Poonam Dhananjay Sandu Vs ITO (ITAT Mumbai)
The appeal before the Income Tax Appellate Tribunal Mumbai concerned the denial of deduction under Section 54 of the Income Tax Act, 1961, arising from the sale of a residential property and purchase of another residential house. The assessee had sold a residential flat through an Agreement for Sale dated 01.12.2016 for ₹9 crore, with the sale deed registered on 30.03.2017, and had purchased another residential property on 04.12.2015. The Assessing Officer denied the Section 54 deduction by treating the date of registration as the date of transfer and added ₹9 crore as long-term capital gains. The CIT(A) upheld the assessment.
Before the Tribunal, the assessee contended that the Agreement for Sale constituted the date of transfer under Section 2(47) of the Act, as it created enforceable rights in favour of the purchaser, was supported by substantial advance consideration, and enabled specific performance. It was also shown that part consideration of ₹2.47 crore had been received prior to registration, evidencing part-performance. The assessee relied on judicial precedents, including the Supreme Court decision in Sanjeev Lal v. CIT, to argue that transfer occurs when rights in personam are created through an agreement to sell. Alternatively, it was argued that even if the date of transfer were taken as the registration date, the date of possession of the new property would satisfy Section 54 conditions.
