TMI Blog1995 (7) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... IDBI Bonds. There is no dispute on this investment of Rs. 15,00,000 and the exemption of this amount for computation of capital gain. 3. The Assessing Officer was, however, of the view that in view of amended definition of term " transfer " as per section 2(47)(v) of the Income-tax Act, the assessee was to pay capital gain on entire consideration of Rs. 25,00,000. The transfer now included delivery possession of any immovable property taken in part performance of the contract of the nature referred to under section 53A of the Transfer of Property Act, 1882. He, therefore, asked the assessee to show cause why capital gain be not assessed with reference to total consideration fixed in the agreement of sale. The assessee, vide reply dated 8-2-1992, contended that he had sold only part of the land and possession of only those plots had been given to the transferees. He has not given possession of the land not transferred and, therefore, provisions of section 2(47)(v) of the Income-tax Act were not applicable. 4. The Assessing Officer did not agree with above contention of the assessee. He computed capital gain at Rs. 4,45,000 in the hands of the assessee with following observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 53A of Transfer of Property Act. He was influenced by the expression, " the transferee has taken possession of the property or part thereof " used in section 53A of the Transfer of Property Act. He held that it was not necessary that possession of whole of the property should be taken by the transferee. The CIT(A) confirmed the order of the Assessing Officer. The assessee has brought the issue in appeal before Appellate Tribunal. 6. We have heard both the parties at length and examined relevant material produced before us. Shri C.S. Aggarwal, learned counsel for the assessee submitted that possession of land was not given to the transferee in pursuance of agreement of sale. He drew our attention to para 2 of the agreement wherein it is specifically provided as under :--- " The possession of said vacant land will only be given after the entire payment of Rs. 25,00,000 (Rs. twenty-five lacs) has been made as above and till such the second party shall have no right on any part of the said land in any manner whatsoever except the ploting, dermarkation, etc. of the said land." Shri Aggarwal further contended that even 3,700 sq. meters sold in the period under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his section would be attracted. She accordingly supported impugned order of the Assessing Officer and of CIT(A). 8. We have given careful thought to the rival submissions of the parties. By amending section 2(47)(v) of the Income-tax Act through the Finance Act, 1987 w.e.f. 1-4-1988, the Legislature has given extended meaning to the word "transfer". It would now include in relation to a capital asset, the following transactions also : "Any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ;" A bare reading of provision makes it clear that possession of immovable property allowed to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act. In other words, taking or retention of possession of immovable property is sine qua non for application of this clause. Section 53A of Transfer of Property Act provides as under :--- " 53A. Part performance.--- Where any person contracts to transfer for consideration of any immovable property by writing si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and therefore provisions of section 53A were applicable. They took the agreement as a transfer and substituted consideration of Rs. 25,00,000 in place of Rs. 15,20,900 received by the assessee. 12. In our considered opinion, the approach adopted by revenue authorities is erroneous and unjustified being based upon misconcept of legal principles involved in statutory provisions. The part performance of a contract has been taken in the little sense to mean performance of any part to contract i.e. sale of a part of property agreed to be sold, has been taken as part performance. This with respect has been in total disregard of express language of statutory provisions and the well-settled law. Any and every type of performance is no relevant to attract application of provision of section 53A of the Transfer of Property Act and/or section 2(47) of the Income-tax Act. It is by now well-settled that equitable doctrine of part performance was given statutory recognition in section 53A and was designed only to protect possession of a transferee when the transfer falls short of requirements laid down by the law. The plea of part performance can be taken only as a shield in defence and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire land. Unless M/s Kumaon Constructions were in effective possession, it was not feasible for them to deal physically with property and develop it according to their own choice. We are unable to endorse above observation of learned CIT(A) based on assumption and surmises. The terms of the agreement between the assessee and M/s Kumaon Constructions reproduced in para 6 above specifically provided that possession of vacant land will be given only after receipt of entire consideration of Rs. 25,00,000. The learned CIT(A) totally ignored above clause while observing that Kumaon Constructions were in constructive possession of the land. It is one of the conditions for application of section 53A that possession of immovable property should be obtained under the contract which is claimed to be partly performed. Thus possession must be obtained under the contract. In such a situation finding of constructive possession has no meaning. It is, therefore, not possible for us to hold that assessee delivered possession of any land other than 3700 sq. meters sold in the year under consideration. As already noted, there is absolutely no material on record to justify even finding of construct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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