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2016 (5) TMI 370 - AT - Income TaxCapital gain - valid transfer or not - existence of no conveyance deed or registered agreement for sale - Held that:- In this instant case , the MOU dated 29.12.2004 entered with GCB is not registered and hence it does not convey any title or ownership rights u/s. 53A of the Transfer of Property Act,1882 in respect of the property as per the newly inserted section 17(1A) of the Registration Act,1908. Thus with regard to the transfer of the property in the instant case as per factual matrix of the case as set out above, there is no valid transfer u/s. 53A of the Transfer of Property Act,1882 had taken place as contemplated u/s. 2(47) of the Act as the MOU dated 29.12.2004 is an unregistered document , no title has been transferred in part performance of the contract as it had not affected the immovable property comprised there-in, hence capital gain cannot be brought to tax. We have also noticed in the instant case that possession is handed over for the limited purpose of demolition and reconstruction of the property for constructing seven storey’s of residential building on this property , and it is not that the assessee and the other coowners of the property in execution of the MOU have handed over the possession of the property in lieu of the part consideration received from GCB in the capacity of the buyer of the said property, rather the possession of the afore-stated property was handed over to GCB as licensee only for limited purpose of demolition of the existing bungalow and for reconstruction of the said property by constructing seven storey’s residential building on the said property. The assessee and the co-owners continue to enjoy the possession as and in the capacity as the owners of the afore-stated property while concurrent possession was with GCB as licensee for limited purposes of demolition of bungalow and for construction of seven stories and hence in our considered view, income there-of cannot be brought to tax in the hands of the assessee and the co-owner during the impugned assessment year as transfer as contemplated u/s 2(47) of the Act read with Section 53A of the Transfer of Property Act ,1882 is not been effected as the possession in fact was never been transferred from the assessee and the co-owners to the GCB in its capacity as buyer of the fourth and fifth floor to be constructed in lieu of constructing rest of five floors for the assessee and the other co-owners as also on payment of ₹ 1.65 crores by GCB to the assessee and other co-owners as per facts and circumstances of the case as set out above. The agreement has already been terminated by the assessee and the co-owners on15.10.2007 for deficiency and discrepancies in performance by GCB in terms of the MOU dated 29.12.2004 with respect to the quality of construction and time of completion and the matter being sub-judice whereby Hon’ble Bombay High Court is seized of the suit filed by GCB with respect to the dispute between the assessee and co-owners on the one hand and the GCB on the other hand. Complete performance of the MOU has not allegedly been done by the builder as it is also on record that only 90% of the work was claimed to have been finished by GCB and no conveyance deed or registered agreement for sale has been registered in favour of GCB by the assessee and the other coowners. The additions made by the AO and as confirmed by the CIT(A) in view of our above reasoning and discussions as set out above are not - Decided in favour of assessee
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