Ramesh Kumar Vs ACIT (ITAT Bangalore)
Mere Possession & Construction Activity Doesn’t Trigger Capital Gains u/s 2(47)(v)- Capital Gains Can’t Be Taxed Without Registered Sale Agreement: Relief to Landowner; No Registered Contract, No Transfer: ITAT Deletes ₹30 Crore Capital Gains Addition- POA Is Not Conveyance – ITAT Bangalore Applies Balbir Singh Maini & Favors Assessee
Background
Assessee, , faced addition of capital gains for AY 2012-13 on account of a transaction with Mr. Srinath Hebbar (Land Traders) regarding property in Kadri, Mangalore.
AO, relying on survey findings, POA, commencement certificate (07-09-2011), & possession by the builder, concluded that there was a “transfer” u/s 2(47)(v) r/w section 53A of the Transfer of Property Act (TPA) & computed capital gains on ₹30 crores.
Assessee contended that there was no registered agreement in FY 2011-12, only an unregistered POA (31-01-2012) & later an unregistered agreement of sale dated 29-08-2012. He offered capital gains in AYs 2013-14 & 2014-15 when actual sale deeds were executed.
Findings of AO & CIT(A)
AO: POA can be treated as a written agreement even though it doesn’t require a registration as per sec 53A of TPA & therefore Assessee had transferred the land for a valid consideration & amounts to transfer u/s. 2(47)(v). Commencement certificate has been obtained on 07/09/2011 from MUDA & also possession lies in the hands of the builder & the fact of the investing of money by the builder & constructing the building in the property of another, would shows that there was a transfer, attracting the provisions of Capital gains. Assessee made the builder as party in the Sale Deeds & the transaction indicates that the relationship is owner & builder when the possession was handed over & sale consideration received. No TDS has been deducted, therefore the builder could not be treated as an agent based on the POA.
