Surendra Singh Vs ITO (ITAT Jabalpur)
Capital Gains Taxable in Year of Registered Sale Because Unregistered Agreement Did Not Transfer Possession; CIT(A)’s Averaging Method Rejected Because Property Valuation Must Rest on Evidence; Capital Gain Not Shifted to Earlier Year Because Possession Was Delivered Only Through Registered Deed; Benefit of Proviso to Section 50C Available Because Part Consideration Was Received Through Banking Channels
The ITAT Jabalpur held that capital gains on sale of immovable property are taxable in the year of actual transfer through registered sale deeds and not merely on execution of an unregistered agreement to sell accompanied by part payment. The Tribunal found that possession was not handed over under the 2011 agreement and therefore Section 2(47)(v) read with Section 53A of the Transfer of Property Act was inapplicable. On valuation issues, the Tribunal rejected the CIT(A)’s approach of averaging the assessee’s and DVO’s valuations, holding that it lacked any rational basis, and remanded the matter to the Assessing Officer for fresh determination after considering the assessee’s objections to the DVO’s report. The Tribunal also upheld the assessee’s eligibility to claim the benefit of the proviso to Section 50C where part consideration had been received through banking channels before registration. Further, it held that while the cost of land purchased outside the prescribed period was ineligible under Section 54, construction costs incurred within the statutory period could still qualify for exemption.
