Capital Gains Taxability Must Follow Actual Date Of Property Transfer, Not Mere Sale Deed Registration Date: ITAT

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that capital gains taxability must be determined on the basis of the actual date of transfer of the property and not merely on the date of registration of the sale deed. The bench of Prashant Maharishi (Vice – President) has deleted an addition of ₹26.08 lakh towards long-term capital gains after holding that the transfer of immovable property had actually taken place in 1993 and not in Assessment Year (AY) 2007-08 merely because the sale deed was registered in 2007. The appeal was filed by Prakash Chand Bethala (HUF) against the order of the National Faceless Appeal Centre (NFAC), which had upheld the assessment framed under Section 143(3) read with Section 254 of the Income Tax Act. The dispute revolved around the taxability of capital gains arising from the sale of an immovable property. As per the facts recorded by the Tribunal, the assessee had entered into a sale agreement for the property on 8 March 1993 for a consideration of ₹9,80,500. However, the registered sale deed was executed much later on 9 March 2007. At the time of registration, the stamp duty valuation authority adopted the market value of the property at ₹2.7 crore. Originally, the Assessing Officer had completed reassessment proceedings under Section 143(3) read with Section 147 on 12 July 2013 by computing capital gains on the basis of the 2007 stamp duty value. The addition was also confirmed by the Commissioner (Appeals). Subsequently, the matter reached the ITAT, where a Coordinate Bench held that the transfer had actually taken place on 8 March 1993, being the date of the agreement to sell, and therefore the stamp duty valuation applicable on that date alone could be considered instead of the value prevailing on the date of registration in 2007. Pursuant to the Tribunal’s earlier directions, the Assessing Officer obtained guidance value details from the office of the Sub-Registrar, Koramangala, which reflected a market value of ₹300 per sq. ft. for the relevant period. Based on this, the Assessing Officer recomputed the long-term capital gain at ₹26.08 lakh and determined the total income at ₹28.14 lakh. The assessee again approached the Commissioner (Appeals), but the appeal was dismissed after the appellate authority noted that despite multiple opportunities issued through email, no response had been filed by the assessee. Before the Tribunal, the assessee raised an additional legal ground contending that the assessment order dated 6 August 2022 passed under Section 143(3) read with Section 254 was barred by limitation under Section 153 of the Act. The assessee argued that the issue was jurisdictional in nature and therefore could be raised at any stage. The Tribunal admitted the additional ground, observing that it went to the root of the matter. While examining the issue, the Tribunal noted that its earlier order dated 28 January 2021 had categorically held that the transfer took place on 8 March 1993 and that the capital gains computation should accordingly relate to Assessment Year 1993-94. The Bench observed that once the earlier Tribunal order itself concluded that the transfer had occurred in 1993, there was no basis to continue taxing the capital gains in AY 2007-08 merely because the sale deed was formally registered in 2007. The Tribunal further observed that even in the earlier round, it had held that Section 50C was not applicable in AY 2007-08. Therefore, the Assessing Officer had wrongly assumed jurisdiction in recomputing and taxing the capital gains for the impugned assessment year. Holding that the capital gains, if any, were chargeable only in AY 1993-94 and not in AY 2007-08, the Tribunal deleted the addition and allowed the appeal of the assessee. Case Details Case Title: Prakash Chand Bethala (HUF) Versus ITO Citation: JURISHOUR-1435-ITA-2026(BANG) Case No.: ITA No.:2381/Bang/2025 Date: 20-05-2026 Counsel For Appellant: Manish, Advocate Counsel For Respondent: Ganesh R Ghale, Standing Counsel Click Here To Read Order Read More: Punjab & Haryana High Court Upholds GST Demand U/s 74 for Fraudulent ITC Claimed Through Cancelled Dealers

Capital Gains Taxability Must Follow Actual Date Of Property Transfer, Not Mere Sale Deed Registration Date: ITAT

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