Case Law Details
DCIT Vs Bharatkumar Babubhai Patel (ITAT Ahmedabad)
ITAT Ahmedabad held that amount received as confirming party on sale of right is considered as receipts on sale of capital asset and accordingly, income is held as income from long term capital gain.
Facts- The assessee declared total income of Rs.80,50,300/- which is inclusive of Long Term Capital Gain on sale of immovable property through Banakhat rights as a Confirming Party of Rs.69,37,813 and also claimed exemption u/s. 54B of Rs. 1,79,59,304/-.
AO held that the Banakhat (Agreement of Sale) was entered by the assessee on 29.04.2005 for a consideration of Rs.15.50 lakhs and an advance of Rs. 2 lakhs only paid, balance was not by the assessee and the Banakhat was also unregistered, but only a notarized agreement. As per the section 17 of the Registration Act, the assessee does not get right over the property by merely entering into an agreement (Banakhat). Therefore the sale consideration received by the assessee in 2011 through registered Sale Deed as Confirming Party cannot be treated as a transfer and not a capital asset in the hands of the assessee. Therefore the entire transaction “income from other sources” and taxed accordingly and also denied deduction u/s. 54B.
CIT(A) allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
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