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2008 (10) TMI 256 - AT - Income TaxCapital Gains - Sale of property - selection of assessment year - Whether the agreement dt. 19th Oct., 1995 constituted a sale deed or mere agreement to bind the vendor to sell and the vendee to buy on the terms and conditions governing the proposed sale of property by the vendor to the vendee/purchasers at future date. HELD THAT:- The agreement dt. 19th Oct., 1995 only contained the terms and conditions to be adhered to and complied with at the time of sale of the property by the vendor and purchaser of the property at specified future date without any future addition or modification of the conditions. As there was neither transfer nor extinguishment of any right, vendor remained lawful owner of the property and paid all the municipal taxes from the year of agreement to all subsequent years till date. Therefore, It is proved that the registered sale deed dt. 20th Dec., 2007 executed by and between the same parties indicating that the earlier agreement dt. 19th Oct., 1995 was only an agreement to sell and not a sale deed transferring the capital asset in favour of the buyer. Applying the ratio of decision in the case of Smt. Maniben Hirji Jadavji Bhatt & Smt. Saraswati Jayantilal Hirjibhai Bhatt, Smarak Shri Copal Krishna Trust vs. ITO [1997 (1) TMI 116 - ITAT AHMEDABAD-B], it is held that the agreement dt. 19th Oct., 1995 does not establish that the transaction of sale of property was completed in terms of provisions of s. 2(47)(v), 1961 r/w s. 53A of the Transfer of Property Act and so the capital gain worked out by the AO and added to the income of the assessee in AY 1996-97 was not justified. Therefore, the CIT(A) has rightly deleted the impugned addition by reversing the order of AO. Accordingly the order of CIT(A) is upheld and the grounds of appeal taken by the Revenue are rejected. Hence, AO is at liberty to take appropriate action on the basis of the registered sale deed dt. 31st Dec., 2007 in case, on verification, he finds that the assessee has not declared the capital gain in the return in relevant assessment year he may take action for working out the capital gain, if any, as permitted under law. In the result, the appeal filed by the Revenue and cross-objection filed by the assessee are dismissed.
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