Seema Subhash Zambad Vs ACIT

Whether tax liability under capital gains arises in respect of land for which neither consideration has been received nor possession has been given by the transferor to the transferee – NO: ITAT

– Assessee’s appeal allowed : PUNE ITAT

Whether tax liability under capital gains arises in respect of land for which neither consideration has been received nor possession has been given by the transferor to the transferee – NO: ITAT

++ not only no registered sale deed was executed by the assessee in favour of M/s Fulzan Properties, even the possession was also not given to be enjoyed as an owner. There are two parts of the ultimate property, namely, the superstructure which is owned by the firm and the land beneath, which is owned by the assessee. Thus, it can be said that the assessee did not transfer the land to M/s. Fulzan Properties. Thus, it is significant to note the ‘Special provision for full value of consideration for transfer of assets other than capital assets in certain cases’ as contained in section 43CA, which has been heavily relied by the AO. It is manifest from the provision concerned that it is a deeming provision in so far as the full value of consideration received as a result of transfer of some property, which is held otherwise than a capital asset. It is not a charging provision in itself nor does the deeming fiction extends to ‘transfer’. Unless the charge is created first under a specific provision, the deeming provision for computation is not activated. Section 43CA can be magnetized only when some building or land held otherwise than as a capital asset, is transferred. In case the property itself is not transferred, the question of deeming the stamp value as the full value of consideration does not arise, which is only a stage posterior to the ‘transfer’ of the property. Thus, this Tribunal hold that the authorities below were not justified in making or confirming the addition in the hands of the assessee under the head ‘Capital gains’ as well as ‘Profits and gains from business or profession’ by treating it as a case of transfer of land to M/s Fulzan Properties in as much as the land itself was not transferred by the assessee during the relevant AY.

ITA No.1280/Pun/2018