TMI Blog2015 (6) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... in a short period of three days. The valuation report further indicates that the comparable sale instances adopted by the valuer are in respect of properties which are not located in the immediate 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/-. - Decided partly in favour of assessee. Part allowance of claimed deduction u/s. 54F - Held that:- 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’ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the appeal; thereby the ld.CIT(A) directed the AO to recalculate the LTCG taking the value of property as on 01/04/1981 of ₹ 8 lacs. The other grounds of appeal of the assessee were rejected. 3. Aggrieved by the order of the ld.CIT(A), now the assessee is in appeal before us. 4. Ground Nos.1 to 3(i), (ii) (iv) are inter-related. The same are being disposed of together. The ld.counsel for the assessee vehemently argued that the AO and the ld.CIT(A) were not justified in holding that the LTGC is pertaining to AY 2009-10 without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 of property is to be taken as date on which a sell deed in registered as conveyance deed before Registering Authority or any other date. ii) It will be seen from the definition of the transfer in relation to a capital asset that the capital gain will be chargeable to tax only on account of sale or any transaction involved allowing of the possession of any immovable property to be taken or in part performance of a contract of the a nature referred to in section 54(a) of the Transfer of Property Act. Since the registered deed was not exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. 8. We may next refer to the relevant provisions of the Indian Stamp Act, 1999 (Note : Stamp Laws may vary from state to state, though generally the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is or are the person/s presently having right, title, and interest in the property. It gives solemnity of form and perpetuate doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of TP Act enacts that sale of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter. Scope of Power of Attorney 13. A power of attorney is not an instrument of transfer in regard to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded 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 by the Delhi High Court, in Asha M. Jain v. Canara Bank - 94 [2001] DLT 841, that the concept of power of attorney sales have been recognized as a mode of transaction when dealing with transactions by way of SA/GPAA/VILL are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPAA/VILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPAA/VILL transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding 'SA/GPA/WILL transactions' are not intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not based upon reliable comparables. ii) Before proceeding further, it is pertinent to examine the relevant provision of section 55(2)(b) which are reproduced hereunder :- (b) in relation to any other capital asset,] (i) where the capita! asset became the property of the assessee64 before the 65[1st day of April. 66[1981]], means the cost of acquisition of the asset to the assessee or the fair 67 market value of the asset on the 68 [1st day of April, 69[1981]], at the opt/on of the assessee ; (ii) where the capital asset be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,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. Ill) 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 have been found to be having sufficient force. There is no denying the fact that the law permits exemption from capital gains provided sale proceeds of an asset are deployed/utilised for the acquisition of another asset within the mandatory time limits. The A O has brought on record adequate evidences which indicate that unregistered agreement to sale of 2007 were primarily made with a view to claim the deduction u/s, 54F. The A O has further pointed out that the property per se reportedly sold by appellants HUF and his mother is one c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement 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 the provisions of s. 2(47)(v) transfer took place and that date of transfer is thus required to be taken for the purpose of computation of capital gain. We therefore hold that the capital gain was required to be assessed in asst. yr. 2002-03 and not in asst. yr. 2004-05. Although, from the side of the Revenue the decision of Suraj Lamp Industries (P.) Ltd. (supra) has been cited but that decision is not in respect of the provisions of the IT Act, but the said decision was pronounced in respect of the provisions of the Transfer of Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 person who is entitled to receive rent is assessable in respect of property even if it is not registered in his name. 20. In our view, considering the aforesaid decisions and the object of the Act, definition given in the Act is required to be taken into consideration. When the document is executed, the property passes and merely because there is no registration certificate, the State coffers should not suffer. If the view propounded that only on registration, act of transfer will be complete, then in that case, if the document is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 effect of transferring, or enabling the enjoyment of, any immovable property. Explanation. -For the purposes of sub-clauses (v) and (vi), 'immovable property' shall have the same meaning as in clause (d) of section 269UA. 21. In case of ownership, there is a transfer of capital assets. This is a case of lease. The transferee was put in possession and was enjoying the property as a lease holder. There cannot be different criteria for transfer of capital asset. For the purpose of tax even if document, i.e., conveyance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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.Ltd. vs. State of Haryana and Another (supra), would not help the Revenue. 5.5. Therefore, Ground Nos.1, 2, 3 (i) (ii) (iv) are allowed. 5.6. With regard to Ground Nos.3 (iii), (v), (vi)(vii) (viii) since we have held that the ld.AO was not justified in computing the LTGC in the AY 2009-10 for the transaction which have effected on 30/03/2008, therefore would not fall in the AY 2009-10. Thus, these grounds have become infructuous. 6. As a result, the appeal of the assessee is partly allowed. 7. Now, we take up the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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