54ec

This query is : Resolved

Ca Siddharth Mehta (Querist)
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07 February 2012 Ms. Roshell Roudrics entered into sale agreement with Mr. Frederick Furtado for a
sum of Rs. 6,000,000. The Agreement was registered on March 28, 2009 on a payment
of Rs. 500,000.
In Clause 4 of the aforesaid Agreement, it was clearly stated that the seller would hand
over possession of the flat only after the receipt of the balance payment for the
consideration of the sale of the flat. In clause 7 of the Agreement, it was stated that on
receipt of balance payment of RS. 5,500,000, the Vendor shall handover quite, peaceful,
and vacant possession of the property. Sub-clause (ii) of clause 7 of the Agreement
stated that the vendor shall grant, assign, transfer, and assure all her rights, title, and
interest in the said flat on receipt of the balance consideration of RS. 5,500,000. The
balance amount was received by Ms. Roshell on April 23, 2009. Possession was given
on April 28, 2009. Society transferred the share certificates in the name of buyer on
August 12, 2009.
Thus, Ms. Roshell offered the capital gains from this flat during Assessment Year 2010-
11 and claimed exemption under section 54EC after making investment in eligible bonds
on October 17, 2009.
The Assessing Officer during course of Assessment opined that, since Agreement was
registered on March 28, 2009, capital gains were chargeable in Assessment Year 2009-10. He further denied benefit of exemption under section 54EC as the investment was
not made within six months from the date of transfer.

Kindly advise.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 February 2012 In this case the AO is on wrong footing.
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Ask him for the date of acquisition for the purchaser of the property,Ms. Roshell, had she been selling the property.
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Without transferring the possession, and merely on the basis of Agreement to Sale/Purchase, it can't be said that the transfer has taken place. There is a difference in Registration of Agreement and a Registered Sale Deed.
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Capital Gains arises only when transfer of the property takes place.
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Vide Section 2(47)(v), on part performance of a contract, the transaction can be termed as "Transfer" only when, possession of of immovable property has been taken by the purchaser.
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