9911796707
TMI Blog2018 (2) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the execution of the sale deed. It is thus clear that no possession was handed over to the purchaser at the time when the agreement for sale was entered into between the parties. Under clause 2(b) of the Agreement dt. 20.10.2005, the purchaser agreed to pay the balance consideration sixty days from the date of katha transfer or execution, registration and delivery of vacant possession in favour of the assessee, whichever is earlier. 3. On 27.03.2007 the assessee and Mr. Sanjay Todi by registered sale deed sold the property to a third party Shri V.V.Kak and Smt. Meeta V.Kak. for a sale consideration of Rs. 56,00,000/-. In the assessment of Shri Sanjay Kumar Todi for A.Y.2007-08 the question that arose for consideration was as to whether the difference between the price at which Mr.Sanjay Kumar Todi agreed to purchase the property from the assessee viz. Rs. 32,00,000/- and the price at which the property was ultimately sold to a third party viz., Rs. 56,00,000/- should be assessed under the head "income from other sources" or "capital gain". The tribunal held that the aforesaid income was to be assessed under the head income under the head capital gain (Short term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee firm." 5. Aggrieved by the aforesaid order of the AO determining the short term capital gain as per section 50(1) of the Act and treating Rs. 56,00,000/- as the full value of consideration received on transfer of the property, the assessee filed appeal before the CIT(A). Before CIT(A) the assessee took a stand that by virtue of agreement dated 22.10.2005 between the assessee and Sanjay Todi, there was a transfer of the property in the previous year relevant to A.Y.2006-07 u/s 2(47)(vi) of the act and therefore there cannot be any assessment of capital gain in A.Y.2007-08. The above argument was put forth by the assessee in the statement of facts filed before CIT(A). Even in the written submission filed before CIT(A) the very same contention was put forth by the assessee. The CIT(A) however rejected the contention of the assessee and he held that the action of the AO in bringing to tax the short term capital gain in A.Y.2007-08 was correct for the following reasons : "I have gone through the above contention of the asseessee. In this regard it is to point out that though the 'appellant claims that agreement of sale was entered on 22-10-2005 amongst the Firm and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome money for giving up his rights to purchase the property. The question before the Hon'ble Bombay High Court was whether the assessee had transferred any capital asset or not. The Hon'ble Bombay High Court held that the right to purchase the property and agreement was a capital asset and money received to relinquish such right gave rise to capital gain. In our view the aforesaid decision is not applicable to the facts of the present case because the assessee in this case was the owner of the property and the assessee cannot convey ownership unless he executes a registered documents. The relinquishment of right under an agreement for sale cannot be equated with transfer of interest in immovable property. 8. The next argument advanced by the assessee was that under section 2(47) (vi) of the act the transfer in relation to a capital asset includes the following transactions :- "(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring or enabling the enjoyment of, any immov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i S.K.Todi at no point of time enjoyed the property in question in any other manner. We fail to see as to how the aforesaid clause in the definition of transfer will be of any assistance to the plea of the assessee that there was a transfer of capital asset under the agreement dated 20.10.2005 between the assessee and Shri S.K.Todi. 10. The ld. Counsel for the assessee relied on Explanation-2 to section 2(47) of the Act. The same reads as follows : "Explanation 2 - For the removal of doubts, it is hereby clarified that "transfer "includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India; ] 11. We are of the view that none of the clause of Explanation-2 are attracted in the present case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee for AY 2007-08, then the full value of consideration received should be considered at Rs. 32,00,000 which is the agreed consideration which the Assessee has to receive from the purchaser as consideration for sale of the property under the agreement dated 20.10.2005 and not the sum of Rs. 56,00,000 for which the property was ultimately sold to a third party. 14. We have considered the alternative submission. Sec.50(1) of the Act is a special provision in so far as it relates to computation of capital gain on sale of a depreciable asset on which depreciation has been claimed. The said provisions read thus: 50. Special provision for computation of capital gains in case of depreciable assets. Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following modifications:- (1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
