Unregistered agreement to sale in one financial year and sale deed in another financial year – Year of Taxation?
The issue before Calcutta HC in the case of Tamal Kundu Vs NFAC[Calcutta High court], Date :April 11,2025 was as to whether unregistered agreement for sale coupled with extinguishment of right in the property can result in capital gains under the Income-tax Act,1961 notwithstanding the conveyance which is done subsequently?
The Hon’ble Chief Justice Bench of Calcutta high court in this case was dealing with a situation where in pursuance of an unregistered agreement for sale, the consideration was fully paid and possession was also given and thus the rights that the seller had in the property was extinguished as per the provisions of Section 2(47)(ii) of the Income-tax Act,1961 dealing with definition of transfer. The department argued that the transfer took place in the year of conveyance where as the assessee offered for taxation in the year of agreement of sale. On these facts, the Ld Judges relying on the decision of Supreme Court in the case of Sanjeev Lal Vs CIT(2014) 365 ITR 389(SC) and CIT Vs Balbir Singh Maini (2017) 398 ITR 531(SC) held that any transaction which has the effect of enabling or transferring the enjoyment of property comes within the purview of Section 2(47) and thus the assessees contention was accepted.
This judgement will be helpful in Real Estate transactions as to whether the transfer has taken place or not.
The copy of the order is as under:
