceedings, the Revenue argued for the application of section 50C and cited relevant case law. However, the Tribunal upheld the CIT(A)'s decision, noting that the property transfer had taken place in 1987, thereby dismissing the Revenue's appeal.

5. Additionally, the Tribunal observed that the Cross Objection (CO) filed by the assessee was time-barred and lacked substantiation for the delay. Consequently, the CO was dismissed as unadmitted. Ultimately, the Tribunal dismissed the appeal of the Revenue and the CO of the assessee.

This detailed analysis highlights the key legal and factual aspects of the judgment, encompassing the issues raised, the arguments presented, and the final decision rendered by the Appellate Tribunal ITAT Mumbai.