DEV PRABHA vs. THE COMMISSIONER OF INCOME TAX

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ITR/48/1984HC Punjab & HaryanaPHHC01006211198418 March 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MRS. JUSTICE SUDEEPTI SHARMA1 pages
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What did the High Court hold?

The High Court, in this reference, has answered the question in favour of the revenue authority. The Tribunal's finding that the conveyance deed represented a composite transaction, comprising the sale of a 3/7th portion of the property and a gift of the remaining 4/7th part, was upheld. This implies that the sale consideration of Rs. 75,000/- was attributable to the 3/7th portion only, and the remaining 4/7th portion was gifted. Consequently, capital gains would be computed on the sale of the 3/7th portion. The operative direction is that the reference is answered in favour of the revenue, and the matter is disposed of accordingly. No specific issue was left undecided.

What were the facts?

This is a reference at the behest of the assessee, Dev Prabha, concerning capital gains arising from the sale of property for Rs. 75,000/-. The assessee contended before the Income Tax Appellate Tribunal (ITAT) and the Assessing Officer that no capital gain was taxable on the transfer of a 3/7th portion of the property, as the entire property was transferred for Rs. 75,000/-. However, the ITAT, upon examining the conveyance deed, determined it to be a composite document encompassing two distinct transactions: the sale of a 3/7th portion and a gift of the remaining 4/7th part. Consequently, the ITAT concluded that the sale pertained only to the 3/7th portion, contrary to the assessee's assertion.

What were the issues?

1. Whether the Tribunal was correct in holding that the conveyance deed represented a composite transaction of sale of 3/7th portion and gift of 4/7th portion of the property, thereby making the assessee liable for capital gains on the sale of the 3/7th portion. (Question of law/mixed law and fact, concerning the interpretation of a conveyance deed and capital gains tax provisions). Assessee's Contention: The assessee argued that the entire property was transferred for Rs. 75,000/-, and therefore, no capital gain was liable for tax on the transfer of the 3/7th portion. Revenue's Contention: The revenue, through the Commissioner of Income Tax, relied on the ITAT's finding that the conveyance deed was a composite document, indicating a sale of only the 3/7th portion and a gift of the remaining 4/7th part. This interpretation would lead to capital gains on the sale of the 3/7th portion.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 2024:PHHC:038544-DB (178) ITR-48-1984 Date of Decision: 18.03.2024 Dev Prabha --Petitioner Versus The Commissioner of Income Tax --Respondent CORAM:-HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA. HON'BLE MS. JUSTICE SUDEEPTI SHARMA. Present:- None. *** SANJEEV PRAKASH SHARMA.J (Oral) 1. This reference is at the behest of the assessee, who has raised the question before this Court relating to the assessment in regard to capital gains which were on account of selling of the property at a consideration of Rs.75,000/-. It is the case of the assessee before the I.T.A and the Assessing Officer that no capital gain was liable for tax on transfer of 3/7th portion of the property as the entire property was transferred @ Rs.75,000/-, however, the I.T.A on examining the conveyance deed found that it was a composite document regarding two transactions, one of sale of 3/7th portion of the property and the other of gift of 4/7th part of the property. Thus, the sale would be in relation to 3/7th part of the property and not of the complete property as asserted by the assessee. 2. No one appears for the assessee. 3. Taking note of the aforesaid aspects, the reference is answered in favour of the revenue authority in the aforesaid terms. 4. Disposed of accordingly. (SANJEEV PRAKASH SHARMA) JUDGE 18.03.2024

(SUDEEPTI SHARMA) lucky

JUDGE Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No LUCKY 2024.03.20 11:13 I attest to the accuracy and integrity of this document

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