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The capital gains tax can be levied as soon as the possession of the property is handed over to the proposed seller irrespective of the fact whether all payments have been received or not during the previous year. Mere fact that the certain acts and obligations between the seller and the buyer are to be executed in the future could not come to any saving.

In the case of Smt. Lalitha Ramaswamy vs. Income-tax Officer (75ITD293) the issue was whether the property was sold in the year of assessment or in the subsequent years. The Bombay Bench of the Tribunal found that the possession of the property had been given to the builder during the previous year and hence there is sale of property. In this case the assessee had received 2/3rd of the price in the previous year and the rest in the subsequent year.

In this case the CIT (A) had given a finding that the demolition of bungalow took place in the previous year which fact further proved that the possession of the property was handed over to the builder even before the end of the previous year. And this had been due to the fact that the sale agreement in this case was in respect of the land and bungalow.

Further the Supreme Court in the case of Mysore Minerals Ltd. v. CIT (239 ITR 775) held that the provisions of the Income tax Act have reference to the enjoyment of the property by the assessee as owner and nothing else. In referring to the term ‘‘owned’’ as occurring in section 32(1) of the Act the Apex Court held that it must be assigned a wider meaning. An assessee in possession of building on part payment of price would be entitled to depreciation etc. on it.

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