TMI Blog2014 (11) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... l be complete, then in that case, if the document is not registered, though the assessee will be enjoying the property, he will say that he is not liable to pay the tax - But that is not the intention of the Legislature - the word 'transfer' as indicated in the Income-tax Act is required to be considered and not 'sale' as indicated in the Transfer of Property Act - transfer of immovable property of the value exceeding ₹ 100 can be said to have been effected on the date of execution of the document. The transaction would relate to the date when the sale-deed was executed, sale consideration was paid and the possession was handed over but not on the date when the document was presented before the Registrar for registration of the sale-deed - the decision in Suraj Lamp and Industries Pvt.Ltd. vs. State of Haryana and Another [2011 (10) TMI 8 - SUPREME COURT OF INDIA] cannot be followed as the decision was delivered on 11/10/2011, but the sale agreement in the present case was executed on 31/03/2008 the particular decision should be made applicable prospectively to avoid hardship had been made clear while delivering the judgment itself - SA/GPA/WILL transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Non concrete supporting evidences deduced for adopting value as at 01.04.1981 at ₹ 8,00,000/-. (iv) Income from long term capital gain referred above duly considered in A.Y. 2008-09 by the appellant. Hence considering long term capital gain I the year amounts to duplication. (v) Claim of exemption u/s.54F is allowed partially and no valid reason given. (vi) Additional compensation received ₹ 10,00,000/- in the year does not change legal and correct situation as to arising of capital gain. (vii) Even decision relied upon by the appellant have not been considered/appreciated judiciously. (viii) Even no plausible reasons given for non-applicability of the decision cited. 2.1. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 29/12/2011, thereby the Assessing Officer (AO in short) made addition on account of Long Term Capital Gain (LTCG) amounting to ₹ 2,49,78,280/-. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions, partly allowed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 raised indicate that there are three actions of the A O which deserve adjudication. Accordingly, the same are discussed in the succeeding paras. I) Ground of appeal No. 3(i), (iii), (v) (vi) on the issue of taxation of capital gains during the year under consideration i) It is the case of the appellant that the entire LTCG of ₹ 2,49,78,280/- is not available for taxation during A Y 2009-10 but is available for taxation in A Y 2008- 09, the year in which it already stands disclosed. In support of his contentions, the appellant has submitted that the sale deed for Shahwadi land was executed on 31-3- 2008, payment were received and stamp duties paid and that the registration of the said deed thereafter was a mere formality. And hence its liability to tax falls in A Y 2008-09. In the opinion of the Id A O, since on the said date i.e. 31-3-2008, a conveyance deed was not signed and that the said sale deed was actually transformed into a registered conveyance deed only on 29-5-2008 and hence the taxability would lye in A Y 2009-10. The question which thus arises is as to whether for the purpose of section 2(47) read with section 45 and other connected sections a transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property. Contract for sale.-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property. Section 53A of the TP Act defines part performance thus : Part Performance. - Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future any right, title or interest whether vested or contingent of the value of ₹ 100 and upwards to or in immovable property. Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yance ownership passes from one party to another. In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614] this Court held: Protection provided under Section 53A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party. It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred. 12. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee. An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor. Scope of Will 14. A will is the testament of the testator. It is a posthumous disposition of the estate of the testator directing distribution of his estate upon his death. It is not a transfer inter vivos. The two essential characteristics of a will are that it is intended to come into effect only after the death of the testator and is revocable at any time during the life time of the testator. It is said that so long as the testator is alive, a will is not be worth the paper on which it is written, as the testator can at any time revoke it. If the testator, who is not married, marries after making the will, by operation of law, the will stands revoked, (see sections 69 and 70 of Indian Succession Act, 1925). Registration of a will does not make it any more effective. Conclusion 15. Therefore, a SA/GPAA/VILL transaction does not convey any title nor create any interest in an immovable property. The observations b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. The said 'SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it clear that if the documents relating to 'SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision. 19. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O is therefore confirmed and grounds of appeal No. 3, (i), (iii), (v) (vi) challenging taxation of capital gains during the year under consideration stands dismissed. II) Ground of appeal 3(ii) is on the issue of adoption of cost of acquisition of Shahwadi Property at ₹ 13,72,000/- i) The appellant argues that u/s 55 (2) (b), in respect of properties acquired prior to 1-4-81. he has option of taking either the cost of acquisition of assets or the FMV of the asset as on 1-4-81. It has been argued that the property was acquired by way of gift from father long back. The value of 41,741/- was taken as per the gift deed wherein the value of the property was indicated at some ₹ 50,000/-. The appellant has submitted that u/s. 55(2)(b) it has the option of taking the FMV and that with a view to ascertain the FMV, the appellant got the property valued from the registered valuer, who estimated the price at ₹ 13,72,000/-. The AO adopted the value of ₹ 47741 which was hitherto disclosed by the appellant in his books. He further pointed out that the valuation report cannot be relied upon as it was hurriedly made and that the estimations of registered valuer are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vicinity. Thus, the valuation report, prepared by the registered value M/s/ K C Engineers, cannot be accepted as a true and correct estimation of the FMV of the property as on 1-4-1981. The impugned property has not been disclosed in any wealth tax returns by the appellant which could have been helpful to estimate its FMV. Considering the peculiar aspect and the infirmities and deficiencies in the valuation of the registered valuer, it is considered reasonable, if the FMV of the property as on 1-4-1981 is restricted to ₹ 8,00,000/- as against ₹ 13,72,000/-. The A O is accordingly directed to recalculate LTCG taking the value of property as on 1-4-81 at ₹ 8,00,000/-. The addition made by the A O is therefore partly confirmed and ground of appeal 3(ii) is partly allowed. iii) Ground of appeal 3(iv) is on the issue of part allowance of claimed deduction u/s. 54F of the Act. The appellant had claimed deduction u/s. 54F of ₹ 4,39,50,000/- whereas the A O allowed deduction of only ₹ 1,12,40,000/-. The argument of the A O regarding the shortcomings entire purchase transaction of property by appellant from his own HUF mother have been examined and hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 9th July, 2001, a copy of which is placed by the Revenue Department on record, by Smt. Sandhyaben Amrishbhai Purohit as a vendor in favour of Smt. Meenaben Markandbhai Parikh, proprietor of M/s Siddhi Corporation, as a purchaser, for a sale consideration of ₹ 12 lacs. As per cl. 5 of the deed, it is evident that on the date of execution of the said deed the possession has also been handed over to the purchaser. As far as the passing of consideration from one hand to another hand, our attention has been drawn on the bank statement of the assessee to demonstrate that the amount of consideration was deposited on two dates, i.e. ₹ 31,000 on 30th April, 2001 and ₹ 11,69,000 on 23rd May, 2001. It has also been informed that on the said date, i.e. on 21st May, 2001, adhesive stamps of ₹ 1,24,800 have also been purchased and duly affixed on the said deed. However, that deed could not be presented before the Sub-Registrar Dwarkadas Kapadia v. CIT [2003] 260 ITR 491/129 Taxman 497 (Bom) is worth mentioning. In the said decision, it was explicitly held that in a situation where consideration has been paid and the possession has been handed over, then in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the contract, though required to be registered, has not been registered, or where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the trans-feror or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession other than a right expressly provided by the terms of the contract.... If the view that without there being registration, the transferor continues to be the owner is taken, still the question which arises is that the income has not been received by the owner and, therefore, whether the assessment of the transferee can be made by considering that there was diversion of income or the transferor has ceased to have any right to have income received ? This section debars the transferor from enforcing Ids right to property. In the case of Rajputana Hotels (P.) Ltd. v. State of Rajasthan [CWP No. 511 of 1989, dated 27-5-1992] while interpreting the provisions of Rajasthan Land Building Act, 1964, it was held that the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le benefits, i.e., avoidance of income-tax and stamp duty. It seems that considering various devices which the tax evaders are applying, the Legislature, therefore, amended by inserting clauses in the definition of 'transfer' by clause (47) of section 2 which is as under : (47) 'transfer', in relation to a capital asset, includes,- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (v) any transaction involving the following 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); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a cooperative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -settled legal position that SA/GPA/WILL transactions are not transfers or sales and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said SA/GPA/WILL transactions may also be used to obtain specific performance or to defend possession under section 53A of the Transfer of Property Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by development authorities. We make it clear that if the documents relating to SA/GPA/WILL transactions has been accepted acted upon by the DDA or other developmental authorities or by the Municipal or Revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision. 5.4. In the case in hand, the agreement to sell dated 31/03/2008 had already been acted upon the parties by delivery possession and registering sale-deed. Therefore, for this reason also, the judgement of the Hon ble Apex Court rendered in the case of Suraj Lamp and Industries Pvt.Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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