2020 (12) TMI 1197 - AT - Income Tax

Capital gain - collaboration agreement entered by assessee for a property - indexation of the cost the capital gain chargeable in the hands of the assessee - whether the transfer took place in Assessment Year 2007-08 as claimed by the Revenue or in Assessment Year 2009-10 as claimed by the assessee? - HELD THAT - Hon'ble Supreme Court in the case of Balbir Singh Maini 2017 (10) TMI 323 - SUPREME COURT held that the execution of unregistered Joint Development Agreement with an irrevocable Power of Attorney in favour of the Developer does not result in the transfer for capital gains liability. The agreement in the present case is not registered one, it does not have any impact in the eye of law for the purpose of Section 53A of the transfer of property act and similarly for defining transfer Under the income tax act. Therefore In the present case, the Collaboration Agreement was never registered. Therefore, the presumption of delivery of possession to the Collaborator cannot be assumed on signing the Collaboration Agreement, i.e., in AY 2007-08. Even otherwise the assessee has offered the above capital gain in assessment year 2009 10, which is the property for the assessment of the transfer of capital asset and consequent capital gain in view of the decision of the honourable Supreme Court as stated above.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the calculation of indexed cost by CIT (A).
3. Denial of deduction under Section 54 of the Income Tax Act.
4. Determination of the correct assessment year for capital gains.
5. Ignoring revised return filed by the assessee.
6. Evaluation of evidence and submissions by CIT (A).

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed the appeal 40 days late due to illness (cancer). The Tribunal found the reason sufficient and condoned the delay, stating, "We do not find any reason to not to condone the delay for the reason shown by the assessee according to us they are sufficient and proper."

2. Validity of the Calculation of Indexed Cost by CIT (A):
The assessee contested the calculation of the indexed cost of acquisition by CIT (A), which was ?610,879 compared to the claimed ?5,682,912. The Tribunal did not specifically address this issue separately as it became academic due to the decision on the assessment year for capital gains.

3. Denial of Deduction Under Section 54:
The assessee claimed a deduction under Section 54 amounting to ?5,317,088, which was denied by CIT (A). This issue was also rendered academic and not specifically adjudicated due to the decision on the assessment year for capital gains.

4. Determination of the Correct Assessment Year for Capital Gains:
The primary dispute was whether the capital gains should be assessed in AY 2007-08 or AY 2009-10. The Tribunal noted that the collaboration agreement dated 1.06.2006 was not registered, and possession was handed over on 19.08.2008. Citing the Supreme Court decision in Balbir Singh Maini’s case, the Tribunal held, "Thus as the agreement in the present case is not registered one, it does not have any impact in the eye of law for the purpose of Section 53A of the transfer of property act and similarly for defining transfer Under the income tax act." Consequently, the Tribunal concluded that the transfer took place in AY 2009-10, not AY 2007-08, and allowed the assessee's appeal on this ground.

5. Ignoring Revised Return Filed by the Assessee:
The assessee argued that the revised return for AY 2009-10, which included the correct computation of capital gains, was ignored. The Tribunal's decision to recognize AY 2009-10 as the correct assessment year implicitly addressed this issue, validating the revised return.

6. Evaluation of Evidence and Submissions by CIT (A):
The assessee claimed that CIT (A) failed to consider the evidence and submissions properly. The Tribunal's decision to shift the assessment year to 2009-10 effectively resolved this contention, as the evidence and submissions were aligned with this assessment year.

Conclusion:
The Tribunal allowed the appeal, determining that the capital gains should be assessed in AY 2009-10 based on the unregistered collaboration agreement and the date of possession. Consequently, other grounds became academic and were not adjudicated. The order was pronounced in the open court on 28/12/2020.

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