Section 2(47): Definition of “Transfer”

Transfer as per S. 2(47), of Income tax Act, 1961-

^{Capital Gain arises on transfer of capital asset. The word transfer occupy a very important place in capital gain, because if the transaction involving movement of capital asset from one person to another person is not covered under the definition of transfer there will be no capital gain chargeable to income tax.}

In simple words Transfer includes:

• Sale of asset
• Exchange of asset
• Relinquishment of asset (means surrender of asset)
• Extinguishments of any right on asset (means reducing any right on asset)
• Compulsory acquisition of asset.
• E.g. Usually flats in multi-storeyed building and other dwelling units in group housing schemes are registered in the name of a co-operative society formed by the individual allottees. Sometimes companies are floated for this purpose and allottees take shares in such companies.  The shareholder /member in this case are deemed owner of flats although legal owner is the society or the company. If deemed  transfer of right to use and enjoy the flat is effected by changing the membership of co-operative society or by transferring the shares in the company.Possession and enjoyment of immovable property is also made by what is commonly known as ‘Power of Attorney’ transfers.Points to be noted:
  1. Redemption of preference share amount to transfer and attract capital gains in the hands of shareholder as per Supreme Court in case of Anarkali Sarabhai. It was held that, when preference share are redeemed by the company, the shareholder has to abandon or surrender his rights in share to get the money in lieu thereof. Thus, this is amount to relinquishment of rights and hence transfers. Since it is amount to sell of share to the company by the shareholder. Thus capital gain arise in the hands of shareholder, for company it is buy-back of share which is allowed for preference share.
  2. Exchange of share of one company with share of another company amounts to transfer in the hand of shareholder as per supreme court in case of orient trading company.
  3. Reduction of share capital amount to transfer as per supreme court in G.Narshimah case.( to be discussed later in details.)
  4. Money or assets received on liquidation of a company would amount to transfer.( to be discussed later in details)
  5. Relinquishment means to give up or abandon or surrender.
  6. The extinguishment means put out or suppress or destroyed.

Related Cases:

S. 2(47)(v), 45 & 254(1) of IT Act, 1961—Capital gain—S. 153(3)(ii) deals with the aspect of limitation and it is not a provision enlarging the jurisdiction of authority or Court. Question of levying taxes in accordance with law has nothing to do with enlarging the jurisdiction of any authority or Court. Therefore, the Assessing Officer should give credit for taxes already paid by the assessee on his very income in the later years—DCIT vs. Standard Fire Works Pvt. Ltd. (2010) 128 TTJ 1 (ITAT-Chennai)

S. 2(47), 28(i), 45(2) & 45(3) of IT Act, 1961—Capital gain—Where land held by assessee company as stock-in-trade has been contributed as capital in a firm after revaluing the same at higher figure and same has been taxed by treating the transaction as a trading or commercial transaction, the same can be taxed as capital gains u/s 45(3) of the Act—DLF Universal Ltd. vs. DCIT (2010) 128 TTJ 121 (ITAT-Delhi)

S. 2(47), 28(i), 37(1) and 45 of the IT Act, 1961—Business loss/capital loss—Loan given by assessee to its subsidiary for acquisition of share in the joint venture company not being in line with the business activities of the assessee, therefore, the loss suffered by the assessee in recovering the amount cannot be treated as capital loss u/s 45 and not allowable as business loss u/s 28 r/w provisions of S. 37 of the Act—DCM Ltd. vs. DCIT (2009) 123 TTJ 114 (ITAT-Delhi)

S. 2(47),  41(2) of IT Act, 1961—Transfer—Cl. (47) of S. 2 of IT Act, 1961, introduces an artificial extended meaning to the expression “transfer”. S. 41(2) applies wherever the sale proceeds of the capital asset of an assessee exceed the written down value. The transfer of assets at written down value for shares of higher value amounts to transfer and attract tax u/s 41(2) of the Act, 1961—CIT vs. Oswal Spinning and Weaving Mills Ltd. (2011) 338 ITR 648 (P&H)

S. 2(28A), 2(47), 45(1) & 48 of IT Act, 1961—Capital gain—A close reading of S. 2(28A) would make it clearly understanding that to call an amount received as interest, at least one of the conditions should be satisfied, namely, the same should have been received as a due on account of any money either borrowed or debt incurred. Therefore, the amount in question received by the Official Liquidator as per the orders of the Company Court, though repeatedly referred to as interest, for the purpose of assessment of income tax, it is part of sale consideration and same cannot be treated as income from other sources as defined in S. 56 but said amount should be treated only as capital gain u/s 45 of the Act for purpose of assessment—Cauvery Spinning & Weaving Mills Ltd. (In Liquidation) vs. CIT (2011) 238 CTR 55 (Mad)

S. 2(47), 45, 55(2), 158BC of IT Act, 1961—Block assessment—The assessee is carrying on the business of a fuel station under licence issued by a company and therefore, licence to carry on business of fuel station not covered under chargeable asset. Once the business and operation of fuel station is theoretically detached from the land, the value of the land cannot be founded out as it has undergone fundamental change in its functional utility. Right to carry on any business cannot be conceived as a capital asset—ACIT vs. T. J. George (2009) 319 ITR 150 (ITAT-Cochin)

S. 2(47)(v) IT Act, 1961—Capital gain—The assessee-owner of the property entered into an agreement with a firm to sell the property against certain consideration. At the time of signing the agreement she (assessee) received advance and also obtained a no objection certificate from the authorities under Chapter XX-C of the 1961 Act. However, she did not execute any sale deed in favor the agreement holders but on their request she executed a power of attorney in favor of an individual authorizing him to do various acts with reference to the property including the execution of deed or deeds of conveyance. The subsequent act of the assessee in executing the power of attorney and sale deeds executed by the power holder on the basis of such power of attorney would not in any way alter status of the parties to the agreement for applicability of S. 53A of the Transfer of property Act, 1882. Thus, the assessee can no longer assert possessory rights against the firm to which possession has already been given pursuant to the agreement and that too after receiving the full sale consideration—Smt. D. Kasturi vs. CIT (2010) 323 ITR 40 (Mad)

S. 2(47), 45, 48, 50C of IT Act, 1961—Capital gain—In absence of any evidence on record to show that the assessee has received consideration over and above the amount recorded in the sale deed, no addition can be made by estimating and substituting the market value—Kaushik Suresh bhai Reshamwala vs. ITO (2011) 7 ITR (Trib) 146 (ITAT-Ahd.)

S. 2(47), 45 of Income-tax Act, 1961—Capital gain—S. 2(47) of the Act was amended by the Finance Act 1987 w.e.f. April 1, 1988, to include equitable transfer as defined in S. 53A of the Transfer of Property Act, 1882 within the definition of “transfer” for the purpose of levying capital gains tax. In the present case, the sale deed specifically provided that in case the entire sale consideration is not paid on or before Dec., 31 1987, the sale deed shall be null and void automatically and admittedly, the sale consideration was not paid on or before Dec., 31, 1987 and thus, the sale deed had become automatically null and void. Since in this case there was no “transfer” of land from the petitioner to the society and, therefore no question of capital gain would arise. The gains would be leviable within the meaning of S. 45, as and when compensation is actually received by the assessee—CIT vs. Rakesh Gupta (2011) 336 ITR 277 (All)

S.2(14), 2(47), 45(1) & 45(4) of IT Act, 1961—Capital gain—Profit received by the assessee partner on notional basis by deducting 40 per cent from two years average profit for the period of pendency of dissolution of the firm under the direction of the Court is to be treated as revenue receipt—B. Raghurama Prabhu Estate Executrix, Smt. M. Kaveri Bai vs. Jt. CIT (2011) 239 CTR 274 (Kar)

S. 2(47)(v) & 50C of IT Act, 1961, S. 53A of Transfer of property Act, 1882—Capital gain—Once, undisputedly, the assessee has handed over the possession of the property to the developer against the payment of share of sale consideration then the property is deemed to have been transferred as per the deeming provisions of S. 2(47). When the conditions of S. 53A are fulfilled irrespective of the fact that it is not absolute transfer by way of execution of sale deed, the transaction is to be completed. Provisions of S. 50C are applicable to transfer of development right in the property—Arif Akhatar Hussain vs. ITO (2011) 140 TTJ 413 (ITAT-Mum.)

Sec. 2(29B), 2(42B), 2(47) & 45 of Income-tax Act, 1961—Capital Gain—Land and building belonging to partnership firm were given on lease for a period of 99 years to a private limited company, the shares of which are held by the partners of the assessee firm. The respondent assessee relied on the terms of the lease deeds and contended that the consideration received for assignment of the lease in rent received for each year for the entire period of the lease i.e. 99 years but received fully and in bulk in advance. High Court of Kerala held that transaction of lease for 99 years of the land and building by the assessee firm, to a company in which the partner of firm were shareholders is nothing but a transfer within the meaning of S. 2(47)(vi) and consideration received by the partners of the firm by way of fully paid up shares of the lessee company was assessable as long term capital gain.
Cases referred to:—
A.R. Krishnamurthy vs. CIT(1989) 76 CTR (SC) 18 : (1989) 176 ITR 417 (SC)
CIT vs. Panbari Tea Co. Ltd. (1965) 57 ITR 422 (SC),
Durga das Khanna vs. CIT (1969) 72 ITR 796 (SC),
Maharaja Chintamani Saran Nath Sah Deo vs. CIT (1966) 62 ITR 167 (Pat),
Mrs. G. Seetha Kamrajj vs. CIT (2006) 204 CTR (AP) 487 : (2006) 284 ITR 54 (AP), and
N. Khandervali Saheb vs. N. Gudu Sahib (Decd.) & Ors. (2003) 261 ITR 1 (SC). [2011] 19 ITCD 1 (KERALA)

S. 2(47), 28(iv), 263 of IT Act, 1961—Business income—For bringing any receipt to tax under the head Capital gains the first requirement is transfer for a capital asset. Mere cancellation of the contract does not result in any transfer of any asset. Even if the extended definition u/s 2(47) of the Act is made available—DCIT vs. Garden Silk Mills Ltd. (2010) 320 ITR 720 (Guj)

S. 2(47)(v) of IT Act, 1961—Capital gain—The agreement for sale itself is a transfer within the meaning of S. 2(47)(v) of the Act which reads that even a transaction u/s 53A of the Transfer of property Act is a transfer within the meaning of the said provision. Since the purchaser has been given possession, the assessees are not entitled to canvass for the position that S. 2(47)(v) is not applicable—C. Ravi vs. DCIT (2010) 325 ITR 417 (Ker)

S. 2(14), 2(47), 45 & 47 (xiiia) of IT Act, 1961, of IT Act, 1961—Capital gain—”Capital asset”, as defined u/s 2(14) means property of any kind held by an assessee, whether or not connected with his business. Membership card which confers right on the member to trade in stock and shares in the exchange is certainly a property. Clause 47A(b) provides for auction sale of the membership after 90 days of declaring a members as defaulter. Since the stock exchange membership card which is sold in auction is property covered by the description capital asset” u/s 2(14), its sale by stock exchange amounts to “transfer” within meaning of S. 2(47)—CDR P. J. Mathew vs. ITO [2010] 230 CTR 398 (KER)

S. 2(47), 54EC & 263 of IT Act, 1961—Revision—As per provisions of S. 2(47), the word “transfer” has a much wider meaning as contemplated in the IT Act, 1961 itself. cl. (v) of S. 2(47) is explicitly clear that by possession or retention in part performance of contract as referred to in S. 53A of the Transfer of Property Act, 1882, transfer can take place. There is no bar on such transfer. Therefore if by way of a part performance of a contract as contemplated in S. 53A of Transfer of Property Act (i.e. agreement to sale) the assessee has received advance payments and deposited the same in specified bonds, he cannot be charged of defrauding the law when there is no bar to take possession by an agreement and transfer can be treated to have taken place on the basis of an agreement and advance payment. Assessing Officer allowed exemption u/s 54EC of the IT Act on the basis of said investment. Hence, the CIT is not justified in invoking the jurisdiction u/s 263 of the Act to disallow the exemption u/s 54EC of the Act—Bhikulal Chandak (HUF) vs. ITO (2009) 126 TTJ 545 (ITAT-Nag)

S. 2(47) of IT Act, 1961—Capital gain—The execution of joint development agreement along with shareholders agreement and power of attorney executed by assessee-company in favor of PEPL does not result in a transfer within the meaning of S. 2 (47) when from records it appeared that assessee company had not transferred any property as such, either in favor of PEPL or JV project. Moreover, right of assessee-company and PEPL were with reference to property to be build in future and, therefore, there cannot be a case of extinguishment of any right in property held by the assessee. Thus, addition made towards long-term capital gain is to be deleted—Vijaya Productions Pvt. Ltd. vs. Addl. CIT (2012) 134 ITD 19 (ITAT-Chennai)

S. 2(47), 153A of IT Act, 1961, S. 53A of Transfer of Property Act, 1882—Capital gain—Since the agreement to sell never culminated into a contract of sale and deed of conveyance was never executed and the proposed transfer of capital asset was aborted and the whole chain of events was open before the authorities at the time of search, and when the assessee clearly explained the receipt and disposal of money in pursuance of the aborted sale contract, no case of transfer of capital asset is arises—ACIT vs. Hotel Harbor View [2010] 2 ITR (Trib) 178 (COCHIN)

S. 2(47), 9(1)(i), 195 and 201 of the IT Act, 1961—TDS—A non-resident assessee acquired shares of another non-resident company without deducting any tax at source while making payment. Agreement in question was not filed before the court. Show cause notice issued to the assessee seeking to treat it as an assessee in default to failure to deduct tax at source while making payment to non-resident assessee. It was held that the petitioner shall be entitled to question the decision of the authority on the preliminary issue before the High Court, in the event the same is decided against it. The question of law to that extent shall remain upon. The decision of the authority shall be based on the interpretation of the agreement in question and in accordance with law—Vodafone International Holdings B. V. vs. Union of India & Anr. (SC)

S. 2(14), (47), 45 of IT Act, 1961—Capital gain—The assessee-company carried on business as a dealer in motor vehicles in certain premises which it held as lessee of the Municipal Corporation and assessee entered into an agreement called a “Retailing business agreement with other under which it received a sum of Rs. 50 lakh in lieu of forgoing its right to use those premises. The surrender of possession, occupation and enjoyment of the premises by the assessee for a premium of Rs. 50 lakh for a fairly long period, would amount to extinguishment of the assessee right in the capital asset. Thus, under such circumstances, there is a transfer within the definition of S. 2(47) of a capital asset, being the right in the property u/s 2(14) and, hence, capital gain has to be computed u/s 45 of the Act—ACIT vs. United Motors (I) Ltd. [2010] 1 ITR (Trib) 578 (ITAT-Mumbai)

S. 2(47), 45(4), 47(ii) & 145 of IT Act, 1961—Capital gain—S. 45 gets attracted in the case of the transfer of capital asset by way of distribution of capital assets, inter alia, on the dissolution of a firm. When on reconstitution of a firm, new partners are admitted and one new partner took over entire assets and liabilities, it amounts to a transfer of assets on dissolution of a firm and therefore, S. 45(4) of the Act applicable. Thus valuing the closing stock on dissolution of firm at fair market rate is justified—ACIT vs. D. D. International (Global) (2009) 125 TTJ 112 (ITAT-Asr)

S. 2(47), r/w S. 28(i) of  IT Act, 1961—Capital gain—Conversion of land in question into stock-in-trade would be taxable u/s 45(2) in year of its sale on basis of fair market value on date of conversion. When stock-in-trade had been transferred to builder on the date by the assessee on which he issued irrevocable power of attorney in favor of builder under which latter became entitled to possession and disposal of area allocated to it, therefore, profit arising on account of transfer of stock-in-trade, representing difference between fair market value of built up area allotted to assessee and fair market value of capital asset on its date of conversion into stock-in-trade would become taxable as business in the relevant assessment year only—Tej Pratap Singh vs. ACIT (2010) 127 ITD 303 (ITAT-Delhi)

S. 2(47), 45(3), 45(4) & 47(ii) of IT Act, 1961—Capital gain—S. 47 was introduced to take out certain transactions which otherwise are transfers of capital assets and otherwise taxable u/s 45 from being taxed. On the reintroduction of sub-s. (3) and (4) of S. 45 by the Finance Act, 1987, cl. (ii) of S. 47 has been expressly omitted removing the protective umbrella. Where in respect there is transfer of capital asset, by any mode and to ensure the gain being taxed u/s 47 has been amended. Therefore, continuing the business with the new partners who are introduced after retiring the old partners is a transfer of capital assets within the meaning of S. 2(47) attracting the capital transactions in terms of S. 45(4) of the Act—CIT vs. Gurunath Talkies (2009) 226 CTR 474 (Ker)

S. 2(42A), 2(47)(v), 2(47)(vi), 45 & 54EC of IT Act, 1961—Capital gain—u/s 2(47)(v) any transaction involving allowing of possession to be taken over or retained in part performance of a contract of the nature referred in S. 53A of the Transfer of Property Act would come within the ambit of S. 2(47)(v). In order to attract S. 53A, the following conditions need to be fulfilled as there should be a contract for consideration; it should be in writing; it should be signed by the transferor, it should be pertained to transfer of immovable property; the transferee should have taken possession of the property; lastly, the transferee should be ready and willing to perform his part of the contract. Assessee-co-owner of a property purchased in the year 1990 along with other co-owners entered into a development agreement on 31st Oct., 2000 with a developer. Under the said agreement, all co-owners get 32.5 per cent of total constructed area form the developer and balance 67.5 per cent was retained by developer. Assessee sold his share during financial year 2004-05 and claimed exemption u/s 54C against the capital gain claiming it to be long-term capital gain. Said development agreement resulted in confirming of the rights of ownership of the developers share of the land upto the developer on the date on which it entered and same would constitute a transfer in relation to developers share in that capital, i.e., 67.5 per cent of land, accordingly the assessees claim seeking exemption u/s 54EC is allowable—ITO vs. Vikash Behal (2010) 131 TTJ 229 (ITAT-Kol)

S. 2(14), (47), 14A, 36(1)(iii) of IT Act, 1961—Capital gain—According to S. 2(14) of the Act, the word capital asset means, property of any kind held by an assessee and it does not necessarily mean that the property which the assessee hold must be his own. Surrender of rights of the assessee would amount to extinguishment of his rights in the land/capital asset and, therefore, it attracts capital gains loss—Asian PPG Industries Ltd. vs. DCIT (2010) 4 ITR (Trib) 17 (ITAT-Mum)

S. 2(47) of IT Act, 1961—Capital gain—The execution of joint development agreement along with shareholders agreement and power of attorney executed by assessee-company in favor of PEPL does not result in a transfer within the meaning of S. 2 (47) when from records it appeared that assessee company had not transferred any property as such, either in favor of PEPL or JV project. Moreover, right of assessee-company and PEPL were with reference to property to be built in future and, therefore, there cannot be a case of extinguishment of any right in property held by the assessee. Thus, addition made towards long-term capital gain is to be deleted—Vijaya Productions Pvt. Ltd. vs. Addl. CIT (2012) 134 ITD 19 (ITAT-Chennai)

S. 2(14), 2(47), 45 & 48 of IT Act, 1961—Capital gain—Giving up of a right to claim specific performance by conveyance in respect of an immovable property, amount to relinquishment of the capital asset. Therefore compensation received for giving up the right to specific performance of an agreement to sell, constitutes capital gain chargeable to tax but deduction as per s. 48 of the Act is allowable—CIT vs. H. Anil Kumar (2011) 242 CTR 537 (ITAT-Kar)

S. 2(47), r/w S. 45 of IT Act, 1961, S. 53 Transfer of Property Act, 1882—Capital gain—In order to be transfer within meaning of cl.(v) of S. 2(47) there must be a transfer under which the possession of immovable property is allowed to be taken or allowed to be retained. Secondly, such taking or retention of possession as is well known is a fact of the equitable doctrine of part performance of contract falling within the scope of S. 53A of the T.P. Act, 1882. In this case, assessee-company purchased a piece of agricultural land on 20.11.99 and he entered into an agreement for sale of such piece of land with some other and similarly executed a power of attorney in favor of representative of said purchaser, authorizing him to cultivate said land and to sell agricultural produce grown on it. Such power attorney was registered before sub-registrar on 21.11.2002. However sale of consideration had been paid to the assessee prior 5.9.2002 through cheque and thus, assessee claimed that transfer of land got completed on 21.11.2002 and, therefore, capital gains arising on sale of land is to be assessed as long-term capital gains. Although the power of attorney was registered on 21.11.2002 but same was effective w.e.f. 5.9.2002 as the possession of the land was given on 5.9.2002 when the power of attorney was executed. Therefore, date of execution of power of attorney and agreement to sell, i.e., 5.9.2002 to be the date of transfer and thus, it has to be assessed as short-term capital gains—V. Ram Chandra Construction Pvt. Ltd. vs. ACIT (2011) 131 ITD 71 (ITAT-Agra)

S. 2(47)(v) & 50C of IT Act, 1961, S. 53A of Transfer of property Act, 1882—Capital gain—Once, undisputedly, the assessee has handed over the possession of the property to the developer against the payment of share of sale consideration then the property is deemed to have been transferred as per the deeming provisions of S. 2(47). When the conditions of S. 53A are fulfilled irrespective of the fact that it is not absolute transfer by way of execution of sale deed, the transaction is to be completed. Provisions of S. 50C are applicable to transfer of development right in the property—Arif Akhatar Hussain vs. ITO (2011) 140 TTJ 413 (ITAT-Mum)

S. 2(47) of IT Act, 1961, r/w S. 53A of Transfer of Property Act, 1882—S. 53A of the Act, 1882 envisage writing signed by the vendor from which terms necessary to constitute the transfer can be ascertained with reasonable certainty. In such a situation, clause (v) of sub-s. (47) of S. 2 of the 1961 Act provides that handing over the possession to the vendee or allowing him to retain the possession if he is already in possession of the property shall also amount to transfer. In the instant case, there is no writing by the vendor from which the terms of the contract of transfer can be ascertained with reasonable amount of certainty. There is no evidence of handing over the possession to the vendee also. Therefore, cl. (v) is also not applicable to the facts of the instant case. Since the transaction of transfer has not taken place at all, the question of accounting the same in the books of account becomes immaterial—Addl. CIT vs. Delhi Apartment Pvt. Ltd. (2012) 135 ITD 441 (ITAT-Delhi)

S. 2(47) of IT Act, 1961—Capital gain—The assessee who is carrying on profession as a Chartered Accountant owned a building jointly with his wife. The assessee and his wife entered into a development agreement with a builder with regard the said building. According to the terms of said agreement, builder agreed to pay owners a consideration of Rs. 2,18,35,000. However Assessing Officer invoking provisions of S. 50C adopted deemed consideration of Rs. 3,82,50,000 and thus, the consideration of assessee came to Rs. 1,91,20,000. After deducting indexed cost of acquisition of value of land Assessing Officer determined such capital at Rs. 1,85,81,560 and than Assessing Officer after allowing exemption u/s 54/54EC, brought to tax capital gains of Rs. 76,64,008. Since, the assessee had transferred land and building to developer through agreement registered by State Registration Authorities, there was transfer of capital asset and thus, capital gain on which is chargeable to income-tax—Chiranjeev Lal Khan vs. ITO (2011) 132 ITD 474 (ITAT-Mum)

S. 2(47), of IT Act, 1961—Capital gain—The assessee-medical practitioner entered into a joint venture agreement with developers for developing the property. Capital gain tax should be levied only on completion of the entire transaction when the super built-up area is handed over to the assessee as per the agreement—CIT vs. Dr. T. K. Dayalu

S. 2(47), 45 & 260A—Appeal (High Court)—Appeal before High Court u/s 260A of the Act involving substantial question of law. the High Court should decide the question of law by recording its finding thereon—CIT vs. Well pack packaging.

S. 2(47) of IT Act, 1961, S. 53 A of Transfer of Property Act, 1882—Capital gain—S. 2(47) applies only in those cases where the transferee has no part to perform in respect of the contract and has taken possession of the property or any part thereof and the transferor has performed or is willing to perform his part of contract, and then only S. 2 (47) (v) would have application. Since as per the agreement in question it is not established that the transaction of sale of property is completed in terms of provisions of S. 2(47)(v) of the IT Act, 1961, r/w S.c53 A of the Transfer of Property Act, 1882 and so the capital gains worked out by the Assessing Officer is not chargeable to the assessment year in question—ITO vs. Smt. Satyawati Devi Verma (2009) 123 TTJ 97 (ITAT-Delhi)

S. 2(47) of IT Act, 1961—Capital gain—No capital gain arises to the assessee if there is no transfer of capital assets within the meaning of S. 2(47) of the Act.

S. 2(47), 45 of the IT Act, 1961—Capital gain—The amount received by the assessee on transfer of various shares in the course of the family arrangment would not result in any capital gains within the meaning of the Income-tax Act as it does not amount to transfer—Mrs. P. Sheela vs. ITO

S. 2(47) & 45 of the IT Act, 1961—Capital gain—Surrender of shares to settle the dispute between two families or to buy the peace, does not amount to any capital gains—Mrs. P. Sheela vs. ITO (2009) 121 TTJ 133 (ITAT-Bang)

S. 2(14), 2(47), 45, 48 & 55(2)(a) of the IT Act, 1961—Capital Gain—The right to construct the additional storeys on account of increase in FSI by virtue of regn. No. 14 is a capital asset held by assessee, therefore, assignment of such right in favor of the developers amounted to transfer of capital asset—Maheswar Prakash-2 Co-operative Housing Society Ltd. vs. ITO (2009) 121 TTJ 641 (ITAT-Mumbai)

S. 2(47)(v) & 54 of the IT Act, 1961, S. 53A Transfer of property Act, 1882—Capital gain—As per cl. (v) of S. 2(47) of the IT Act, transfer includes any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in S. 53A of the transfer of property Act, any transaction entered into in any manner which has the effect of transferring or enabling the enjoyment of any immovable property. Therefore, any transaction involving allowing of possession to be taken over or retained in part performance as referred to in S. 53A of Transfer of property Act would come within the ambit of S. 2(47) of the Act to hence, withdraw of exemption u/s 54 of the Act is justified—R. Kalanidhi vs. ITO [2010] 122 ITD 388 (Chennai)

S. 2(47)(v) & 45 of IT Act , 1961—Capital gain—The owners and assessee entered into an agreement for development of the property and certain rights were assigned to the developer who in turn had made the substantial payment and entered into the property and constructed the flats. The legal ownership continued with the owners to be transferred to the society at a future distant date really does not effect the applicability of S. 2(47) as per the reasons assigned—Taher Alimohammed Poonawala vs. Addl. CIT (2009) 124 TTJ 387 (ITAT-Pune)

S. 2(47), 45 & 48 of IT Act, 1961, S. 53A of Transfer of Property Act, 1882—Capital gain—According to Transfer of property Act, 1882, immovable property would include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth. Hence, deduction in computing capital gains is allowable for cost of old superstructure demolished by the assessee before handing over the possession of land to developer under the development agreement—Dr. Maya Shenoy vs. ACIT (2009) 124 TTJ 692 (ITAT-Hyd)

S. 2(47), 45 of IT Act, 1961—Capital gain—The amount received by a cable operator for not competing with the purchaser in future is not taxable under the head capital gain—CIT vs. Amol Narendra Dalal [2009] 318 ITR 429 (Bom)

S. 2(47), 32, 37, 45 of IT Act, 1961—Capital gain—Deputy Commissioner of Income-tax v. Whirlpool of India Ltd. [2012] 16 ITR (Trib) 309 (ITAT-DELHI)

S. 2(47)(v),045(1)of IT Act, 1961—Capital gain—ITO vs. MAHESH NEMICHANDRA GANESHWADE & ORS [2012] 147 TTJ 488 (ITAT-PUNE)

S.2(47), r/w S. 45 of IT Act, 1961—Capital Gain—A case where the assessee makes a gift of shares to his son and by said gift income from share would not accrue to the assessee but would accrue to the son and to that extent the income of the assessee would be diminished and his tax liability reduced. This cannot be regarded as a case of tax avoidance even if the motive of the assessee in making the gift was to save tax on the income from shares at a higher rate applicable to him.—ACIT Vs. Biraj Investment Pvt. Ltd.

S. 2(47) of IT Act, 1961—Capital gain—Commissioner of Income-tax vs. Enam Securities Pvt. Ltd.

S. 2(47) of IT Act, 1961—Capital gain—Commissioner of Income-tax vs. P. N. Panjawani

S. 2(47) of IT Act, 1961—Capital gain—Commissioner of Income-tax vs. R. Nagaraja Rao

S.2(47), r/w S. 45, 54B and 54F, of the IT Act, 1961—Capital gain—u/s 53A of the transfer of Property Act, it is necessary that for part consideration, the possession should have been handed over to the transferee. Merely because full consideration has been received by the assessee on account of agreement of sale by itself is no ground to charge capital gains on the subject matter in issue— DCIT Vs. Tej Singh [2012] 138 ITD 489 (ITAT-Agra)

S. 2(47) of IT Act, 1961—Capital gain—CIT vs. Moped and Machines

Reference:

As Per Section 2(47), of the Income Tax Act, 1961-

In this Act, unless the context otherwise requires,—

2(47).  “transfer”, in relation to a capital asset, includes,—

(i)  the sale, exchange or relinquishment of the asset ; or

(ii)  the extinguishment of any rights therein ; or

(iii)  the compulsory acquisition thereof under any law ; or

(iv)  in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ;] [or]

(iva)  the maturity or redemption of a zero coupon bond; or

(v)  any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or

(vi)  any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.

[Explanation 1].—For the purposes of sub-clauses (v) and (vi), “immovable property” shall have the same meaning as in clause (d) of section 269UA.]

[Explanation 2.—For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;]