Transfer –Capital gains- Registration of sale deed alone of completes transfer–Capital

 

Assessee entered into an agreement of sale on 7-12-1999 with a company for sale of his property and

received full sale consideration on 21-12-2002. Thereafter, 16 sale deeds were registered in favour of

nominees of company on various dates between 27-2-2003 and 23-3-2004. Possession of the above

property was handed over to nominees on 25-3-2004. In return of income filed for assessment year 2004-

05, the assessee disclosed capital gains arising out of sale of above property. The entire sale consideration

was invested in notified bonds on various dates between 13-5-2004 and 10-9-2004 and exemption under

section 54EC was claimed. The AO held that the sale transactions, which took place between 27-2-2003

and 7-3-2003, would be liable to capital gains tax for the assessment year 2003-04. The sale transactions,

which took place between 27-2-2003 and 7-3-2004, would be liable to capital gains tax during the

assessment year 2004-05. The CIT(A), however, revered the order of the AO and held that the entire

capital gains tax would be chargeable in assessment year 2004-05. On second appeal, the Tribunal held

that the transfer as contemplated under section 2(47)(v) took place as early as on 21-12-2002 and

accordingly directed the Assessing Officer to tax the entire capital gain in the assessment year 2003-04.

The High Court held that, registration of sale deed alone completes transfer, capital gain arising on sale

transactions, which took place between 27-2-2003 and 7-3-2003, would be considered for taxation only in

assessment year 2003-04 and as regards sale deeds executed between 11-4-2003 and 23-3-2004 liability

would be assessed in assessment year 2004-05. (AYs. 2003-04 & 2004-05)

R. Krishnaswamy .v. CIT (2014) 222 Taxman 270/43 taxmann.com 177 (Mad.)(HC)