TMI Blog1991 (12) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... sments were re-opened by the Income-tax Officer on the ground that the assessees had omitted to disclose assessable capital gains arising from the transfer of this property. The assessee claimed by letter dated 8-4-1981 that the properties transferred were agricultural lands which were deemed to be capital assets only by the amendment of the Act with effect from 1-4-1970 and since the sale had taken place on 28-2-1970, the capital gains, if any, arising from the transfer of this property was not assessable to tax and even if it is so assessable, it could not be brought to tax for the assessment year 1972-73 as the transaction related to the earlier assessment year 1971-72. The Income-tax Officer did not accept that the lands were agricultural in nature and took the view that the transfer took place only on 2-6-1971 when the documents were registered and accordingly brought to tax the capital gains arising from the transfer of the property. 3. The assessees appealed and relied on the decision of the Gujarat High Court in the case of Arundhati Balkrishna v. CIT [1982] 138 ITR 245 to contend that the transfer of the property took place when the sale deeds were executed. The Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document is executed and not only when it is registered." 6. However, the Revenue required us to consider two other decisions of the Supreme Court. The first is the decision in the case of Alapati Venkataramiah. That was a case where under an agreement dated 17-3-1948, possession of the property was given on the same date but the sale deed was executed only on 22-11-1948. The question arose whether capital gains could be assessed in the previous year ended 31-3-1948 relevant to the assessment year 1948-49. The Supreme Court pointed out that a transfer of immovable property could be effected under the transfer of Property Act only by a registered instrument in writing and since no such instrument existed in the previous year, there could be no assessment to capital gains. It will be seen that in that case there was no document at all during the previous year and, therefore, the question whether the document takes effect from the date of execution or from the date of registration did not arise for consideration in that case. The second decision of the Supreme Court is Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888. In that case the question for consideration was whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her a right of preemption under the Mohammedan law which was required to be made after the completion of the sale could be done before the sale was registered. Both these cases have been distinguished by the Supreme Court in the latest decision by pointing out that they depended upon the completion of the transaction and not the effectiveness of the same. 8. The decision of the Tribunal in the case of S.E.S. Muruganandam followed the decision of the Gujarat High Court in the case of Darbar Shivrajkumar. That decision was in turn based on the decisions of the Supreme Court in the cases of Ram Saran Lall and Hiralal Agrawal which, as we have seen above, have been distinguished by the latest decision of the Supreme Court. Besides, the order of the Tribunal related to the levy of gift-tax and the question was whether the gift was completed only on the registration of the document or whether the gift took place on the execution of the deed itself when it related to immovable property. Since the gift-tax is exigible only when the gift is completed, the view of the Supreme Court that the transaction is completed only when the document is registered would be of significance in that conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is effected on the date on which the document is copied out in the books of the Registrar. The Court also pointed out the administrative difficulties in treating the completion of registration as the effective date. In this context, we may recall that even the Supreme Court observed in S.K Mohammad Rafiq v. Khalilul Rehman AIR 1972 SC 2162 at page 2165 that the law relating to completion of registration gave rise to certain difficulties but it was a matter on which legislation may become necessary and that is for Parliament to consider and not for the court. But reading the latest decision of the Supreme Court along with the decision of the Gujarat High Court in the case of Arundhati Balkrishna which is with reference to section 45 of the Income-tax Act and there being no decision contra, we have to accept the claim of the assessee that the transfer was effective from the date of execution and it fell outside the assessment year under consideration. 10. The Revenue sought to attack the transaction as an attempt to avoid the levy of tax on the ground that the execution of sale deed on 28-2-1970 which was the date of the presentation of the Budget was quite significant. But we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
