The Income Tax Appellate Tribunal (ITAT) allowed the assessee's ...

Transfer of possession rights over property: Complexities in calculating capital gains.

December 2, 2024

Case Laws     Income Tax     AT

The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal for statistical purposes in relation to the computation of capital gains arising from the transfer of "possession rights" over a property. The assessee contended that the "possession rights" constituted a "capital asset" and the transfer of such rights was liable to capital gains tax. However, the ITAT observed that the assessee failed to furnish crucial documents supporting the acquisition of such "possession rights" through a family settlement agreement in 2004. The ITAT noted discrepancies in the assessee's computation of the "cost of acquisition" of the "possession rights." The assessee had computed the cost based on the registered valuer's report valuing the property as of 01.04.1981, despite not having ownership rights over the property. The ITAT found it unclear why the assessee computed the cost of acquisition based on ownership rights when the assessee had acquired only "possession rights" through a family arrangement without incurring any cost. While acknowledging that the "right of possession" qualifies as a capital asset, the ITAT held that the assessee failed to substantiate the date of acquisition of such rights (the 2004 family arrangement) and the basis for computing the cost of acquisition at Rs. 43,73,026. Consequently, the ITAT allowed the assessee's appeal for statistical purpose.

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