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Facts
The assessee appealed against the order of the CIT(A) for AY 2016-17 concerning capital gains tax liability. The assessee argued that capital gains should not be taxed in the year of development agreement execution, as no income or gain had accrued. The AO contended that tax was payable in the year of the agreement's execution.
Held
The Tribunal noted that the lower authorities had not properly examined whether the 'transfer' for capital gains tax purposes was completed upon the execution of the development agreement or upon the handover of the constructed flat. Therefore, the matter was set aside and restored to the AO for fresh adjudication.
Key Issues
Whether capital gains tax is leviable in the year of execution of a development agreement or in the year of possession of the completed property.
Sections Cited
250, 2(24)
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Income Tax Appellate Tribunal, PATNA BENCH, VIRTUAL HEARING AT KOLKATA
Before: SRI SANJAY GARG & SHRI SANJAY AWASTHI
Rekha Banker ………….. Appellant Rekha Banker Road No.1, Raj Bansi Nagar, Bihar-800023. (PAN: ATIPB9779L) Vs. Income Tax Officer, Ward-6(2), Patna .............. Respondent Appearances: Appellant represented by: Shri None (adjournment petition filed) Respondent represented by: Shri Ashwani Kr. Singal, JCIT Date of concluding the hearing : 15.01.2025 Date of pronouncing the order : 15.01.2025 ORDER
Per Sanjay Garg, Judicial Member:
The captioned appeal has been preferred by the assessee against the order dated 11.12.2022 of the Ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ld. ‘CIT (A)’] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Year (AY) 2016-17.
No one has put an appearance on behalf of the assessee despite notice. An adjournment application has been filed on behalf of the assessee. However, considering the facts and grounds taken in the appeal, we proceed to take the appeal for hearing and dispose of the same on merits after hearing the Ld. DR.
The sole issue involved in this appeal is as to whether the tax on account of capital gain is to be levied in the year in which the development I.T.A. No.: 81/PAT/2023 Rekha Banker, AY : 2016-17 agreement was executed or in the year in which the assessee received possession of the flat on completion of construction.
The case of the assessee is that only the development agreement was executed in the Financial Year (FY) 2015-16 relevant to the AY under consideration and that no income or capital gain has accrued to the assessee on execution of the said agreement. However, the case of the Assessing Officer (in short “AO”) is that the assessee is liable to pay capital gain tax in lieu of execution of development agreement in the FY 2015-16. A perusal of the grounds of appeal
of the assessee reveals that the assessee has pleaded that the facts of the case and submissions of the assessee have not been examined by both the lower authorities in proper perspective. It has not been held by any of the lower authorities as to whether the ‘transfer’ ion as defined u/s. 2(24) of the Act, was completed on the date of execution of the development agreement or the assessee only gave authority to the developer to do the construction and that the transfer was complete on the handing over of the constructed flat to the assessee. The issue is required to be examined after going through the evidences and documents on the file especially the terms of the development agreement. We, therefore, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the AO for decision afresh on this issue in accordance with law. Needless to say, that the AO will properly examine the evidences on file and will give proper opportunity to the assessee to present her case and thereafter pass a speaking order in accordance with law.