Sale Consideration not accruing to the Assessee in the Year under Consideration but Extending to Many Years, not to be Computed as Short-Term Capital Gains: ITAT

The Income Tax Appellate Tribunal “SMC” Bench, Pune, has, while jointly considering two appeals filed on the same ground bydifferent assessees, held that sale consideration not accruing to the assessee in the year under consideration, but extending to many years cannot be computed as short – term capital gain.

The aforesaid observation was made by the court whentwo appeals were filed by different assessees against the common order dated 31-01-2019, passed by the Commissioner of Income Tax (Appeals)-13, Pune [‘CIT(A)’], for the assessment year 2011-12,challenging the action of CIT(A) in confirming the addition of Rs.14,54,317/- on account of short-term capital gain.

The assesseederiving his income from account writing and agriculture, filed the return of income declaring a total income of Rs.4,05,810/- and agricultural income of Rs.2,62,510/-, following which the same was processed u/s. 143(1) of the Act.

Thereafter, the Assessing Officer (A.O), reopened the assessment u/s. 147 of the Act and determined the total income of the assessee at Rs.18,60,130/- inter alia making an addition of Rs.14,54,317/- on account of undisclosed short term capital gain, videhis order dated 27- 12-2016, passed u/s. 143(3) r.w.s. 147 of the Act, and the same being followed by the CIT(A)’s confirmation on such addition, the aggrieved assessee was left with no other option but to file an appeal before the Appellate Tribunal.

Hearing both the parties and perusing the materials available on record, the Tribunal commented:

“The sale consideration which is said to have been taxed in the hands of the assessee not been accrued to the assessee in the year under consideration, but extending to many years, if that is the case, the order of AO in computing the short – term capital gains vide para-No.9.2 is not justified.But taking into consideration the repayment by way of EMI’s by the developer to Karad Janata Sahakari Bank Ltd. on behalf of the assessee, the same is to be considered for taxation as actual receipt towards sale consideration in the respective assessment years.”

“Admittedly, the consideration or sale of plot as per the development agreement as considered by the AO at Rs.50,00,000/- has not been accrued to the assesseeand therefore, the AO is directed to compute the short -term capital gains depending on the repayment by way of EMI on behalf of the assessee towards mortgaged loan, by the developer to the share of assessee.” –  Allowing the appeals of both the assessees the bench added.

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