Abbasbhai A. Upletawala v. ITO – [2022] 143 384 (Mumbai – Trib.)

The Assessee was a director and had given his personal guarantee to the SBI in respect of his company’s commercial borrowings. Later, SBI invoked the personal guarantee given by the assessee. SBI entered into an assignment agreement with Asset Reconstruction Co India Ltd (ARCIL). The land, which was offered as collateral security, was assigned to the ARCIL. Said land was sold to Advent Developers Pvt Ltd (ADPL). The assessee was confirming party to this sale transaction between ARCIL and ADPL.

The AO held that the assessee had earned long-term capital gains on the sale of such land and was liable to pay tax.

The Tribunal held that what is important in the instant case is the year in which the transfer takes place. So far as the transaction is concerned, that is between the ARC and the end buyer. But the very fact that ARC is selling the property as the owner of the property does indicate that the transfer from the assessee to the ARC, via SBI perhaps, took place at an earlier stage. That is the year of transfer in which the taxability arises so far as the assessee is concerned.

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