Non-Registration of Gift Deed can’t be considered to be Sham Transaction as Assessee was in Full Possession of Property Sold by a Registered Sale Deed.

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Non-Registration of Gift Deed can’t be considered to be Sham Transaction as Assessee was in Full Possession of Property Sold by a Registered Sale Deed.

Here is an interesting case before ITAT Delhi wherein it is held that the non-Registration of Gift Deed can’t be considered to be Sham Transaction as Assessee was in Full Possession of Property Sold by a Registered Sale Deed.

The case detail is as under:

 ITA No.3047/Del/2019 AY : 2014-15

Let us have a short overview of the case:

Facts of the case:
> Assessee has shown long term capital gain on the sale of 1/3rd share in the property at Rani Jhansi Chowk, Delhi and has claimed exemption u/s. 54 of the Act.

> AO found that the husband of the assessee had purchased the said property from M/s. Glorious Housing & Land Development Pvt. Ltd. vide agreement to sell dated 22.03.2006 for a consideration of Rs.16005000/-.

> And subsequently 1/3rd share of the said property was given as a gift to the assessee by her husband on 01.05.2006.

> The AO rubbished the entire transaction by dismissing the gift as the same was not evidenced by a registered gift deed.

> The amount of Rs.12.50 crores credited in her bank account was treated as income of the assessee u/s.69A of the Act and addition of Rs.12.50 crores was made by the AO.

>Assessee carried the matter before the CIT(A).  The CIT(A) came to the conclusion that the documents need to be registered under transfer of property Act but the AO has failed to appreciate that under the provisions of section 2 (47) (vi) defacto transfer of any immovable property are covered.

>CIT(A) conclude: No doubt the gift deed was not registered but the same cannot be rubbished as the sham transaction since the assessee was in full possession of the said property which was subsequently sold by her by way of a registered sale deed for a consideration of Rs.12.50 crores which was credited to her bank account held with HDFC Bank.

The copy of the order is as under:

 

1699256866-3047 del 2019

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