|The Tax Publishers2021 TaxPub(DT) 0815 (Bang-Trib) : (2021) 188 ITD 0001
INCOME TAX ACT, 1961
Section 45 Section 50C
Where sale deed was executed by assessee selling two shops at Cavalry Road on 10-8-2009, as per section 47 of the Indian Registration Act, 1908, the sale by the assessee to the transferee would operate from 10-8-2009 and as transfer by way of sale of the property took place on 10-8-2009 the capital gains in question therefore, cannot be brought to tax in assessment year 2011-12 hence, the addition made by AO was, thus, directed to be deleted.
Capital gains - Year of assessability - Applicability of provision of section 50C -
The assessee had not disclosed the capital gain on sale of the property, the AO initiated proceedings for reassessment to assess capital gain that escaped assessment. The order by the District Registrar was passed on 31-3-2010. The assessee paid the stamp duty as demanded by the registering authorities on 26-6-2010 and the document was registered on 26-6-2010. Since the sale deed was executed on 10-8-2009 which fell within the financial year 2009-10 relevant to the assessment year 2010-11, the capital gain in question cannot be brought to tax in assessment year 2011-12. AO, however, wanted to tax the difference between the value adopted by the registering authorities at Rs. 57,80,325 and the sale consideration between the parties at a sum of Rs. 32,23,000 viz., a sum of Rs. 25,53,315 in assessment year 2011-12 on the ground that since the document was ultimately registered on 26-6-2010 assessment year 2011-12 will be the year in which the provisions of section 50C would be attracted and accordingly AO brought to tax a sum of Rs. 25,53,315. It was not possible to re-open the assessment for assessment year 2010-11 now, as the-same was already barred by limitation of time for re-opening. For the above reasons, the AO brought to tax additional capital gain of Rs. 25,53,315, which accrued to the assessee, by applying provision of section 50C, for the assessment year 2011-12, being the year of accrual. The CIT(A) confirmed order of AO. Held: The sale deed in the present case was executed by assessee selling two shops at Cavlry Road on 10-8-2009. As per section 47 of the Indian Registration Act, 1908, the sale by the assessee to the transferee would operate from 10-8-2009. Therefore, transfer by way of sale of the property took place on 10-8-2009. Contention of the assessee was that prior to the amendment of section 50C with effect from 1-10-2009, it is only cases where the valuation was completed in the relevant assessment year that provisions of section 50C can be applied. In the present case, no such devise to evade tax had been pleaded by the revenue nor a plea had been taken by the Assessee that sale having taken place earlier to the execution or registration of sale, provisions of section 50C were not applicable. As rightly contended by the assessee, Calcutta High Court's decision was a decision rendered on the scope of amendment to section 50C with effect from 1-10-2009. The capital gain in question cannot be brought to tax in assessment year 2011-12. The revenue authorities erred in bringing to tax the capital gain in assessment year 2011-12. The addition made by the AO was, therefore, directed to be deleted.
Relied:B.C. Srinivasa Setty's case (1981) 128 ITR 294 (SC) : 1981 TaxPub(DT) 902 (SC) at p. 299. Distinguished:Bagri Impex (P) Ltd., v. ACIT (2013) 31 taxmann.com 39 (Calcutta) : 2013 TaxPub(DT) 1084 (Cal-HC) and Sri J. Appa Rao v. ACIT ITA No. 518/Hyd/2010 Order, dated 29-11-2013.
REFERRED : Gurbax Singh v. Kartar Singh & Ors. (2002) 254 ITR 112 (SC) : 2002 TaxPub(DT) 32 (SC).
FAVOUR : In assessee's favour.
A.Y. : 2011-12
IN THE ITAT, BANGALORE BENCH
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