Under
the Income Tax Law, very often a controversy arises as to when a particular
property can be said to be transferred, namely when the possession of the
property is handed over to the buyer or in the year in which the title of
ownership is transferred. This is because the possession of an immovable
property may be transferred in one particular financial year whereas the title
to the property might be transferred in the next year. Hence, disputes do arise
as to the taxability of the capital gains in the year of transfer of possession
or transfer of title. Fortunately, the Income Tax Appellate Tribunal, Mumbai
Bench in the case of Gripwell Industries Ltd v. Income tax Officer [2006]
284 ITR (AT) 188 has held that where there is an agreement of sale between the
assessee and the vendee and the physical possession of the factory along with
factory land, building and other assets is actually given in one financial year
whereas the legal title to the property is transferred in the next financial
year, the capital gains would be deemed to accrue in the year in which the
possession is actually given and not in the later year when the legal transfer
of title is effected. This judgment is of great importance for all persons
possessing property and interested in transferring it.