2019 (10) TMI 971 - AT - Income Tax

Correct amount of capital gain - sale of his land - Date of Transfer of land - the assessee claims non-accrual of capital gain in-as-much as land was under dispute - Non receipt of consideration - fulfillment of condition of transfer u/s. 2(47) - HELD THAT - Confirmation from PACL, the transferee, in the matter may be also useful in deciding the matter, and it is in fact surprising that no such was called for by the Revenue, or indeed furnished by the assessee himself. It may though be again clarified that in case of any inconsistency, the AO shall allow primacy to the conduct of the parties, particularly considering that the dispute with regard to the ownership of land; the same being sub judice, cannot be doubted. The assessee is toward this entitled to rely on the court orders claiming the ownership of the land forming part of ATS dated 04/12/2006. The AO shall take the same on record, and cause such verification as he may deem fit and proper under the circumstances, or necessary, to arrive at his satisfaction qua the fulfillment of the condition of transfer as afore-stated. The assessee is bound to cooperate in the said, set aside proceedings, offering explanation/s qua the factual or legal aspects of the matter, if any, as may be raised by the assessing authority. The AO, needless to add, shall observe the time limit as prescribed u/s. 153, i.e., w.e.f. 01/6/2016. Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
Determination of correct amount of capital gain on land sale to Punjab Alkali Chemicals Ltd.

Analysis:
1. The appeal concerns the assessment under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2007-08, where the appellant contests the capital gain arising from the sale of land to Punjab Alkali Chemicals Ltd. (PACL).

2. The key contention revolves around the non-returning of capital gain on 62 Marlas of land, part of the total land agreed to be sold, due to a dispute between the assessee and the Revenue regarding the accrual of capital gain despite non-receipt of full consideration.

3. The Revenue argues that the Agreement to Sell (ATS) dated 04.12.2006 constitutes a transfer under section 2(47)(vi) of the Act, leading to the accrual of capital gain regardless of consideration receipt, as possession was transferred to PACL as the buyer.

4. The assessee's defense includes the conditional nature of the sale pending court resolution, evidenced by the ATS allowing sale deed execution by 04.12.2007, subject to mutual consent for extension, indicating a non-conditional sale based on the contract terms.

5. The Tribunal directs the matter back to the assessing authority for factual determination, emphasizing that the transfer under section 2(47) would occur only upon fulfillment of conditions, with ownership of only 20 Marlas confirmed as transferred on 04.12.2006 pending resolution of the dispute for the remaining 42 Marlas.

6. The Tribunal allows the appeal for statistical purposes, highlighting the need for the assessing authority to consider court orders confirming ownership and conduct of the parties, with the assessee's cooperation required for verification and explanation, within the prescribed time limit under section 153 starting from 01/6/2016.