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2017 (5) TMI 1168 - AT - Income TaxNon-chargeability of capital gains in respect of the land in the assessment year under consideration - year of transfer - Held that:- The capital gain would be taxable in the year in which such transactions are entered into even if the transfer of the immovable property is not effective or complete under the general law. The assessee entered into an agreement with the builder/developer for development of the impugned land and construction of flats thereon. Also, the assessee signed a development agreement dated 27.06.2006 in favour of the builder/developer and gave possession of the property to the builder/developer. Further, the assessee acted on the impugned agreement by accepting from the builder/developer payments by cheques on different dates in the financial year 2006-07 relevant assessment year 2007-08. All the conditions of sub-clause (v) of section 2(47) are satisfied in this case and therefore, it has to be inferred that a "transfer" did take place within the meaning of section 2(47)(v). The argument that the deeds in respect of the sale of flats were not registered/executed is not a relevant consideration so far as provisions of sub-clause (v) of section 2(47) are concerned. The completion of "transfer" of an immovable property as per the general law is not a requirement for the applicability of the provisions of sub-clause (v) of section 2(47). Thus, the taxability of long term capital gains only taxed in the F.Y 2006-07 relevant to A.Y 2007-08 and ordered accordingly. Computation of short term capital gains on selling of assessee’s share of residential and commercial constructed area - the gain on the transfer of the asessee’s share in constructed area is to be brought in tax as short term capital gains after giving due deduction as enumerated in sec.48 of the Act. The Assessing Officer has to consider this issue of computation of capital gains on assessee’s share of construction area along with undivided share in land which was actually transferred by the asseseee in this assessment year. In other words, the Assessing Officer cannot bring into tax entire share of constructed area along with undivided share in land only on receipt basis as transferred unless there is actual transfer in terms of Sec.45 of the Act. Accordingly, we direct the Assessing Officer to tax the gains arising from transfer of capital asset effected in the previous year alone in the relevant assessment year 2011-12. Since we have held that there was a transfer u/s.45 in the A.Y 2007-08 and the long term capital gains to be computed in terms of Sec.2(47)(v) of the Act in the A.Y 2007-08 and short term capital gains to be computed in transfer of capital asset in the respective previous years when the transfer of constructed area when it was actually taken place, there is no question of computing any business on the impugned issue. Accordingly, the findings of the CIT(Appeals) on applicability of Sec.45(2) is infractuous.
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