Vinay Chauhan Vs ITO (ITAT Delhi)
Joining a Subsequent Transfer Deed Does Not Automatically Make the Original Allottee Liable for Capital Gains Again
Delhi ITAT Deletes ₹42.03 Lakh Addition Where Earlier Transfer and Capital Gains Disclosure Were Established
In Vinay Chauhan v. ITO, ITA No.7235/Del/2026, AY 2012–13, the Delhi Bench of the Income Tax Appellate Tribunal deleted a long-term capital gains addition of ₹42,02,567 arising from a subsequent transfer of rights in a Noida plot.
The assessee demonstrated that he had already transferred his rights to two purchasers under an earlier registered agreement and had disclosed capital gains on that transaction. Those purchasers subsequently assigned their rights to another buyer. The Tribunal held that capital gains could not again be assessed in the original allottee’s hands on the facts established before it.
The order was pronounced on 15 September 2026, while its concluding administrative date is 10 November 2026.
Background: Earlier Assignment Followed by a Subsequent Transfer
The assessee held rights in Plot No.257, Block G, Sector 63, Noida, under a lease dated 29 December 2006, executed in his favour by the Noida authorities.
He subsequently entered into a registered agreement to sell dated 10 April 2008 with Kiran Sahu and Ravinder Prakash for ₹12,37,500. His case was that he had surrendered all his rights and title in the property through that transaction.
Thereafter, a notarised tripartite agreement dated 28 June 2011 was executed involving the assessee, the intermediate purchasers and the ultimate buyer, Rajpal Sharma. Under this arrangement, the intermediate purchasers agreed to assign their rights to Sharma for ₹59 lakh.
A transfer deed was registered on the same date.
Revenue Assessed the Subsequent Sale in the Original Allottee’s Hands
The Assessing Officer treated the assessee as liable to capital gains in respect of the ₹59 lakh subsequent transfer consideration during the previous year relevant to AY 2012–13.
An addition of ₹42,02,567 was made in reassessment proceedings under Section 143(3) read with Section 147. The first appellate authority sustained the addition.
The dispute before the Tribunal therefore concerned whether the subsequent transaction could be taxed in the assessee’s hands despite his earlier assignment of rights.
The Tribunal’s order does not reproduce the detailed calculation underlying the ₹42.03 lakh addition. Its adjudication focuses on the sequence of transfers and the evidence concerning the earlier capital gains disclosure.
Assessee Relied on Earlier Transfer and Assessment of Intermediate Purchasers
The assessee advanced two connected arguments.
First, he contended that no right or title remained with him after the registered agreement dated 10 April 2008. Consequently, the subsequent assignment by the intermediate purchasers could not be treated as his own transfer for ₹59 lakh.
Second, he submitted that Kiran Sahu and Ravinder Prakash had already been assessed in respect of the subsequent capital gains, in equal shares.
The assessee supported his case through a 91-page paper book, which included the original lease and documents relating to the transactions.
His position was that participation in the later documentation did not justify attributing the intermediate purchasers’ transaction to him.
Tribunal Examined Whether Earlier Capital Gains Had Been Disclosed
The Tribunal sought to verify a crucial factual issue: had the assessee actually disclosed capital gains arising from the earlier registered agreement?
In response, counsel furnished the assessee’s income-tax return and capital gains computation.
These documents showed a sale consideration of ₹12,37,500, against an acquisition cost of ₹10 lakh, resulting in disclosed capital gains of ₹2,37,500.
The Tribunal specifically recorded that this evidence remained unrebutted by the Revenue.
The earlier transfer was therefore supported by both transaction documents and the corresponding tax disclosure. This was central to the Tribunal’s conclusion that the disputed subsequent assessment could not survive.
Addition Deleted and Appeal Allowed
After examining the material, the Tribunal held that assessing capital gains once again in the assessee’s hands concerning the same capital asset was unsustainable in the circumstances.
It directed deletion of the ₹42,02,567 addition and allowed the appeal.
The decision is based on the established transaction chain and unrebutted documentary evidence. It does not hold that successive transfers of the same property cannot generate separate taxable capital gains in the hands of the respective transferors.
Author’s Comments
The ruling highlights the importance of identifying whose rights were transferred and whose consideration arose from the transaction. An original allottee’s participation in subsequent documentation must be examined alongside the earlier assignment and the rights retained, if any.
However, the decision should not be read as holding that every registered agreement to sell automatically completes a transfer for income-tax purposes. The applicable legal requirements and transaction-specific facts remain relevant.
There is also an apparent chronological inconsistency: the order refers to AY 2010–11 while discussing disclosure arising from the agreement dated 10 April 2008, which ordinarily falls in FY 2008–09, relevant to AY 2009–10. It also reproduces the earlier gain as long-term without separately examining its classification. These incidental references should be verified before reliance. The decisive finding remains that the earlier transfer and capital gains disclosure were established through evidence that the Revenue did not rebut.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (Appeals)/Addl. JCIT(A) (for short, “CIT(A)”), Mumbai’s DIN & Order No. ITBA/APL/S/250/2025-26/1087554285(1) dated 18-Mar-2026, involving proceedings u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961; hereinafter referred to as, “the Act”.
Heard both the parties. Case file perused.
2. Now comes the sole substantive issue between the parties. The assessee/appellant herein pleads that both the learned lower authorities’ respective assessment and lower appellate findings have erred in law and on facts in assessing him for having derived long term capital gains “LTGC” amounting to Rs. 42,02,567/- which forms the sole substantive matter of the tribunal’s apt adjudication herein.
3. Both the parties vehemently retreat their respective stands against and in support of the impugned addition. Mr. Rastogi invites the tribunal’s attention to the assessee’s detailed paperbook running into 91 pages contain the assessee’s lease dated 29.12.2006 executed in his favour by the Noida authorities regarding allotment of plot number 257, block – G, sector 63, Noida. He thereafter appears to have executed an agreement to sell in favour of the twin parties ie., Kiran Sahu and Ravinder Prakash for a sum of Rs. 12,37, 500/- surrendering all his rights and title therein in financial year 2008-09. There is further no quarrel between the parties that the same followed a notarized tripartite agreement dated 28.06.2011 executed between the aforesaid twin vendees as well as the assessee with one Shri Rajpal Sharma wherein the former agreed to assign all their rights in favour of Shri Sharma for a sum of Rs. 59 lakhs which ultimately got registered as a transfer deed on 28.06.2011 i.e., on the very date. Both the learned lower authorities have admittedly held the assessee as liable to be assessed for his long-term capital gains qua this sale consideration of Rs. 59 lakhs in the relevant previous year.
4. It is in this factual backdrop that the assessee’ sole substantive argument before the tribunal is that the impugned long-term capital gains are not sustainable in law and on facts not only in light of the fact that Shri Ravindra Prakash and Srimathi Kiran Sahu have already been assessed for the same to the extent of half share each but also he had no right or title left anymore in the relevant capital asset in light of his registered agreement to sell executed on 10.04.2008 in their favour. It is in this factual backdrop that the tribunal sought to ascertain the clinching factual position as to whether the assessee had declared his long-term capital gains arising from his registered agreement to sell dated 10.04.2008(supra) in assessment year 2010-11 or not. Mr. Rastogi has filed his not only his income tax return but also computation of his capital gains in light of the sale consideration received on 10.04.2008 (supra) which has gone unrebutted from the Revenue side. It emerges from a perusal thereof that assessee had declared total capital gains of Rs. 2,37, 500/- qua sale consideration of Rs. 12,37,500/- reduced by the cost of acquisition of Rs. 10 lakhs; respectively; and, therefore, it is hereby concluded that assessment of the capital gains once again qua the very capital asset forming subject matter of addition in the instant appeal; is not sustainable in law. The same is directed to be deleted in very terms therefore.
5. This assessee’s appeal is allowed.
Order pronounced in the open court on 15-Sep-2026.
