Page 48 - Knowledge Network Transform

decisions on this issue. Therefore,
even though the issue of year of
taxability has been put to rest, the
year of transfer would still have to be
determined in accordance with the
existing provisions and judicial
precedents.

This view is further fortified by a
perusal of the proviso to section
45(5A) which states that if the
assessee 'transfers' the share in the
project on or before the date of issue
of completion certificate, the same
would be chargeable to tax in the
'year of transfer'. Thus, it can be seen that the
The failure of the Legislature to make suitable
Legislature has consciously sought to distinguish
amendments to other sections of the Act to provide
between 'year of transfer' and 'year of chargeability'.
benefits based on year of chargeability to those
These provisions are similar to section 45(2) which transactions covered u/s. 45(5A) would accentuate
provides that in a case of transfer by way of hardship and lead to litigation.
conversion of capital asset into stock-in-trade, the
Time limit u/s. 54/54F to be reckoned from year of
capital gains shall be taxed in the year in which such transfer
stock-in-trade is sold or transferred. Even in section
45(2), the year of transfer would be governed by 5. Since the year of transfer and year of chargeability
are held to be distinct, it may also have impact on the
section 2(47) whereas the year of chargeability is
deferred to the year in which the stock-in-trade is exemption provisions. Section 45(1) introduces a
sold or transferred. Thus, a view could be taken that deeming fiction to state the capital gains would be
deemed to be taxable in the year of transfer except
the year of transfer would still be required to be
determined in case of JDAs falling within the ambit of for cases falling within the ambit of sections 54, 54B,
section 45(5A). 54D, 54E, 54F etc. Thus, if an individual seeks to claim
deduction u/s. 54/54F, the assessee would have to
Therefore, the provisions of section 2(47) and the
invest/construct a residential property within the
existing litigation on the determination of year of time limit provided u/s. 54/54F. The perusal of
transfer would still continue to harass taxpayers even
section 54 would show that the time limit provided
if the capital gains would be subject to tax under
has to be considered from the 'date on which the
section 45(5A). This would also have a ripple effect transfer took place'.
on other provisions of the Act where a reference is
made to the year of transfer. A conjoint reading of the two provisions would show
that taxation of income under the head 'Capital
Similarly, Explanation (iii) to section 48 which defines
Gains' revolves around the 'date of transfer'.
indexed cost of acquisition also refers to the year in Therefore, transactions falling within the ambit of
which the asset is transferred. This may imply that
section 45(5A) would still have to determine the
while computing the capital gains on constructed 'year/date of transfer' and individual assessee
premises received by the assessee, the cost of
seeking to claim benefit u/s. 54/54F would have to
acquisition of the land would be subject to
ensure that the share of constructed premises to be
indexation benefit of the year in which the asset was received by them, complies with the time-limits
transferred in accordance with section 2(47).
based on the date of transfer of land or building.

45 Life shrinks or expands in proportion to one's courage.