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| The Tax Publishers2020 TaxPub(DT) 3923 (Hyd-Trib) INCOME TAX ACT, 1961
Section 147
Where assessee had received entire consideration and possession of the property was also handed over in the assessment year 2004-05, he would be exigible towards capital gain tax only for the assessment year 2004-05 and not for the assessment year 2007-08 when proper sale deed was executed and registered. Just because capital gain accrued to assessee has escaped tax in assessment year 2004-05, the same cannot be brought to tax subsequently in assessment year 2007-08, therefore, AO was directed to delete the addition made.
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Reassessment - Notice after period of four years - Capital gain accrued in the assessment year 2004-05 - Possibility of taxing same in the assessment year 2007-08
Assessee was an individual engaged in Bakery business. Property was sold by executing an unregistered sale deed but duly notarised, dated 23-1-2004 and assessee received the entire sale consideration of Rs. 5 lakhs. And the possession of the property was also handed over to the vendee on the very same day. In order to perfect the title of the property the purchaser had requested the assessee to execute proper sale deed and accordingly the same was registered on 20-11-2006. It was pleaded before the AO that since the actual transfer of the property had taken place during the assessment year 2004-05 capital gain tax cannot be assessed in the hands of the assessee for the relevant assessment year 2007-08 and if at all it is required to be assessed in the relevant assessment year then the sale value of the property should be taken as Rs. 5 lakhs being the actual sale consideration received by the assessee during the assessment year 2004-05. However, the AO opined that since the assessee had not declared capital gain from the sale of the property for the assessment year 2004-05 the same has to be brought to tax for the relevant assessment year 2007-08. Held: Section 2(47)(v) of the Act clearly stipulates that transfer of the immovable property comes into effect when possession of the property is handed over coupled with part performance of the contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. In the instant case, it is apparent that on 27-12-2003 the assessee had received the part consideration of Rs. 5 lakhs and the possession of the property was also handed over as evident from the bank statement of the assessee and the unregistered notarized sale deed. Hence, the assessee would be exigible towards capital gain tax only for the assessment year 2004-05 and not for the relevant assessment year 2007-08. Just because capital gain accrued to the assessee has escaped tax in the assessment year 2004-05, the same cannot be brought to tax subsequently in the assessment year 2007-08 as per the provisions of the Act.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2007-08
IN THE ITAT, HYDERABAD BENCH
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