2023 (4) TMI 946 - AT - Income Tax

Transfer of capital asset being land - during the year under consideration or in the preceding year - Date of transfer of asset - event of transfer of title - reliance on registered agreement to transfer the impugned property - HELD THAT - As relying on BALBIR SINGH MAINI, CS ATWAL 2017 (10) TMI 323 - SUPREME COURT Transaction of transfer of the immovable property is completed when the title deed is registered as per registration Act, 1908, after amendment in 2001. There is no dispute in the case in hand that the sale deed transferring the title of the land in question was registered on 22.02.2010 and therefore, any draft title deed written on a prior date will not change the event of transfer of title vide registered deed. Hence, we do not find any error or illegality in the impugned order of the Ld. CIT(A). Adopting the full value of consideration u/s 50C - assessee has objected the adopting of full value consideration u/s 50C of the Income Tax Act being the Stamp Duty Valuation taken at the time of registration of sale deed - As per the first and second proviso to section 50C(1) the Stamp Duty valuation on the date of agreement if the amount of consideration or part thereto has been received by way of account payee cheques or other electronics mode may be adopted as full value consideration - once the assessee has disputed the adoption of deemed full value of consideration the the AO is bound to refer the determination of the fair market value of the capital asset to the DVO. The issue of determination of fair market value of the land in question is set aside to the record of the AO for fresh adjudication after consideration the objections of the assessee as well as the determination of fair market value by referring to the DVO. Legal expenses claimed as cost of purchase - AO recorded the fact that there was some legal dispute with the respect to the purchase of property and purchase deed was registered on the order of the Court. Accordingly, the AO estimated the expenses at Rs.50,000/- - HELD THAT - It is manifest from the record that except making a claim of Rs.3 lac as legal expenses regarding the purchase of the property the assessee has not furnished any details of such expenses nor any evidence in support of the said claim. Accordingly, in the facts and circumstances of the case, we find that estimation of Rs.50,000/- made by the AO is reasonable and proper.

Summary

Issues Involved:
1. Transfer of capital asset during the year.
2. Admission of additional evidences.
3. Deemed sale consideration under Section 50C.
4. Legal expenses incurred on the purchase of property.

Summary:

Issue 1: Transfer of Capital Asset During the Year
The assessee contended that no capital gains arose during the year since the registered agreement to transfer the property was executed and possession was handed over in the earlier year. The AO and CIT(A) disagreed, noting the sale deed was registered on 22.02.2010, thus assessing the capital gain for the year under consideration. The Tribunal upheld this view, referencing the Supreme Court's ruling in CIT vs. Balbir Singh Maini, which clarified that a transfer of immovable property is completed when the title deed is registered as per the Registration Act, 1908, post the 2001 amendment.

Issue 2: Not Admitting Additional Evidences
The assessee argued that the CIT(A) erred in not admitting additional evidences. The Tribunal found that since the date of registration was not in dispute, additional evidence would not change the outcome. Therefore, the Tribunal upheld the CIT(A)'s decision.

Issue 3: Deemed Sale Consideration
The assessee objected to the stamp duty valuation at the time of registration being adopted as the full value of consideration under Section 50C. The Tribunal noted that the AO and CIT(A) failed to refer the determination of fair market value to the DVO despite the assessee's objection. The Tribunal set aside this issue to the AO for fresh adjudication, considering the objections and determining the fair market value by referring to the DVO.

Issue 4: Legal Expenses
The assessee claimed Rs. 3 lakh as legal expenses, but failed to provide details or evidence. The AO estimated the expenses at Rs. 50,000 due to the lack of supporting evidence. The Tribunal found this estimation reasonable and upheld the AO's decision.

Conclusion:
The appeal was partly allowed for statistical purposes, with the issue of fair market value determination referred back to the AO for fresh adjudication. The Tribunal upheld the decisions on the transfer of capital assets, admission of additional evidence, and legal expenses.