Claim of LTCG Not Allowable when Transactions of Transfer of Land does not Falls Within Ambit of Section 45 of Income Tax Act : ITAT [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the claim of Long Term Capital Gain (LTCG) was not allowable when the transaction of transfer of land does not fall within the ambit of section 45 of the Income Tax Act,1961.

Avantha Realty Ltd, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the disallowance of long-term capital loss made by the assessing officer. 

Upvan Gupta, the counsel for the assessee contended that the assessing officer without appreciating that the transaction under consideration for the transfer of land to another company was a genuine transaction, supported by evidence and documents, and the transaction under consideration for the transfer of land was not a sham or colorable device. 

It was further submitted that the disallowance made by the assessing officer was not as per the law and is liable to be deleted. 

Kanv Bali, the counsel for the revenue relied on the decisions of lower authorities and contended that there was no physical payment and neither any deed of conveyance was drawn and registered. 

The bench observed that the claim of the assessee of long-term capital loss by observing that the transfer of a capital asset by the assessee company to its parent/holding company is because of provision 47(v) of the Income Tax Act and the transaction of transfer of land from subsidiary to holding company was not covered under section 45 of the Income Tax Act. 

The bench also observed that the findings arrived by the Commissioner were based on section 47(v) of the Income Tax Act and when the transaction does not fall within the ambit of section 45 of the Income Tax Act then any claim of long-term capital loss/profit cannot be held as allowable. 

The two-member bench comprising Chandra Mohan Garg (Judicial) and B.R.R. Kumar (Accountant) held that the decision made by the Commissioner by confirming the disallowance made by the assessing officer was as per the law while dismissing the appeal filed by the assessee. 

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