Sections 2(47) and 54 – Condition regarding purchase of new property within one year of transfer of old property – Date of agreement to sale was considered as the date of transfer and not the date of conveyance deed.
Members: A. T. Varkey, (J. M.) and Dr A. L. Saini (A. M.)
ITA No.: 1356/Kol/2017
A. Y: 2012-13 Dated: 7th September, 2018
Counsel for Assessee / Revenue: P. R. Kothari / Rabin Choudhury
Sections 2(47) and 54 – Condition regarding purchase of new property within one year of transfer of old property – Date of agreement to sale was considered as the date of transfer and not the date of conveyance deed.
Facts
The assessee is an individual, who had sold a flat vide deed of conveyance dated 26/27.12.2011. The sale deed was executed in pursuance of an agreement to sale which was executed on 16.09.2011. The deed of conveyance was registered while the agreement to sale was not registered.
The assessee had purchased a new residential flat on 04.10.2010. The AO took the date of registration of the property sold as the date of transfer i.e. 26/27.12.2011 and since the new property was purchased on 04.10.2010, which, according to the AO, was not within the period of one year from the date of transfer of the old asset, he denied the benefit of section 54. On appeal, the CIT(A) confirmed the AO’s order.
Held
Relying on the Supreme Court decision in Sanjeev Lal vs. CIT (Civil Appeal No. 5899-5900 of 2014 dated 01.07.2014)), the Tribunal observed that by entering into an agreement to sale, some right which the assessee had in respect of the capital asset in question had been extinguished, because after execution of the agreement to sale, it would not be open to the assessee to sell the property to others in accordance with the law.
The vendee gets a right to get the property transferred in his favour by filing a suit under Specific Performance Act. Thus, according to the Tribunal, a right in respect of the capital asset (old residential property in question) had been transferred by the assessee in favour of the vendee/transferee on 16.09.2011. And since purchase of the new property was on 04.10.2010, it was held that the purchase of the property was well within one year from the date of transfer as per section 2(47) of the Act.
As regards a question as to the admissibility or otherwise of the agreement to sell as an evidence in a suit for specific performance, relying on the decision of the Supreme Court in the case of S. Kaladevi vs. V. R. Somasundaram & others (Civil Appeal No. 3192 of 2010 dated 12.04.2010), the Tribunal noted that the agreement to sell can be a basis for a suit for specific performance in view of section 49 of the Registration Act. Thus, though the agreement to sell was not registered, the vendee can seek decree of specific performance on the basis of unregistered agreement to sell.
