Mehboob Jabir Patel Vs ITO (ITAT Ahmedabad)
The assessee appealed against the order of the Commissioner of Income-tax (Appeals) for AY 2014-15, challenging the addition of ₹52,38,111 as Short-Term Capital Gain (STCG). The assessee contended that the property transfer was completed only in AY 2016-17 and that the capital gain had already been offered to tax in that year. The assessee also sought consequential relief to avoid double taxation.
The assessee, engaged in the business of processing and sale of quartz sand, had filed a return declaring total income of ₹6,22,860. During scrutiny assessment, the Assessing Officer noted that the assessee had executed and registered sale deeds on 12.04.2013 in respect of land bearing R.S. Nos. 208/1 and 208/2 situated at Halol. The aggregate sale consideration mentioned in the registered sale deeds was ₹1,66,09,000. Since the sale deeds were registered during Financial Year 2013-14, relevant to AY 2014-15, the Assessing Officer held that a transfer within the meaning of Section 2(47) had taken place during that year and computed STCG of ₹52,38,111.
Before the Assessing Officer, the assessee argued that substantial sale consideration remained unpaid, certain cheques issued by the purchasers were dishonoured or not realized, and possession continued with the assessee until receipt of the final payment in April 2015. It was submitted that a legal notice dated 08.11.2013 had been issued to the purchasers and that possession was handed over only after complete realization of consideration in Financial Year 2015-16. Accordingly, the assessee claimed that the capital gain was taxable in AY 2016-17, where it had already been offered to tax.
