2019 (2) TMI 1343 - AT - Income Tax

Long Term Capital Gains from the sale of immovable property u/s. 50C - reopening of assessment - HELD THAT - AO computed the income from the sale of land under the head Capital Gain and determined the total income at ₹ 2,23,76,000/- and reduce an amount of ₹ 40,00,000/- from such amount considering such amount having been offered as value of consideration in the A.Y. 2007-08. The word or assessable inserted in Section 50C by Finance Act, 2009 with effect from 01/04/2009 is applicable from 2009-10 only and hence provisions of Section 50C cannot be applied in the year under consideration. Therefore, Capital Gain cannot be assessed u/. 50C in the case of assessee. Now property under consideration stood transferred on 15/07/2006 on handing over of the possession to Jhonson Electric Co. Pvt. Ltd. in compliance to Agreement for Sale dated 06.04.1993. Accordingly, subsequent transfer of the said property by Jhonson Electric Co. Pvt. Ltd. to Tanman Finvest Pvt. Ltd. vide Deed of Conveyance dated 08.05.2007 would result capital gain in the hands of Jhonson Electric Co. Pvt. Ltd. only. It is worthwhile to mention here that the Long Term Capital Gain on the basis of Deed of Conveyance dated 08.05.2007 has been assessed in the case of Jhonson Electric Co. Pvt. Ltd. vide an order u/s. 143(3) r.w.s. 147 dated 03.11.2010. Since Long Term Capital Gains on the basis of sale consideration disclosed in Conveyance Deed determined u/s. 50C has already been assessed in the case of Jhonson Electric Co. Pvt. Ltd. which had purchased the property from the assessee. Therefore, CIT(A) has rightly hold that property cannot again be assessed in the hands of assessee. - Decided against revenue.

Summary

Issues:
1. Whether the deletion of Long Term Capital Gains (LTCG) by the ld. CIT(A) was justified.
2. Applicability of Section 50C in assessing Capital Gains.
3. Transfer of property and assessment of Capital Gains.

Analysis:
1. The appeal pertains to the deletion of LTCG of ?1,83,76,000 by the ld. CIT(A) for the assessment year 2007-08. The assessee, a private trust, derived income from interest. The Assessing Officer assessed the LTCG from the sale of immovable property at ?1,83,76,000 under Section 50C. The ld. CIT(A) partly allowed the appeal of the assessee, leading to the current appeal by the Revenue.

2. The Assessing Officer, based on AIR Information, noted a sale deed for ?2.00 crores in respect of immovable property. However, the applicability of Section 50C was disputed as the word "or assessable" was inserted in the section by the Finance Act, 2009, effective from 01/04/2009. Therefore, the provisions of Section 50C could not be applied for the year under consideration. The property was transferred on 15/07/2006, and subsequent transfers led to Capital Gains assessed in the hands of other parties, not the assessee.

3. The property in question was transferred to another entity, resulting in Capital Gains assessed in their hands. The ld. CIT(A) rightly held that the property could not be assessed again in the hands of the assessee. The detailed and reasoned order of the ld. CIT(A) was upheld, stating that the Capital Gains had already been assessed in the hands of the entity that purchased the property from the assessee. Therefore, the appeal by the Revenue was dismissed, affirming the decision of the ld. CIT(A).

In conclusion, the Tribunal upheld the decision of the ld. CIT(A) to delete the LTCG and dismissed the Revenue's appeal, emphasizing the correct application of tax provisions and the assessment of Capital Gains in the hands of the appropriate entities involved in the property transactions.