2021 (3) TMI 780 - AT - Income Tax

Addition on account of long term capital gain - Transfer of capital asset u/s 2(47) - Transfer in question effected in which A.Y. - HELD THAT - As decided in MORMASJI MANCHARJI VAID 2001 (6) TMI 58 - GUJARAT HIGH COURT as pleased to give credence on the date of transfer of possession of the property by way of transferring the right, title and interest of the property and not the date of registration of the deed of conveyance. Thus, we find that the ratio laid down in the above passed by the Jurisdictional High Court has rightly been applied by the Ld. CIT(A) by holding the said transfer took place on 23.02.2011 when the possession was handed over to the purchaser relevant to the A.Y. 2011-12 and consequently deleting the addition without any ambiguity so as to warrant interference. Hence, the appeal preferred by Revenue is found to be devoid of any merit and hence dismissed. Revenue s appeal is dismissed.

Summary

Issues Involved:
1. Deletion of addition on account of long-term capital gain.
2. Determination of the date of transfer for capital gains tax purposes.
3. Validity of the sale deed without signatures of concerned parties or witnesses.
4. Applicability of Section 50C of the Income Tax Act, 1961.
5. Eligibility for exemption under Section 54F of the Income Tax Act, 1961.

Issue-Wise Detailed Analysis:

1. Deletion of Addition on Account of Long-Term Capital Gain:
The Revenue appealed against the deletion of an addition of ?8,29,16,210/- towards long-term capital gain by the Commissioner of Income Tax (Appeals). The Assessing Officer (AO) had computed the long-term capital gain based on the sale consideration of ?16,78,08,163/- as of 05.08.2011, while the assessee declared the sale consideration of ?3,00,00,000/- received on various dates in 2010 and claimed exemption under Section 54F.

2. Determination of the Date of Transfer for Capital Gains Tax Purposes:
The AO considered the date of registration (05.08.2011) as the date of transfer, while the assessee argued that the transfer took place on 23.02.2011 when the possession was handed over, and the sale consideration was received. The Tribunal, after reviewing the documents and rival submissions, concluded that the transfer took place on 23.02.2011 when the possession was handed over and the sale consideration was paid, making the relevant assessment year 2011-12.

3. Validity of the Sale Deed Without Signatures of Concerned Parties or Witnesses:
The Revenue contended that the sale deed dated 23.02.2011 was invalid as it lacked signatures of the parties and witnesses. However, the Tribunal found that the document was duly stamped and franked by the bank on 23.02.2011, indicating the payment of stamp duty, and the possession was handed over on the same date. The Tribunal did not appreciate the argument that the document was invalid due to the absence of signatures.

4. Applicability of Section 50C of the Income Tax Act, 1961:
The AO applied Section 50C, adopting the sale consideration based on the stamp duty valuation as of the registration date (05.08.2011). The Tribunal, however, held that the transfer took place on 23.02.2011, and the sale consideration received on that date should be considered for computing the capital gain. The Tribunal emphasized the actual date of transfer and possession over the date of registration for tax purposes.

5. Eligibility for Exemption under Section 54F of the Income Tax Act, 1961:
The AO denied the exemption under Section 54F, arguing that the construction of the residential house was completed before the deemed date of transfer (05.08.2011). The Tribunal, however, found that the transfer took place on 23.02.2011, and the exemption under Section 54F was rightly claimed by the assessee for the assessment year 2011-12.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition of ?8,29,16,210/- towards long-term capital gain. The Tribunal concluded that the transfer took place on 23.02.2011, based on the possession and payment of consideration, and not on the date of registration. Consequently, the exemption under Section 54F was validly claimed by the assessee for the assessment year 2011-12. The Tribunal relied on the judgments of the Jurisdictional High Court, emphasizing the date of transfer and possession over the registration date for capital gains tax purposes.