Section 53A of the Income Tax Act
The decision most relied on for Section 53A is CIT v. Balbir Singh Maini (398 ITR 531), cited in 228 of the 377 judgments on BharatTax that turn on this section.
Leading authorities on Section 53A
A transfer of immovable property, for the purpose of capital gains under section 2(47)(v) of the Income-tax Act, occurs only when the agreement allowing possession in part performance of a contract is a registered instrument, as mandated by Section 53A of the Transfer of Property Act.
For income tax purposes, the 'owner' of a property is the person who is entitled to receive income in their own right, bears the risks incidental to ownership, and utilizes the asset, even if the sale deed is not formally registered. This beneficial ownership is sufficient for claiming depreciation or capital gains exemption under relevant sections.
Exemption under Section 54 for capital gains on a residential property is available even if the sale deed is not registered within the stipulated time, provided a substantial amount of consideration is paid, or the delay in completion/registration is beyond the assessee's control.
Expenditure incurred by an assessee towards payment of installments for acquiring a new residential property can be considered as investment for the purpose of claiming exemption under Section 54, even if the sale deed has not been registered. The assessee's claim for exemption under Section 54 can be allowed if the installments paid exceed the amount of capital gain.
An Assessing Officer is justified in initiating reassessment proceedings under section 147 if, subsequent to the original assessment, fresh information is received indicating potential tax evasion, such as loan transactions with a finance company known for providing accommodation entries.
An assessee is entitled to a deduction under section 54 if substantial steps have been taken towards acquiring a new residential property, even if the sale deed has not yet been executed, provided the intention to purchase and invest is evident.
Section 54 of the Income-tax Act allows deduction for purchase of a residential house even if the transaction involves an agreement with a builder, payment linked to construction stages, and possession is obtained later, as the term 'purchased' has a wider connotation beyond a registered sale deed or immediate possession.
Capital gains cannot be said to have accrued in the year of execution of a Joint Development Agreement (JDA) if no consideration is received and possession is handed over only for development purposes.
