Rahul G. Patel Vs DCIT (ITAT Ahmedabad)
In the case of Rahul G. Patel vs. DCIT (ITAT Ahmedabad), the assessee appealed against the denial of exemption under Section 54EC of the Income Tax Act by the Assessing Officer (AO). The dispute arose when Patel invested in NHAI bonds using the advance payment received from the sale of a capital asset, before the sale deed was officially registered. The AO denied the exemption, arguing that the investment was made before the transfer date, thus disqualifying it under Section 54EC. However, Patel cited CBDT Circular No. 359, dated May 10, 1983, which clarified that investments made from earnest money or advance payments before the transfer date still qualify for exemption. The ITAT considered this circular and ruled in favor of Patel, allowing the exemption under Section 54EC. The tribunal directed the AO to grant the exemption, emphasizing that such investments are aligned with the purpose and spirit of the section. Also Read: Real Income: Section 50C & Important Tax Decisions by various Courts
If sale agreement not registered, the transfer under Section 2(47) was incomplete until sale deed’s execution
ITAT Ahmedabad reviewed the issue concerning the computation of capital gains on the sale of a property. The central issue revolved around the valuation of the property for capital gains purposes under Section 50C of the Income Tax Act. The assessee argued that the sale agreement was executed in 2010 and should be valued according to the stamp duty rate at that time, while the actual sale deed was executed in 2012. The Assessing Officer, however, applied the 2012 stamp duty value, leading to a higher capital gains assessment. The ITAT acknowledged the legal provisions that allow for the consideration of the earlier date for valuation, introduced in the Finance Act of 2016, but ruled that since the sale agreement was not registered, the transfer under Section 2(47) was incomplete until the sale deed’s execution in 2012. As a result, the ITAT upheld the use of the 2012 valuation for computing the capital gains, aligning with the provisions under the Indian Registration Act and the Income Tax Act.
