INCOME TAX ACT, 1961

Section 50C

Capital gains - Full value of consideration - Assessee claimed to have sold property in the year 1993 but registry take place in 2004 -

Assessee was allotted a site. This was registered by executing a lease come sale agreement. Possession of the schedule property was delivered to assessee. Vide memorandum of agreement of transfer and assignment assessee entered into agreement to transfer and assign the said property to S represented by its Director for consideration of Rs. 7,25,000. Subsequently the said property was sold to B along with the building constructed thereon. AO observed that, though assessee received entire sale consideration in 1993, he was unable to prove that he has not received any further sale consideration as on that date registration being 4-10-2004, when the market value of property was Rs. 61,97,000, and that B being the power of attorney holder has not received any consideration on his behalf from the purchaser of the property B. AO was of the opinion, that assessee has shown sale proceeds of sale of property, which is much lesser than, guidance value, and accordingly as per provisions of section 50C, long term capital gains was reworked at Rs. 49,36,647 based on the guidance value in the year of sale being 4-10-2004. Assessee submitted that, transfer of property actually took place in the year 1993, when entire sale consideration was received by assessee. And in 2004, only registration of the deed took place, to complete the contractual obligation. It was submitted that, computation of capital gains in the year 2004 by taking guidance value of the property was therefore incorrect. Revenue D submitted that, capital gains has not been offered to tax by assessee in the year 1993, which alleged to be the year of sale. Held: In the present case, at the time of registration in the year 2004, assessee was represented by the original purchase through general power of attorney executed by assessee in 1993. It is also noted that, at the time of registering the sale deed the said property stands transferred in the name of another person who is submitted to be the brother of Director in the company being original purchaser. The recitals in the registered sale agreement placed at mentions details of the sale consideration having received by assessee under Memorandum of Agreement of Transfer and Assignment entered into on 17-3-1993 between assessee and the company. Provisions of section 50 C has been inserted in the form of clarification to the section and accordingly is retrospectively applicable. Provisions of section 50C should be looked into from the date of Memorandum of Agreement of Transfer and Assignment entered into by assessee with S through its Director. Nothing has been placed on record to show why the subsequent sale has been registered in the name of an individual who is alleged to be the brother of the Director of M/s Shantha Exports Pvt Ltd. It also has been recorded by CIT(A) that assessee did not disclose the capital gains on such amount received in 1993. Nothing has been brought to record how the loss if any is allowable during the year under consideration. The issue set aside back to the file of AO to consider it de novo in the light of various evidences filed by assessee.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2005-06

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