Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2006 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2006 (12) TMI 170 - AT - Income TaxValidity of the reassessment proceedings u/s 147 - Capital Gains - deemed transfer u/s 2(47)(v) - sale of plot of land - meagre - whether the transferee to have 'performed or is willing to perform' his obligations under the agreement - HELD THAT:- It is not possible to hold that the transferee was willing to perform his obligations in the financial year 1995-96 in which the capital gains are sought to be taxed by the Revenue. We hold that this condition laid down u/s 53A of the Transfer of Property Act was not satisfied. Once we come to the conclusion that the transferee was not 'willing to perform', as stipulated by and within meanings assigned to this expression u/s 53A of the Transfer of Property Act, his contractual obligations in this previous year, it is only a corollary to this finding that the development agreement dt. 12th Oct., 1995, based on which the impugned taxability of capital gain is imposed by the AO and upheld by the CIT(A), cannot be said to be a "contract of the nature referred to in s. 53A of the Transfer of Property Act" and, accordingly, provisions of s. 2(47)(v) cannot be invoked on the facts of this case Chaturbhujdas Dwarkadas Kapadia vs. CIT's case [2003 (2) TMI 62 - BOMBAY HIGH COURT] undoubtedly lays down a proposition which, more often that not, favours the Revenue, but, on the facts of this case, the said judgment supports the case of the assessee inasmuch as 'willingness to perform' has been specifically recognized as one of the essential ingredients to cover a transaction by the scope of s. 53A of the Transfer of Property Act. Revenue does not get any assistance from this judicial precedent. The very foundation of Revenue's case is thus devoid of legally sustainable basis. In the present case, the situation is that the assessee has received only a meagre amount' out of total sales consideration, the transferee is avoiding adhering to the payment schedule on one ground or the other, and there is no surety that the sales consideration will actually be realized by the assessee, and yet the assessee is expected to pay capital gains on the entire agreed sales consideration. It is also important to bear in mind that this order, it was specifically agreed between the parties under the agreement in question that "that the Lok Housing will not issue stop payment instructions in any circumstances nor put forward any excuses of any type to avoid presentation and consequent encashment of the said cheques on their respective due dates. Further encashment of the said cheques on presentation shall be as of the essence of the contract". This condition of the contract was, by no stretch of logic, fulfilled. The transferee did request the assessee to reschedule the payments. When payment on time is essence of the contract, and the payments are not made in time, it cannot be said that such a contract confers any rights on the transferee to seek redressal u/s 53A of the Transfer of Property Act. This agreement cannot, therefore, be said to be in the nature of a contract referred to in s. 53A of the Transfer of Property Act. It cannot, therefore, be said that the provisions of s. 2(47)(v) will apply in the situation before us. For all these reasons, we are of the considered view that the assessee deserves to succeed on both the counts-i.e. for the reason that the reopening of assessment was not justified, as also for the reason that the capital gains, on sale of plot in question, could not have been taxed in the particular assessment year in appeal before us. For our purposes, it is not necessary to go into the question as to in which year the capital gain on sale of plot will be taxable. We leave it at that. In the result the appeal is allowed.
|