APARTMENT SOLD BUT SALE DEED MADE NEXT YEAR

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This discussion clarifies when an apartment sale should be recognised for tax purposes, particularly when the sale deed is registered in a different financial year than the actual transaction and payment. While the Transfer of Property Act considers the sale complete upon registration, the Income Tax Act often treats the transfer as occurring when possession is handed over and payment is received. Therefore, for tax purposes, the sale is typically considered in the year possession was transferred, even if the deed was registered later.

CA Rapunzel

CA Rapunzel (Querist)

27 August 2021 A client sold an apartment in 2020-21 and amount was also received in the same year. But the sale deed was made in the year 2021-22 .
My question is when should the sale be considered ? year 2020-21 or 2021-22 ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

27 August 2021 When was the possession of the property handed over?

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CA Rapunzel

CA Rapunzel (Querist)

27 August 2021 In the year 2020-21 the possession was given.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

27 August 2021 When the possession of the property handed over, it amounts to transfer u/s. 2(47) in such cases. Hence the sale would be considered in FY 2020-21.

CA Rapunzel

CA Rapunzel (Querist)

27 August 2021 Thank you so much sir.

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VANAJA RANI

VANAJA RANI (Expert)

27 August 2021 As per Transfer of property Act 1882, section 54 Sale is defined “Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

Sale how made.—Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
Hence as per Transfer of property act,1882 Apartment is sold in the year 2021-22.

But as per income tax act 1961, without sale deed registration also treated as transfer.it will be treated as sale in the year 2020-21.

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