I paid the whole price and took possession of a factory under an agreement for sale in December 2016, but the sale deed was only registered in March 2018. Can the department tax the stamp-value difference under section 56(2)(x) in the later year?
No. The Calcutta High Court held that where the entire consideration is paid on the date of the agreement for sale, possession of the property is handed over, and the buyer starts running the business on it, the transfer takes place then and not on the later registration of the sale deed. Section 2(47)(ii) covers extinguishment of the vendor's rights, and section 2(47)(vi) covers any transaction that has the effect of enabling the enjoyment of immovable property. So the purchase of the rice mill fell in the previous year relevant to assessment year 2017-18, and the section 56(2)(x) addition made in assessment year 2018-19 could not stand. The Tribunal's order was set aside.
Decided by the High Court (High Court at Calcutta, Special Jurisdiction (Income Tax), Original Side; T.S. Sivagnanam CJ and Chaitali Chatterjee (Das) J) on 2025-04-11, reported as ITAT/50/2025, IA No. GA/1/2025, Calcutta High Court. It bears on section 56(2)(x), section 2(47), section 2(47)(ii), section 2(47)(vi), section 260A of the Income Tax Act 1961, in Capital Gains and How Tax Law Is Read matters.
Section 56(2)(x) fixes the buyer with tax on the excess of stamp duty value over what he paid, and everything turns on which year the receipt falls in and which date's circle rate applies. Departments routinely take the registration date of the conveyance as the date of purchase. This judgment applies Sanjeev Lal and Balbir Singh Maini on the buyer's side of the transaction, and holds that the wider limbs of section 2(47) decide the year of acquisition just as they decide the year of a seller's capital gain. It also exposes a common inconsistency: the Tribunal here accepted, for the purpose of the circle rate, that the price had been paid on the agreement date, while simultaneously holding that no right accrued on that date. The Court said the two findings could not stand together. The point matters wherever full payment and possession precede registration by a year or more, which is the ordinary pattern in distress and part-financed purchases.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee bought a rice mill in the district of Purulia, together with the factory plant and machinery, under an agreement for sale with the vendor. The agreement required payment of Rs 86 lakhs as full and final consideration by 30 December 2016, and the whole of it was paid by that date through banking channels. On payment the vendor was bound to deliver possession of the factory premises immediately, the assessee was entitled to take the electricity connection, trade licence, Government permit and every other licence needed to run the mill, the vendor undertook to raise no objection before any authority, and the assessee had the right to run the business in the premises from that date. The vendor was to execute the sale deed within two years of receiving the consideration, and the registered sale deed was in fact executed and registered on 21 March 2018. The assessee treated the purchase as made in the previous year relevant to assessment year 2017-18, ran the mill and offered the resulting profit to tax for that year, and that assessment was later reopened under section 147 and reassessment completed. The Assessing Officer nevertheless made an addition under section 56(2)(x) for assessment year 2018-19, taking the registration of the sale deed as the date of purchase. The Tribunal, by order dated 20 November 2024 in ITA No. 1797/KOL/2024, held that no right accrued to the assessee on execution of the agreement for sale. The assessee appealed under section 260A.
The appeal was allowed, the Tribunal's order was set aside and all the substantial questions of law were answered in favour of the assessee. The Court held that the Tribunal committed an error in concluding that the transfer did not take place in favour of the assessee on and from the date of execution of the agreement for sale, when the entire sale consideration had been paid under that agreement and the assessee had been put in possession of the property. On those facts the transaction answered the definition of transfer in section 2(47), so the acquisition belonged to the previous year relevant to assessment year 2017-18 and not to assessment year 2018-19, in which the addition under section 56(2)(x) had been made. The Court also recorded that the sale transaction had been assessed to tax for assessment year 2017-18 and that assessment had been reopened under section 147 and the reassessment completed. It further held that the Tribunal's finding on the applicable circle rate, where it had accepted that the stamp duty value as on 30 December 2016 applied because the whole consideration was paid then, was contrary to its own finding on the preliminary issue of the date of transfer.
The Court took the short issue to be whether the purchase of the rice mill was made on the date of the agreement for sale or on the date the registered sale deed was executed. It began from facts that were not in dispute: the agreement fixed Rs 86 lakhs as full and final consideration payable by 30 December 2016, the whole sum was paid on the date the agreement was executed, possession of the factory premises and of the plant and machinery was delivered, the assessee was given the right to take every licence and permit needed to run the mill and to run the business in the premises, and production was in fact commenced. The Tribunal had not disputed any of this. The question then became whether that qualified as a transfer within section 2(47). On that, the Court applied Sanjeev Lal v CIT, (2014) 365 ITR 389 (SC), where the Supreme Court held that although in normal circumstances a property cannot be said to be sold when an agreement to sell is entered into, the definition in section 2(47) changes the answer: if a right in the property is extinguished by execution of an agreement to sell, the capital asset can be deemed to have been transferred, because clause (ii) covers the extinguishment of any right in a capital asset and its transfer to someone else. The Supreme Court had there found that under the agreement the vendee acquired a right in the property and the vendor's right stood extinguished, and had directed that the provisions be given a purposive and harmonious construction. The Court then applied CIT v Balbir Singh Maini, (2017) 398 ITR 531 (SC), on clause (vi), where the Supreme Court held that any transaction which has the effect of transferring, or enabling the enjoyment of, immovable property falls within that clause. With both limbs satisfied, the legal issue was settled and the Tribunal's contrary view did not state the correct legal principle. Two further matters reinforced the conclusion: the same sale transaction had already been assessed for assessment year 2017-18 and had been through reassessment under section 147, and the Tribunal's own finding fixing the circle rate as on 30 December 2016, made because the entire consideration had been paid then, was irreconcilable with its finding on the year of transfer.
under section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property should come within its purview
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Handle my notice → Ask a CA on WhatsAppNo. The Calcutta High Court held that where the entire consideration is paid on the date of the agreement for sale, possession of the property is handed over, and the buyer starts running the business on it, the transfer takes place then and not on the later registration of the sale deed. Section 2(47)(ii) covers extinguishment of the vendor's rights, and section 2(47)(vi) covers any transaction that has the effect of enabling the enjoyment of immovable property. So the purchase of the rice mill fell in the previous year relevant to assessment year 2017-18, and the section 56(2)(x) addition made in assessment year 2018-19 could not stand. The Tribunal's order was set aside. This was decided by the High Court (High Court at Calcutta, Special Jurisdiction (Income Tax), Original Side; T.S. Sivagnanam CJ and Chaitali Chatterjee (Das) J) and bears on section 56(2)(x), section 2(47), section 2(47)(ii), section 2(47)(vi), section 260A of the Income Tax Act 1961. It is reported as ITAT/50/2025, IA No. GA/1/2025, Calcutta High Court. Section 56(2)(x) fixes the buyer with tax on the excess of stamp duty value over what he paid, and everything turns on which year the receipt falls in and which date's circle rate applies. Departments routinely take the registration date of the conveyance as the date of purchase. This judgment applies Sanjeev Lal and Balbir Singh Maini on the buyer's side of the transaction, and holds that the wider limbs of section 2(47) decide the year of acquisition just as they decide the year of a seller's capital gain. It also exposes a common inconsistency: the Tribunal here accepted, for the purpose of the circle rate, that the price had been paid on the agreement date, while simultaneously holding that no right accrued on that date. The Court said the two findings could not stand together. The point matters wherever full payment and possession precede registration by a year or more, which is the ordinary pattern in distress and part-financed purchases. If it applies to you, the first step is this: Put the agreement for sale, the bank evidence of full payment and the possession clause on record at the assessment stage; the Court's reasoning rests on all three being present and undisputed.
The assessee bought a rice mill in the district of Purulia, together with the factory plant and machinery, under an agreement for sale with the vendor. The agreement required payment of Rs 86 lakhs as full and final consideration by 30 December 2016, and the whole of it was paid by that date through banking channels. On payment the vendor was bound to deliver possession of the factory premises immediately, the assessee was entitled to take the electricity connection, trade licence, Government permit and every other licence needed to run the mill, the vendor undertook to raise no objection before any authority, and the assessee had the right to run the business in the premises from that date. The vendor was to execute the sale deed within two years of receiving the consideration, and the registered sale deed was in fact executed and registered on 21 March 2018. The assessee treated the purchase as made in the previous year relevant to assessment year 2017-18, ran the mill and offered the resulting profit to tax for that year, and that assessment was later reopened under section 147 and reassessment completed. The Assessing Officer nevertheless made an addition under section 56(2)(x) for assessment year 2018-19, taking the registration of the sale deed as the date of purchase. The Tribunal, by order dated 20 November 2024 in ITA No. 1797/KOL/2024, held that no right accrued to the assessee on execution of the agreement for sale. The assessee appealed under section 260A. The matter was decided on 2025-04-11 by the High Court (High Court at Calcutta, Special Jurisdiction (Income Tax), Original Side; T.S. Sivagnanam CJ and Chaitali Chatterjee (Das) J). On those facts the High Court held as follows. The appeal was allowed, the Tribunal's order was set aside and all the substantial questions of law were answered in favour of the assessee. The Court held that the Tribunal committed an error in concluding that the transfer did not take place in favour of the assessee on and from the date of execution of the agreement for sale, when the entire sale consideration had been paid under that agreement and the assessee had been put in possession of the property. On those facts the transaction answered the definition of transfer in section 2(47), so the acquisition belonged to the previous year relevant to assessment year 2017-18 and not to assessment year 2018-19, in which the addition under section 56(2)(x) had been made. The Court also recorded that the sale transaction had been assessed to tax for assessment year 2017-18 and that assessment had been reopened under section 147 and the reassessment completed. It further held that the Tribunal's finding on the applicable circle rate, where it had accepted that the stamp duty value as on 30 December 2016 applied because the whole consideration was paid then, was contrary to its own finding on the preliminary issue of the date of transfer.
The Court took the short issue to be whether the purchase of the rice mill was made on the date of the agreement for sale or on the date the registered sale deed was executed. It began from facts that were not in dispute: the agreement fixed Rs 86 lakhs as full and final consideration payable by 30 December 2016, the whole sum was paid on the date the agreement was executed, possession of the factory premises and of the plant and machinery was delivered, the assessee was given the right to take every licence and permit needed to run the mill and to run the business in the premises, and production was in fact commenced. The Tribunal had not disputed any of this. The question then became whether that qualified as a transfer within section 2(47). On that, the Court applied Sanjeev Lal v CIT, (2014) 365 ITR 389 (SC), where the Supreme Court held that although in normal circumstances a property cannot be said to be sold when an agreement to sell is entered into, the definition in section 2(47) changes the answer: if a right in the property is extinguished by execution of an agreement to sell, the capital asset can be deemed to have been transferred, because clause (ii) covers the extinguishment of any right in a capital asset and its transfer to someone else. The Supreme Court had there found that under the agreement the vendee acquired a right in the property and the vendor's right stood extinguished, and had directed that the provisions be given a purposive and harmonious construction. The Court then applied CIT v Balbir Singh Maini, (2017) 398 ITR 531 (SC), on clause (vi), where the Supreme Court held that any transaction which has the effect of transferring, or enabling the enjoyment of, immovable property falls within that clause. With both limbs satisfied, the legal issue was settled and the Tribunal's contrary view did not state the correct legal principle. Two further matters reinforced the conclusion: the same sale transaction had already been assessed for assessment year 2017-18 and had been through reassessment under section 147, and the Tribunal's own finding fixing the circle rate as on 30 December 2016, made because the entire consideration had been paid then, was irreconcilable with its finding on the year of transfer. In the words reproduced by the source cited on this page: "under section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property should come within its purview"
It was decided by the High Court on 2025-04-11 and is reported as ITAT/50/2025, IA No. GA/1/2025, Calcutta High Court. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 56(2)(x), section 2(47), section 2(47)(ii), section 2(47)(vi), section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed, the Tribunal's order was set aside and all the substantial questions of law were answered in favour of the assessee. The Court held that the Tribunal committed an error in concluding that the transfer did not take place in favour of the assessee on and from the date of execution of the agreement for sale, when the entire sale consideration had been paid under that agreement and the assessee had been put in possession of the property. On those facts the transaction answered the definition of transfer in section 2(47), so the acquisition belonged to the previous year relevant to assessment year 2017-18 and not to assessment year 2018-19, in which the addition under section 56(2)(x) had been made. The Court also recorded that the sale transaction had been assessed to tax for assessment year 2017-18 and that assessment had been reopened under section 147 and the reassessment completed. It further held that the Tribunal's finding on the applicable circle rate, where it had accepted that the stamp duty value as on 30 December 2016 applied because the whole consideration was paid then, was contrary to its own finding on the preliminary issue of the date of transfer. It arises in Capital Gains and How Tax Law Is Read matters, on section 56(2)(x), section 2(47), section 2(47)(ii), section 2(47)(vi), section 260A of the Income Tax Act 1961, and was decided by High Court at Calcutta, Special Jurisdiction (Income Tax), Original Side; T.S. Sivagnanam CJ and Chaitali Chatterjee (Das) J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show what you did with the property after possession — electricity connection, trade licence, permits, production started, profits offered to tax in that year — because it is enjoyment under section 2(47)(vi) that carries the argument. If the officer taxes the difference in the year of registration, point to your own return for the earlier year and to any reassessment already completed for it; double taxation of the same transaction in two years is the strongest practical point. Where the Tribunal or the officer applies the agreement-date circle rate but the registration-date year, take the inconsistency head on; the Court set aside the order on exactly that footing.
Still good law. A Division Bench judgment of 11 April 2025 that applies two Supreme Court decisions, Sanjeev Lal v CIT, (2014) 365 ITR 389 and CIT v Balbir Singh Maini, (2017) 398 ITR 531, to the definition of transfer in section 2(47). The source page records no case citing it. Whether the Revenue has taken it further was not checked in this session. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment gives the date of the agreement for sale inconsistently: the body of the order says at one point that the agreement was made on 13.12.2016, while the substantial questions of law, the payment obligation and the circle-rate finding all proceed on 30 December 2016. Nothing turns on the difference for the result, but the record does not resolve it. The order does not state the amount of the addition made under section 56(2)(x), the stamp duty value taken by the Assessing Officer, or what the first appellate authority decided. It also does not say what the outcome of the reopened assessment for assessment year 2017-18 was, only that the reassessment was completed, so the record does not show whether the same transaction has now been taxed twice or whether the earlier year absorbed it. The batch line gave the sections as 56(2)(x), 2(47), 2(47)(ii) and 2(47)(vi), which matches; section 260A, under which the appeal was filed, and section 147 are also mentioned in the order. The Tribunal's order of 20 November 2024, which contains the extracted terms of the agreement, was not read in this session. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed, the Tribunal's order was set aside and all the substantial questions of law were answered in favour of the assessee. The Court held that the Tribunal committed an error in concluding that the transfer did not take place in favour of the assessee on and from the date of execution of the agreement for sale, when the entire sale consideration had been paid under that agreement and the assessee had been put in possession of the property. On those facts the transaction answered the definition of transfer in section 2(47), so the acquisition belonged to the previous year relevant to assessment year 2017-18 and not to assessment year 2018-19, in which the addition under section 56(2)(x) had been made. The Court also recorded that the sale transaction had been assessed to tax for assessment year 2017-18 and that assessment had been reopened under section 147 and the reassessment completed. It further held that the Tribunal's finding on the applicable circle rate, where it had accepted that the stamp duty value as on 30 December 2016 applied because the whole consideration was paid then, was contrary to its own finding on the preliminary issue of the date of transfer.
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