A division bench of the Telangana High Court has held that the execution of a registered sale deed shall be treated as a valid “transfer” within the meaning of Section 2(47)(V) of the Income Tax Act, 1961.
The appellant, Syed Sikandar Ali, is an individual. The income tax department initiated the re-assessment making an Income Tax Addition of Rs.2,81,88,700.00 as long-term capital gains under the provisions of the IT Act.
The appellant challenged the income tax addition towards long-term capital gains contending that the registration document could not be taken as conclusive proof to hold that there was a transfer resulting in capital gains. It was argued that preceding and subsequent events should also be taken into account to arrive at the true character of the transaction. The Appellant had contended that the transaction was done only to avail the loan by mortgaging the property.
However, the lower authorities and the Tribunal confirmed the income tax addition observing that there was a ‘transfer’ within the meaning of Section 2(47) of the Income Tax Act, 1961 giving rise to capital gains as evidenced by the document dated 29/04/2009 between the assessee and Smt. K. Manju Devi Taparia.
Upholding the ITAT order, Chief Justice Ujjal Bhuyan and Justice C.V.Bhaskar Reddy observed that “according to the Tribunal, the appellant had already executed a registered sale deed which is treated as valid transfer under Section 2(47)(V) of the Act. The other documents relied upon by the appellant were only pleadings before civil and criminal courts, which proceedings were yet to attain finality. Accordingly, Tribunal upheld the income tax addition of long-term capital gains made by the assessing officer as confirmed by the CIT(A).”
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