MEHBOOB JABIR PATEL,GODHRA vs. THE ITO, WARD-1, GODHRA

On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in confirming the addition of a sum of Rs. 52,38,111/-as income from STCG in A.Y.2014-15 without considering that the Ld. AO has disallowed deductions for expenses related to the transfer of property, amounting to Rs. 1,15,000/- for legal fees & brokerage and Rs. 1,60,000/- for transfer cost.

On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in confirming the addition of a sum of Rs. 52,38,111/-as income from STCG in A.Υ.2014-15 without considering that the Ld. AO has disallowed deductions for expenses related to the transfer of property, amounting to Rs. 1,98,000/- for stamp duty and Rs. 40,325/- for registration fees.

Alternatively, Ld. Assessing Officer may please be given direction to give appropriate effect in AY 2016-17 so as to avoid double taxation.” Asst. Year : 2014-15 - 2–

The brief facts of the case are that the assessee has filed his return of income for the year under consideration on 30.11.2024 declaring total income of Rs.6,22,860/-. The case was selected for scrutiny through CASS. During the year under consideration, the assessee was engaged in the business of processing and sale of quartz sand under the name and style of M/s. Patel Minerals. The books of account of the assessee were duly audited and audit report in Form Nos. 3CB and 3CD was furnished before the lower authorities. During the course of assessment proceedings, the Assessing Officer observed that the assessee had entered into sale transactions in respect of land bearing R.S. No.208/1 and 208/2 situated at Halol. The sale deeds were executed and registered on 12.04.2013 for an aggregate sale consideration of Rs.1,66,09,000/-. The Assessing Officer observed that the sale deeds were duly registered in F.Y. 2013-14 relevant to A.Y. 2014-15 and accordingly held that transfer within the meaning of section 2(47) of the Act had taken place during the year under consideration. The Assessing Officer accordingly computed Short Term Capital Gain of Rs.52,38,111/- and added the same to the income of the assessee.

1 The contention of the assessee before the Assessing Officer was that though sale deeds were registered on 12.04.2013, substantial consideration remained unpaid, cheques issued by purchasers were dishonoured/not realized and possession continued with the assessee till receipt of final payment in April, 2015. It was submitted that legal notice dated 08.11.2013 was issued to the purchasers and possession was handed over only upon receipt of complete consideration in F.Y. 2015- 16 relevant to A.Y. 2016-17. Accordingly, capital gain was offered to tax in A.Y. 2016-17. The Assessing Officer, however, rejected the explanation of the assessee by holding that execution and registration of the sale deeds constituted “transfer” within the meaning of section 2(47) of the Act read with the provisions of the Transfer of Property Act, 1882. 4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A), who upheld the action of the Assessing Officer. Asst. Year : 2014-15 - 3–

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.

Before us, the Ld. AR submitted that the assessee had not received full consideration at the time of registration of the sale deeds and possession also remained with the assessee till final realization of payment in April 2015. It was argued that transfer u/s 2(47)(v) of the Act could not be said to have been completed merely on execution of sale deed when possession had not been handed over and substantial consideration remained unpaid. In support of the above contention, the assessee has placed reliance on the following:- i. Legal notice issued to purchasers dated 08.11.2013; ii. Reply of purchasers acknowledging non-payment; iii. Understanding between parties permitting retention of possession by assessee; iv. Confirmation deed dated 17.12.2015 evidencing receipt of final payment and handing over of possession.

The Ld. DR, on the other hand, relied upon the orders of the lower authorities and submitted that the sale deeds were duly executed and registered on 12.04.2013. Therefore, according to the Revenue, transfer stood completed during Financial Year 2013-14 itself. The Ld. DR further contended that subsequent disputes regarding realization of consideration or delayed receipt of payment would not defer the chargeability of capital gains under the Act.

We have heard the rival contentions and perused the material available on record.

1 The undisputed facts emerging from record are that the sale deeds were executed and registered on 12.04.2013 before the Sub-