2023 (10) TMI 1134 - AT - Income Tax

LTCG invoking the provisions of Section 50C - property transferred through Sale Deed - as argued land was transferred by the assessee to his daughter-in-law without any consideration whatsoever - Whether case of family arrangement not liable to capital gain? - as submitted that the gift given to relative is not considered as a transfer as per Section 47(iii) and said transfer is not taxable in the hands of the daughter-in-law in view of the provisions of Section 56(2)(vii) - HELD THAT - We observe that this issue has been directly dealt with in the case of Smt. Balwant Kaur Mangat 2017 (8) TMI 1129 - ITAT DELHI as held transaction is clearly through sale deed and submission that it was a gift is not borne out from the deed of transfer - mode of receipt of consideration not mentioned. Since the consideration has not received through cheque, there is no question of it being reflected in the bank account of the daughter. The provisions of section 50C are clearly applicable in this case as it is a case of transfer of property through sale deed at a price lower than the value adopted for stamp duty valuation. Section 47(iii) comes to play only in cases of transfer through gift or will or an irrevocable trust. Transfer in the present case is not through these modes. The transaction has been held to be gift in the hands of the daughter, the transferee, and therefore it should be held so in the case of the assessee also is not tenable because in case of the daughter the consideration as per stamp duty valuation is not taxable as per proviso to section 56(2)(vii). However, the provisions of capital gains taxation and the income from other sources are independent of each other. The income in the hands of the daughter having been held to be exempt, does not absolve the assessee from the capital gain liability. Also decided in the case of Shri Jay Atulbhai Mody 2022 (12) TMI 1260 - ITAT RAJKOT held that property transferred to Mother through Sale Deed is a sale and not Gift, taxable as capital gain. Decided against assessee.

Summary

Issues Involved:
1. Addition of Rs. 30,53,684/- as Long-Term Capital Gain.
2. Applicability of Section 50C to family plots.
3. Consideration of sale deed as a gift.
4. Levy of interest under Section 234-B.

Summary:

1. Addition of Rs. 30,53,684/- as Long-Term Capital Gain:
The assessee contested the addition of Rs. 30,53,684/- as Long-Term Capital Gain, arguing that the plots were family plots used for building construction for family members and should not be liable to capital gain. The Assessing Officer (AO) observed that the sale deed was registered for Rs. 51,000/- but the Stamp Duty valuation was much higher. The AO issued a show cause notice and added Rs. 30,53,684/- to the income under Section 50C. The Ld. CIT(A) confirmed the addition, noting discrepancies in the assessee's claims and treating the gift deed as an afterthought.

2. Applicability of Section 50C to family plots:
The assessee argued that the plots were transferred as a gift to his daughter-in-law without consideration and thus should not attract capital gains tax under Section 50C. The AO and Ld. CIT(A) rejected this argument, stating that the gift deed was a self-serving document and the provisions of Section 50C were applicable as the sale deed showed consideration.

3. Consideration of sale deed as a gift:
The assessee claimed that the sale deed was executed for administrative and Stamp Duty purposes only and the intention was to gift the property. The Ld. CIT(A) and AO did not accept this, treating the transaction as a sale and not a gift. The ITAT referenced similar cases where sale deeds showing consideration were not accepted as gifts, even if no actual money was exchanged.

4. Levy of interest under Section 234-B:
The assessee contended that no interest under Section 234-B should be levied. This argument was not specifically addressed in detail in the judgment, as the primary focus was on the applicability of Section 50C and the nature of the transaction.

Conclusion:
The ITAT upheld the decision of the Ld. CIT(A), confirming the addition of Rs. 30,53,684/- as Long-Term Capital Gain under Section 50C. The appeal was dismissed, reinforcing that the transaction was treated as a sale and not a gift, and the provisions of Section 50C were correctly applied.