Ganpatbhai Mayajibhai Baria Vs ITO (ITAT Ahmedabad)
ITAT Deletes Capital Gains Addition: Agreement to Sell Alone Does Not Amount to Transfer
The Ahmedabad ITAT deleted an addition of ₹56.98 lakh made as undisclosed capital gains, holding that the mere execution of a Banakhat (agreement to sell) does not result in a “transfer” under section 2(47) of the Income-tax Act unless the conditions of section 53A of the Transfer of Property Act are satisfied. The assessee, along with other co-owners, had entered into a notarized agreement to sell agricultural land in March 2018, but the registered sale deed and related settlement agreement were executed only on 21.10.2020.
The Assessing Officer treated the assessee’s alleged share of ₹56.98 lakh as undisclosed capital gains for AY 2018-19 on the basis of the Banakhat and an assumption that part of the consideration had been received in cash. The Tribunal, however, found that the agreement to sell neither transferred ownership nor established delivery of possession during the relevant year. It observed that the transaction ultimately culminated only in 2020 and therefore, if any capital gains arose, they could be considered only in the year in which the registered transfer actually took place.
The Tribunal further noted that the addition was based merely on a presumption of cash consideration without any corroborative evidence of actual receipt. It also took note of the fact that in the case of a similarly placed co-owner, the transaction had already been held not taxable in AY 2018-19. Accordingly, the addition was deleted in full. Having granted relief on merits, the Tribunal did not adjudicate the legal grounds challenging the validity of the reassessment proceedings.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
