TMI Blog2012 (11) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... al has committed serious error in not analysing the documents in proper perspective, particularly, in the face of the power of attorney and the tripartite agreement not making any reference at all to the first of the agreements dated 23.10.1991 entered into by the assessee with M/s.Emerald Promoters Pvt. Ltd. to accept the contention of the assessee that possession was handed over to Emerald Promoters Pvt. Ltd. in November 1991 itself. - Decided in favor of revenue. - Tax Case (Appeal) Nos.635 to 637 of 2005 - - - Dated:- 11-6-2012 - Mrs.Justice CHITRA VENKATARAMAN, Mr.Justice K.RAVICHANDRABAABU, JJ. For Appellant : Mr.T.Ravikumar Standing Counsel For Respondents : Mr.P.J.Rishi Kesh, Mr.Philip George JUDGMENT CHITRA VENKATARAMAN, J. The Revenue is on appeal as against the order of the Income Tax Appellate Tribunal relating to the assessment years 1993-94 and 1995-96. The following are the substantial questions of law raised in these appeals:- 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee had transferred the entire land to M/s.Emerald under the agreement dated 23.10.1991 for a sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. was authorised to take possession of the Schedule property and administer the same, to make house plots, construct houses/ flats develop the schedule property, to apply for housing/Residential flats/ commercial flats, building plan before all the statutory housing authorities. However, subsequent to this General power of attorney, the assessees herein along with other owners entered into a tripartite agreement with M/s.Sudsun Housing Development (I) Ltd. and M/s.Emerald Promoters Pvt. Limited, the assessee's General power of attorney as the confirming party under the deed of agreement dated 27.10.1994 wherein it is stated that the confirming party due to paucity of funds, desired to relinquish their role as contractors of vendors 1 to 5, which included the assessees before this court and the vendors desired to develop the Schedule ' A ' Property through the purchaser viz., M/s.Sudsun Housing Development (I) Ltd. . The said deed of agreement also referred to sale of undivided share of 0.4650%, 0.4650% and 0.4636% undivided shares in favour of three other vendors, who are parties to this agreement. Accoridngly, the sale deeds were executed through power of attorney on behalf, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad admitted capital gain on sale of the land at Mogappair for a consideration of Rs.4,50,000 and a capital gain of Rs.1,32,822 and claimed exemption under section 54. 7. In the assessment order relating to the assessee Harikrishnan, the Assessing Authority pointed out that during the assessment proceedings for the assessmente year 1992-93, the assessee filed the receipt for cash of Rs.4/- lakhs as sale consideration and considering the major development work done to the tune of Rs.3 lakhs, the transactions resulted in a capital loss. After giving opportunity to the assessees' representative, the Assessing Authority came to the conclusion that 83.96% of the undivided share was sold by the assessees and four other land owners in favour of M/s.Sudsun Housing Development. The agreement dated 27.10.1994 made no reference to the first of the sale agreements dated 23.10.1991 relating to the sale consideration of Rs. 4,50,000 and Rs.4,00,000 as the case may be. The agreement dated 27.10.1994 clearly mentioned that the assessees were the owners and vendors of the property. M/s.Sudsun Housing Development (I) Ltd. had confirmed the above transaction in their letter dated 14.3.2002 by statin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, there is no justification in the contention of the Revenue that the entire sale consideration in respect of 83.96% of the undivided share should be assessed at the hands of the assessee. Referring to Section 2(47)(v) of the Income Tax Act the Tribunal held that when physical possession was handed over to M/s.Emerald Promoter Pvt. Ltd. by the assessees in the year 1991 as part performance of the agreement, after receiving the entire sale consideration, no amount arising out of sale consideration could be assessed at the hands of the assessees. 9. As regards Mr.P.Srinivasan, the Managing Director of M/s.Emerald Promoter Pvt. Ltd. the Tribunal held that the company being an artificial person is also assessable as an independent unit under the Income Tax Act. After the agreement was entered into P.Srinivasan handed over possession of the land along with other owners. Thus, when Emerald Promoter Pvt. Ltd. took possession of the land from the assessees the question of the vendors retaining possession did not arise. The Tribunal also referred to the decision of this court reported in 251 ITR 532 (D.KASTURI VS. COMMISSIONER OF INCOME TAX AND ANOTHER) and held that when possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in writing (3) a completed contract has to be spelt out from that agreement and the most important (4) the transfer of possession of the property in pursuance of the said agreement. Keeping these conditions in mind, learned Standing Counsel appearing for the Revenue pointed out that even in the background of the decision of the Apex Court reported in (2012) 340 ITR 1 (SC) (Suraj Lamp and Industries Pvt.Ltd. Vs. State of Haryana and Another), the transactions of the nature of general power of attorney sales or sale agreements, do not convey tittle and do not amount to transfer nor could be recognised as valid modes of transfer of immovable property. In the general power of attorney dated 5.11.1991 there is no reference at all as to M/s. Emerald Promoters Private Limited having entered an agreement of sale on 23.10.1991 in pursuance of which the possession was taken up by them . The Commissioner of Income Tax (Appeals) has gone into the recitals contained in the general power of attorney and rendered a finding that there is no reference in the general power of attorney about the agreement dated 23.10.1991. 12. Learned Standing Counsel for the Revenue submitted that the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moters Pvt. Ltd. dated 18.11.2003 to the Commissioner of Income Tax (Appeals) clearly pointed out that the consideration of Rs. 90/- lakhs in respect of 83.96% undivided share was received by them and they were retained by them only. Thus, the consideration of Rs. 90/- lakhs was never passed on to any of the persons. The transactions are recorded in the books of accounts . The sale agreement pertaining to sales made to M/s.Sudsun Housing was only executed by them. The registration was done only by Emerald Promoters Pvt. Ltd. as they had the power of attorney. The name of the assessee was included in the sale agreement and the Form 371 for obtaining NOC only for the reason that he is the owner as per the registered documents. Except this letter, no other document was filed to establish and prove that the sale of the entire land was made in favour of M/s.Emerald Promoters Pvt. Ltd. even during November 1991. 15. Except the agreement dated 23.10.1991 entered into with M/s.Emerald Promoters Pvt. Ltd., the documents such as General Power of Attorney executed by the assessee in favour of M/s.Emerald Promoters Pvt. Ltd. dated 5.11.1991, the receipt issued by the asessee, the second agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in possession of M/s. Emerald Promoters Pvt. Ltd. 17. Subsequently, a tripartite agreement was entered into on 27.10.1994 between the vendors P.Srinivsan, R.Dhanapal, T.T.V.Dhinakaran T.R.Harikrishnan G.Balasundaram, R.Annamalai, K.Sadagopal and M.K.Saravanan represented by the Power of Attorney M/s.Emerald Promoters Pvt. Ltd., who in turn also appeared as a confirming party and M/s.Sudsun Housing I Ltd. as a purchaser, wherein the above said vendors agreed to convey the balance of 83.96% undivided share of the lands in favour of the purchaser. The agreement states that the Confirming Party due to paucity of funds desired to relinquish their role as contractors of vendors 1 to 5 and the vendors desired to develop the Schedule 'A' property through the purchaser. The agreement also refers to the construction put up by the confirming party of an extent of 20718.75 sq.ft which in turn would require 16.04% undivided share of the property and the confirming party as power of attorney of the vendors 1 to 5 executed the registered sale deeds in respect of 0.4650%, 0.4650% and 0.4636% undivided shares in the Schedule 'A' lands in favour of the vendors 6,7, and 8 to enable them to hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re this court to show that as to whether the assessee had subsequently put M/s Emerald Promoters Pvt. Ltd. into possession in pursuance of the agreement of sale at all. On the contrary, the Power of Attorney dated 5.11.1991, executed by the said Harikrishnan in favour of M/s.Emerald Promoters Pvt. Ltd. shows that the Power of attorney was to take possession of the property and administer the same in and on behalf of the assessee herein to make house plots, construct houses/flats develop the schedule property, to enter into contracts for sale, lease mortgage and to receive the consideration on behalf of the assessee. Beyond this, learned counsel for the assessee could not produce any material to show that in pursuance of the alleged sale agreement, the assessee had put the said Emerald Promoters Pvt. Ltd. into possession of the property. Even in the agreement dated 27.10.1994, it is stated that the vendors 1 to 5 and confirming party assure the purchaser that they would deliver vacant possession of the schedule property to the purchaser within one week from the receipt of No Objection Certificate from the Income Tax Department. 21. As regards the so called construction put up by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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