2 Sections 2(47) and 54 – Condition regarding purchase of new property within one year of transfer of old property – Date of agreement to sale was considered as the date of transfer and not the date of conveyance deed.

Members:  A. T. Varkey, (J. M.) and Dr A. L. Saini (A.
M.)

ITA No.:
1356/Kol/2017

A. Y: 
2012-13  Dated: 7^th
September, 2018

Counsel for Assessee / Revenue:  P. R. Kothari / Rabin Choudhury

Sections 2(47) and 54 – Condition regarding
purchase of new property within one year of transfer of old property – Date of
agreement to sale  was considered as the
date of transfer and not the date of conveyance deed.

Facts

The assessee is an individual, who had sold
a flat vide deed of conveyance dated 26/27.12.2011. The sale deed was executed
in pursuance of an agreement to sale which was executed on 16.09.2011. The deed
of conveyance was registered while the agreement to sale was not
registered. 

The assessee had purchased a new residential
flat on 04.10.2010.  The AO took the date
of registration of the property sold as the date of transfer i.e. 26/27.12.2011
and since the new property was purchased on 04.10.2010, which, according to the
AO, was not within the period of one year from the date of transfer of the old
asset, he denied the benefit of section 54. 
On appeal, the CIT(A) confirmed the AO’s order.

Held

Relying on the Supreme Court decision in Sanjeev
Lal vs. CIT (Civil Appeal No. 5899-5900 of 2014 dated 01.07.2014)), the
Tribunal observed that by entering into an agreement to sale, some right which
the assessee had in respect of the capital asset in question had been
extinguished, because after execution of the agreement to sale, it would not be
open to the assessee to sell the property to others in accordance with the law.

The vendee gets a right to get the property
transferred in his favour by filing a suit under Specific Performance Act.
Thus, according to the Tribunal, a right in respect of the capital asset (old
residential property in question) had been transferred by the assessee in
favour of the vendee/transferee on 16.09.2011. 
And since purchase of the new property was on 04.10.2010, it was held
that the purchase of the property was well within one year from the date of
transfer as per section 2(47) of the Act.

As regards a question as to the
admissibility or otherwise of the agreement to sell as an evidence in a suit
for specific performance, relying on the decision of the Supreme Court in the
case of S. Kaladevi vs. V. R. Somasundaram & others (Civil Appeal No.
3192 of 2010 dated 12.04.2010), the Tribunal noted that  the agreement to sell can be a basis for a
suit for specific performance in view of section 49 of the Registration
Act.  Thus, though the agreement to sell
was not registered, the vendee can seek decree of specific performance on the
basis of unregistered agreement to sell.