Case Law Details
M/s Rajasthan Agencies Pvt. Ltd. Vs ITO (ITAT Jaipur)
Holding period for purpose of transfer u/s 2(47) was to be considered from the time of agreement to sale instead of execution of sale deed
Conclusion: Assessee was entitled to claim long term capital gain arising from the sale of the land as transfer as per provisions of section 2(47) was to be considered at the time of agreement dated 11.04.2007 instead of execution of sale deed 13.04.2010 because agreement to sale dated 11.04.2007, conversion of land use by JDA on 03.02.2010 and 05.02.2010 and execution sale deed dated 13.04.2010 were interlinked and inseparable chain of events necessary for transaction of transfer.
Held: During scrutiny assessment, AO noted that assessee-company had purchased agricultural land vide sale deed dated 13.04.2010. Assessee claimed long term capital gain arising from the sale of the land. AO rejected the claim of the assessee and held that the land was purchased by the assessee vide sale deed date 13.04.2010 and therefore computed the short term capital gain as per the provisions of Section 50C. Asessee filed the appeal before CIT(A) and CIT(A) held that the land sold by assessee was an agricultural land and prior to its conversion to non agriculture use. The agricultural land belonging to Schedule caste could not be transferred as barred by Section 42 of Rajasthan Tenancy Act 1955 which prohibits the sale, gift or bequeath by a member of Scheduled caste in favour of any person who was not a member of schedule caste. Accordingly, CIT(A) had confirmed the treatment of capital gain as short term capital gain. On appeal before Tribunal. It was held transfer of immovable property would be considered as a combined act of agreement to sale and sale deed as a single transaction of transfer with effect from the date on which such transaction was intended and conceived by the parties to the transaction. Hence, agreement to sale dated 11.04.2007, conversion of land use by JDA on 03.02.2010 and 05.02.2010 and execution sale deed dated 13.04.2010 were interlinked and inseparable chain of events necessary for transaction of transfer. The possession was handed over and consideration was received prior to the date of sale deed. The parties were very much aware about the need of conversion of land use and accordingly applied to JDA for conversion which was granted in the month of February, 2010 and thereafter the sale deed was executed. Hence, the transfer as per provisions of section 2(47) of the Act was to be considered at the time of agreement dated 11.04.2007. The intention of the parties could be gathered from the terms of the agreement, subsequent performance by the parties in terms of agreement getting the land converted to non agricultural use and execution on sale which had reaffirmed the status of the parties to the agreement and the transfer under the agreement instead of altering the same. When agreement to sale in respect of immoveable property is executed, a right in personae is created in favour of the vendee and thereby the vendor is restrain from selling the property to someone else because the vendee gets the legitimate right to enforce specific performance of the agreement. Thus, the transfer of the land in question would be regarded as on the date of agreement to sale dated 11.04.2007.
FULL TEXT OF THE ITAT JUDGEMENT
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