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2022 (12) TMI 75 - AT - Income TaxCapital gain - Addition u/s 50C - transfer u/s. 2(47) - Relevancy of date of sale deed - nature of land was agricultural - crucial date for determining transfer for the purpose of section 2(47) of the Act when the date of agreement for sale of property is different from the date of registration of sale deed - agreement to sale creates some rights in favour of the transferee and it is a transfer within section 2(47) - As submitted plot has treated as industrial plot only for the purpose of sale deed as purchaser has purchased an agricultural land for industrial purpose - HELD THAT - This bench takes note of clause (v) of section 2(47) of the Act which provides that if a transfer‟ involves handing over of possession of any immovable property in part performance of a contract of the nature referred to in section 53A of the TP Act 82 that shall be included in the definition of transfer of capital asset. In the case in hand although fact of registration of agreement to sale is not disputed however, the possession was not handed over. Thus, strictly speaking provisions of section 53A of the TP Act are not applicable. There was no deemed transfer. In case in hand the matter has to be considered for a charging section 45 read with Section 2(14) of the Act and the relevant is Section 47 of the Registration Act 1908, whereby it is provided that registered document shall operate from the date of its execution. It is the date of the execution of the registered deed and on that date alone, the title to property passes. When section 2(47) of the Act specifically deals with sale‟ under clause (i) to section 2(47) and of the agreement to sale‟ of property under clause (v) then the assessee cannot plead of being covered under clause (ii) of section 2(47) dealing with the extinguishment of any right. First proviso of section 50C(1) provides that where the date of agreement fixing the value of consideration for transfer of the assets and the date of registration of such transfer of asset not the same, then the stamp value may be taken as the value adopted or assessed or assessable by any authority of a state Govt. for the purpose of payment of stamp duty in respect of such transfer on the date of agreement. Provision to section 50C(1) provides that the provision of first proviso to section 50C(1) shall apply only in case where the amount of consideration or a part thereof has been received by way of an account payee cheque or account payee bank draft of use of electronic clearing system through a bank account on or before the date of the agreement for transfer of the asset. This makes it crystal clear that the Act also intends to take the date of sale deed to be relevant for purpose of ascertaining the nature of assets and only as exception u/s 50C(1), the agreement to sell is relevant. Thus, for the purpose of determining the nature of capital assets and consequent calculation of capital gains, the relevant date would be when the right, title or interest got extinguished in vendor and in substance same vested in the vendee. As the case is covered by Section 2(47)(i) of the Act, the relevant date is execution of sale deed and as admittedly on date of execution of sale deed, the land was not of the nature of agricultural land and stood converted as industrial plot, benefit of Section 2(14) of the Act could not have been extended to the assessee. So there is no error in the findings of Ld. Tax authorities below. Appeal dismissed.
Issues Involved:
1. Assessment of Long-Term Capital Gain (LTCG) on the sale of land. 2. Determination of the nature of the land (agricultural vs. industrial) at the time of sale. 3. Relevance of the date of the agreement to sell vs. the date of the sale deed for tax purposes. 4. Calculation errors in the conversion of circle rates from Bigha to Hectare. 5. Application of Section 50C of the Income Tax Act, 1961. Issue-Wise Detailed Analysis: 1. Assessment of Long-Term Capital Gain (LTCG) on the Sale of Land: The appellant sold immovable property for Rs. 1,68,55,000/-. The Assessing Officer (AO) assessed the LTCG at Rs. 1,09,69,234/- based on the sale of an industrial plot. The appellant contested this, claiming the land was agricultural at the time of the agreement to sell and should not attract capital gains tax as per Section 2(14) of the Income Tax Act. 2. Determination of the Nature of the Land (Agricultural vs. Industrial) at the Time of Sale: The appellant argued that the land was agricultural at the time of the agreement to sell (02.07.2008) and only changed to industrial land on 10.07.2008, before the sale deed was executed on 18.09.2008. The CIT(A) and the Tribunal held that the nature of the land at the time of the sale deed is crucial. Since the land was industrial at the time of the sale deed, it qualified as a capital asset under Section 2(14) of the Act, making LTCG applicable. 3. Relevance of the Date of the Agreement to Sell vs. the Date of the Sale Deed for Tax Purposes: The appellant cited the Supreme Court's decision in Sh. Sanjeev Lal Etc. vs. CIT, arguing that the agreement to sell creates rights in favor of the transferee, making it a transfer under Section 2(47) of the Act. However, the Tribunal noted that the possession was not handed over at the time of the agreement to sell, making Section 53A of the Transfer of Property Act inapplicable. The Tribunal relied on the Bombay High Court's decision in Pr. CIT Vs. Talwalkars Fitness Club, which held that the relevant date for transfer is the date of the sale deed, not the agreement to sell. 4. Calculation Errors in the Conversion of Circle Rates from Bigha to Hectare: The appellant claimed a calculation error in converting circle rates from Bigha to Hectare, asserting that the correct conversion rate should be Rs. 27,66,798/- per Hectare instead of Rs. 92,72,000/- per Hectare. The Tribunal did not find merit in this argument, as the primary issue was the nature of the land at the time of the sale deed. 5. Application of Section 50C of the Income Tax Act, 1961: Section 50C stipulates that the stamp duty value on the date of the sale deed is considered for computing capital gains. The Tribunal noted that the first proviso to Section 50C allows using the stamp duty value on the date of the agreement if part of the consideration was received by cheque or bank draft on or before the agreement date. Since the land's use changed after the agreement but before the sale deed, the Tribunal upheld the AO's use of the sale deed date for valuation. Conclusion: The Tribunal concluded that the relevant date for determining the nature of the land and computing capital gains is the date of the sale deed. As the land was industrial at that time, LTCG was applicable. The appeal was dismissed, and the grounds were decided against the assessee. The order was pronounced on 30/11/2022.
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