Maimoon Fashion Accessories Pvt. Ltd. Vs ITO (ITAT Mumbai)
Background: Maimoon Fashion Accessories Pvt. Ltd. (“the assessee”) appealed before the ITAT Mumbai against the order of the CIT(A) dated 19.11.2024 for AY 2016-17, which had upheld the addition of ₹41,79,538 as long-term capital gains on sale of a plot of land. The appeal was delayed by 205 days, for which the assessee sought condonation, explaining that the CIT(A)’s order was received only on 23.06.2025, when the subsequent penalty order under section 271(1)(c) was served. ITAT accepted the explanation and condoned the delay.
Facts: The assessee, engaged in manufacturing fashion accessories, entered into an oral agreement to sell a plot in Village Kune, Pune, to Smt. Joheratussharaf Saifuddin in October 2009 for ₹31 lakh. The full consideration was paid in the same financial year, and possession of the plot was handed over to the purchaser. However, the formal sale deed was executed only on 11.03.2016. For AY 2010-11, the assessee had declared capital gains of ₹11,04,636 arising from this sale.
During scrutiny of AY 2016-17, the AO contended that the transfer of ownership occurred only upon execution of the registered deed in March 2016, making AY 2016-17 the relevant assessment year. On this basis, the AO computed long-term capital gains under section 50C, considering the stamp duty value of ₹64,77,000 as the fair market value, resulting in addition of ₹41,79,538. The CIT(A) upheld this view, rejecting the assessee’s plea that the transfer had occurred earlier.
Legal Issue:
The central issue before the ITAT was to determine the correct previous year in which the transfer of the capital asset occurred, specifically whether the sale should be taxed in AY 2010-11 (financial year 2009-10) when possession and consideration were completed, or in AY 2016-17 when the formal sale deed was executed.
Relevant Law:
Section 2(47) of the Income Tax Act defines “transfer” in relation to a capital asset. Key clauses relevant to the case:
