INCOME TAX ACT, 1961

Section 56(2)

Income from other sources - Applicability of section 56(2)(vii)(b) - Transfer of immovable property merely by agreement for sale/possession of property handed over to assessee -

The assessee contended that it had purchased/acquired/received a immovable property by agreement to sale dated 10-9-2014 and date of letter of allotment was 10-9-2012. It was thus stated that pre-amended provisions of section 56(2)(vii)(b) would be considered and as such above provisions would not be applied as the immovable property was not purchased without consideration. The revenue authorities held otherwise and taxed the same under section 56(2)(vii)(b). Held: In the instant case, there was no dispute that the 'agreement for sale' was dated 10-9-2014 and the 'letter of allotment' dated 27-4-2012 cannot be considered as the date of execution of agreement by any stetch of imagination. It is well-settled that immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession on the date of registration of document, which is relevant. The contention of assessee that the provisions of section 56(2)(vii)(b) was introduced by the Finance Act, 2013 with effect from 1-4-2014 and hence, the amended provision was not applicable to the case of the assessee, since the appellant was entitled to the immovable property during the assessment year 2013-14. In the instant case, the 'agreement for sale' is dated 10-9-2014. Section 56(2)(viii)(b)(ii) clearly stipulates that where any immovable property is received for a consideration Rs. 50,000, the stamp duty value of such property as exceeds such consideration shall be chargeable to tax in the hands of the individual or HUF as income from other sources. It is applicable from assessment year 2014-15. Thus, it was crystal clear that the aforesaid section is applicable to the instant case.

Followed:Alapati Venkataramiah v. CIT (1965) 57 ITR 185 (SC) : 1965 TaxPub(DT) 294 (SC) and CIT v. Podar Cements (P.) Ltd. (1997) 226 ITR 625 (SC) : 1997 TaxPub(DT) 1265 (SC). Distinguished:Pr.CIT v. Vembu Vaidyanathan (2019) 413 ITR 248 (Bom) : 2019 TaxPub(DT0 882 (Bom-HC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2015-16

INCOME TAX ACT, 1961

Section 254(2)

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