Law: Capital Value Tax Rules, 1990

Section: R.4,7(d)(4)

Law: Finance Act, 1989

Section: 7(4)

Capital Value Tax Rules, 1990--- ----R. 4--- Finance Act (V of 1989), S. 7(4)--- In house sale/purchase/transfer of immoveable property at offices of private real estate developers/companies---Capital Value Tax (CVT), payment of---Collecting authority---Scope---Petitioner, a private limited company, was engaged in the business of constructing and selling units/flats/apartments through sale agreements---Petitioner received a notice from the tax authorities alleging that it had transferred various properties/flats/apartments to its customers, therefore, a specified sum was payable by it as Capital Value Tax (CVT)---Pleas raised by the petitioner were that the tax authorities had no jurisdiction to declare the petitioner as a collecting authority being attesting and transferring authority, and that the petitioner being a private limited company was not an attesting/transferring authority and was not under any legal obligation to collect and pay any CVT---Held, that S. 7(4) of the Finance Act, 1989 provided that CVT was required to be collected by the person responsible for registering or attesting the transfer of the asset in respect of which the tax was payable at the time of registering or attesting the transfer---Asset included immoveable property and structures thereon---Liability to pay was on the purchaser at the time when the transfer in her/his/its name took place and the responsibility to collect the same was on the person/authority, registering or attesting such transfer---Authority to collect CVT vested with the registration authority namely, the Registrar of Documents, however, during recent years with the development of co-operative housing societies and statutory authorities engaged in the business of development and sale of real estate, a methodology of transferring immovable property had evolved, whereby properties were transferred privately without involving the Registrar of Documents---Such private transfers were designed to avoid transactional costs, taxes and duties which in turn led to higher turnover of such properties for investment purposes---Such societies, statutory authorities and even limited liability companies (such as the petitioner)…

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