Capital Gain Matter under Suraj Lamp and Industries (SC)

Section 2(47): Transfer takes place in year of execution of sale deed, handing over of possession & receipt of sale consideration & is not deferred to year of registration. Verdict in Suraj Lamp and Industries 340 ITR 1 (SC) explained The Tribunal had to consider whether capital gains are assessable in AY 2008-09, being the year when the sale deed was executed and possession handed over and most of the sale consideration was received or in AY 2009-10 when the sale deed was registered. Held by the Tribunal: The transaction relates to the date when the sale-deed was executed, sale consideration was paid and the possession was handed over but not on the date when the document was presented before the Registrar for registration of the sale-deed. Moreover, the issue whether the transaction would relate to the date when the assessee has received sale consideration, handed over the possession and executed sale agreement or the date when the sale agreement is presented before the concerned Registrar for registration of the document was not before the Apex Court in Suraj Lamp and Industries Pvt.Ltd. vs. State of Haryana (2012) 340 ITR 1 (SC). Also, the judgement in Suraj Lamp and Industries was delivered on 11.10.2011, but the sale agreement in the present case was executed on 31.03.2008. The Apex Court has observed that “It is also submitted that this decision should be made applicable prospectively to avoid hardship. We have merely drawn attention to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not “transfers” or “sales” and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said “SA/GPA/WILL transactions” may also be used to obtain specific performance or to defend possession under section 53A of the Transfer of Property Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by development authorities. We make it clear that if the documents relating to “SA/GPA/WILL transactions” has been accepted acted upon by the DDA or other developmental authorities or by the Municipal or Revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision.” In the case in hand, the agreement to sell dated 31/03/2008 had already been acted upon the parties by delivery possession and registering sale-deed. Therefore, for this reason also, the judgement of the Apex Court in the case of Suraj Lamp and Industries Pvt.Ltd. vs. State of Haryana and Another (supra), would not help the Revenue.