Section 50C can be invoked in the Year in which Sale taken Place: ITAT [Read Order]

The Income Tax Appellate Tribunal  ( ITAT ), Delhi has held that the provisions of section 50C of the Income Tax Act, 1961 can be invoked in the year in which the sale had taken place.

The Assessing Officer, based on the AIR Information, observed that the assessee had executed one transaction of sale of one immovable property at A34, Sector 30, Noida for Rs.83,70,000/- on 23rd June, 2009. According to the Assessing Officer, this transaction had not been reflected in the Return of Income. The assessee explained that he had purchased the a vacant plot in the year 1987 through a General Power of Attorney (GPA) from the original allottee Smt. Lilavati Kapur for Rs. 1,35,000/- on which the assessee had constructed the ground floor and sold the house on 03.08.1991 to Smt. Santosh Sareen for a consideration of Rs. 4,55,000/- under a registered “Agreement to Sell” along with the possession of property.

However, the AO held that there was no proof of valid sale on 03.08.1991 and therefore, said that the transaction in the assessment year under consideration attracted Long Term Capital Gains (LTCG) on the sale of property and was taxable u/s 50C of the Income Tax Act, 1961.

The Tribunal noted that the assessee had purchased the property through an agreement to sell in 1987 and had sold the same again through an agreement to sell in 1991. The assessee had given possession to the buyer in the year 1987. The buyer had also confirmed the same in response to the enquiry conducted by the AO. The buyer has also filed evidences to support that she was in possession all along from the year 1991.

“In view of the above facts, we hold that the sale of this property by the assessee has taken place in the year 1991 and the AO was not justified in taxing the capital gain arising on the sale of this property in the year under consideration. As regards invoking the provision of section 50Cof the Act, the same will come to be attracted only when sale has taken place during the year. As we have held that the sale by the assessee stood completed in the year 1991, there is no question of invoking the provision of section 50C. Accordingly, the addition made by the assessing officer of Rs. 78,40,062/- as long term capital gains is directed to be deleted,” the Tribunal said.