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2020 (10) TMI 1115 - ITAT JABALPURTaxable event u/s. 56(2)(vii)(b) - transfer recognized u/s. 2(47)(vi) - year of assessment - property under reference stands ‘received’ by the assessee during fy 2012-13 OR fy 2013-14, i.e., the previous years relevant to AYs. 2013-14 and 2014-15 respectively - HELD THAT:- The de facto ownership, recognized in Podar Cement Pvt. Ltd. [1997 (5) TMI 2 - SUPREME COURT] is for the purpose of section 22 of the Act. The reason/s therefor is not far to seek, i.e., the object of the Act, being to tax the person who is in the effective control of the asset (property), and who has a better title thereto than anyone else, receiving income therefrom in his own right. No doubt, the word employed in section 56(2)(vii) is ‘receives’. The same, again, could only mean receipt in his own right, assuming effective control over and right on the usufruct of the property, implying a de facto ownership. It is only a de facto transfer, which stands recognized u/s. 2(47)(vi) of the Act, that would result in a de facto ownership, fulfilling the requirement of a ‘receipt’ u/s. 56(2)(vii) inasmuch as it enables one to exercise, for all practical purposes, rights in and over the property ‘received’. While the sale, resulting in a de jure ownership, is complete only on 24/4/2013, the de facto transfer, leading to a de facto ownership, gets completed earlier on 30/3/2013 on the execution of the instrument of sale, with each party having fulfilled his part of the contract to transfer. There is thus receipt of the subject land by the assessee on 30/3/2013, i.e., during the previous year relevant to AY 2013-14, the immediately preceding year. The taxable event u/s. 56(2)(vii)(b) thus takes place during the said year, and not the current year. That, for that year, the law did not bring the short consideration to tax, but only where the subject property is received without consideration, is a different matter altogether, with which we are not concerned and, in fact, is, to that extent, an irrelevant consideration. The Revenue’s action in invoking s. 56(2)(vii)(b)(ii) for the current year is thus not sustainable in law. - Decided in favour of assessee.
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