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Smt. Sapnaben Dipakbhai Patel Versus ITO Ward-10 (1) Ahmedabad.

Gain for taxation on actual sale consideration - expression “capital asset" - Transfer of asset - genuity - addition by the AO on the ground that the assessee has sold land i.e. “capital asset” in this year and failed to offer gain for taxation on actual sale consideration in her return of income for this assessment year - Held that:- The rights acquired by SDS under the agreement dated 4.4.2008 are of capital nature. In other words, the rights assigned by the assessee by virtue of this agreemen .....

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n of this agreement has been curtailed or encumbrance has been created.

On an analysis of various case laws, it emerges out that clause (v) and (vi) were included in section 2(47) with an intention to cover those cases of transfer of ownership where the prospective buyers becomes owner of the property by becoming a member of company, cooperative society or to include those transactions that closely resembles transfer, but are not treated as such under general law. Under section 2(47)( .....

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immovable property is not effective or complete under the general law.Thus, in the present cases we are of the view that on execution of agreement dated 2.3.2009, when the possession was also handed over, the transfer within the meaning of section 2(47)(v) and (vi) was complete. The parties to the agreement are not challenging the genuineness of the agreements.

An analysis of all the facts and circumstances, discussed by the ld.Revenue authorities, we are of the view that setting of .....

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H BORAD, ACCOUNTANT MEMBER For The Assessee : Shri Dhiren Shah, AR For The Revenue : Shri Jagdish CIT-DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The assessee is in appeal before us against the order of ld.Commissioner Income-Tax (Appeals)-XVI, Ahmedabad dated 29.7.2013 passed for the Asstt.Year 2010-11. 3. The grounds of appeal taken by the assessee are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. In bri .....

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duly processed under section 143(1) of the Income Tax Act. The case of the assessee was selected for scrutiny assessment on 8.9.2012 and notice under section 143(2) was issued which was duly served upon the assessee on 14.9.2012. In the return of income, the assessee has shown income from short term capital gain (STCG) and interest income. According to the AO, the Annual Information Report Wing has given an information that immovable property valued at ₹ 7,41,64,205/- and of ₹ 5,87, .....

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purchased by the assessee and alleged to have been sold in this year. The AO has made addition of ₹ 6,83,09,792/- which comprises of two amounts viz. ₹ 6,64,88,792/- and ₹ 18,21,000/- pertaining to the transaction undertaken by the assessee in respect of two different chunks of agriculture land which were purchased by her and sold. In brief, the assessee has purchased a piece of land measuring 123731 sq.mters having different survey numbers from Shri Bhikhubhai N. Padshala and .....

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is stage. She had received a sum of ₹ 3,00,000/- as advance against the proposed agreed consideration of ₹ 76,75,413/-. Subsequently, by another agreement to sell/banakhat dated 2.3.2009, the said land was agreed to be sold to one Gatil Properties P.Ltd. (hereinafter referred to as GPPL ) for a sum of ₹ 10,64,08,660/-. In this agreement, the assessee was the selling party, GPPL was the purchasing party and SDS was a confirming party. By this agreement, the assessee was paid  .....

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prospective buyer i.e. GPPL. Thereafter, a registered sale deed was executed on 27.1.2010 wherein M/s.GPPL was shown as vendee. The assessee was shown as vendor and SDS as confirming party. Vide this sale deed, the land measuring 85,995 sq.meters out of the total land of 1,23,731 sq.meters agreed in the banakhat was transferred. The consideration in the sale deed was shown at ₹ 7,41,64,205/- for the area admeasuring 85,995 sq.meters. It also emerges out that second sale deed was executed o .....

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ents i.e. 4.4.2008 and 2.3.2009 are to be ignored. The assessee has sold land only by way of registered sale deed executed on 27.1.2010 and therefore, the capital gain resulted on transfer of land is to be assessed in the hands of the assessee in the Asstt.Year 2010-2011. The ld.AO has made an addition of ₹ 6,64,88,792/- [Rs.7,41,64,205/- (being the value shown in the sale deed) minus ₹ 76,75,413/- (being the value offered for taxation by the assessee)]. The ld.AO has reproduced all .....

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tained in part performance of a ontract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882)" Section 53A of the Transfer of Property Act narrates as following: "where any person contracts to transfer for consideration any immovable 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, tak .....

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prescribed therefore 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 person 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 who has no notice of the contract or of the part performance .....

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er i.e. Gatil Properties Pvt. Ltd. by possession agreement dtd.02/03/2009 and the confirming party has not taken or retained the possession of the property or any part thereof, for part performance of the contract and has not done some act in furtherance of the contract. Therefore, provision of section 53 A of the Transfer of property Act r.w.s. 2(47(v) of the Act has not been fulfilled by the assessee or confirming party, as the confirming party i.e. Capital consultancy has not taken or retaine .....

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spouse's one company to another company. The possession of property is given directly with the purchaser i.e. Gatil Properties Pvt Ltd by possession agreement dtd.25/01/2010 and the confirming party has not taken or retained the possession of the property or any part thereof, for part performance of the contract and has not done some act in furtherance of the contract. Therefore, provision of section 53 A of the Transfer of property Act r.w.s. 2(47(v) of the Act has not been fulfilled by th .....

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nt for sale between the assessee and both the confirming parties, cannot be considered as according to the of provisions section 53 A of the Transfer of property Act r.w.s. 2(47)(v) of the Act and therefore, the income by way of sale consideration should be taxed in the hands of the assessee. 26. In this regards, The legendary decision delivered by Hon ble Supreme Court Of India in [2011] 202 TAXMAN 607 (SC)/[2011] 14 :axman.l03(SC) in Suraj Lamp & Industries Pvt. Ltd. v State of iaryana, R. .....

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ode of transfer of immovable property- Held, yes- Whether such transactions cannot be relied upon or made basis for imitations in municipal or revenue records - Held, yes. Section 54 of Transfer of Property Act makes it clear that a contract of sale does not of itself create any interest in, or charge on, such property. Supreme Court of India in Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004(8) SCC 614 this Court held: "Protection provided under Section 53 A of the Act to the proposed .....

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hird party." It is thus; clear that a transfer of immovable property by way of sale can only be by a deed of conveyance (deed of sale). In the absence of deed of conveyance (duly, stamped and registered as required by law), no right, title or interest in an immovable property can be transferred. Any contract of sale (agreement to sell) which not a registered deed of conveyance (deed of sale) would fall short of the requirements of section 54 and section 55 of Transfer of Properly Act and wi .....

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of the law point i.e. Provisions Section 53A of the Transfer of property Act r.w.s. 2(47(v) of the Act, Section 54 and section 55 of the Transfer of Property Act, an agreement for sale between the assessee and both the confirming parties, cannot be considered as legal and valid transaction, such sale transaction can be recognized as valid and legal only be by a deed of sale (Conveyance). In this case, the property is legally registered on 27/01/2010 to the office of the Sub registrar by paying s .....

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2010 and the income by way of sale consideration is taxed in the hands of the assessee in the year under the consideration. Therefore, the difference of ₹ 6,64,88,792/- (Rs.7,41,64,205/- ₹ 76,75,413/-) i.e. difference of market value of ₹ 7,41,64,205/- as per sale transaction registered in office of the Sub Registrar, Ahmedabad and sale consideration of ₹ 76,75,413/- Shown by the assessee in return of income towards the property bearing Survey No.260/1,286/2, 286/3, 292/1 .....

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see. The total amount of ₹ 6,83,09,792/- (Rs.6,64,88,792/- + ₹ 18,21,000/-) is considered as Short Term Capital Gain and added to the total income of the assessee. Penalty proceedings u/s 271(l)(c) of the Act are initiated for concealment the particulars of income and furnishing inaccurate particulars of income. 6. Appeal to the CIT(A) did not bring any relief to the assessee. 7. With the assistance of the ld. representatives, we have gone through the record carefully. On due conside .....

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e possession, transaction can be termed as a transfer giving rise to short term capital gain/long term capital gain by referring to section 2(47) of the Income Tax Act r.w.s. 53 of the Transfer of Property Act, 1882 ? (iii) Whether cumulative setting of the circumstances referred by the ld.AO would goad the adjudicating authority to ignore all these agreements and envisage the transfer of land by the assessee directly to the GPPL only when alleged sale deed dated 27.1.2010 was executed and short .....

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he meaning of capital asset elaborately, because in the present case the area of our inquiry would be whether the right accrued to SDS falls within the ambit of expression property of any kind held by an assessee employed in section 2(14) while explaining the meaning of capital asset . According to the assessee, SDS has acquired enforceable right at law by virtue of this agreement. He could file suit for specific performance of contract under Specific Relief Act and persuade the assessee to regi .....

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to that controversy, whether agreements are sham or not, for the sake of arguments, if the agreements are to be assumed genuine, then, what rights should be devolved upon the vendee on execution of such agreement. Therefore, under issue no.(i) we embark upon an inquiry about the scope of rights acquired by an assessee on execution of such agreement. The impact of such surrounding circumstances for ignoring the agreement, we will be looking while recording the finding under issue no.(iii). This c .....

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the purchase consideration was ₹ 2,00,000/-. A sum of ₹ 40,000/- was paid in advance and the balance of ₹ 1,60,000/- was to be paid at the time of execution and registration of the sale deed. It appears that though the assessee was awaiting specific performance of the contract by the seller, the vendor was avoiding the same. Later the seller sought cancellation of the agreement and agreed to pay compensation of ₹ 6,00,000/- to the assessee. A deed of cancellation was ent .....

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t liable to assessment as capital gains. The Tribunal while dealing with the controversy held that the assessee has a right to obtain a sale deed. That right was capital asset and by virtue of deed executed on 21.3.1990, the assessee has relinquished his right to obtain sale deed. This relinquishment is a transfer within the meaning of section 2(47) of the Act. The observation of the Tribunal read as under: In the present case, it is not the claim of the Revenue that there was extinguishment of .....

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nition of 'capital asset' in Section 2(14). It is that capital asset, i.e. the right acquired under the agreement of sale that the assessee relinquished in terms of the deed of cancellation dt. 21st March, 1990. That capital asset was not extinguished on account of destruction or loss. It was only given up or relinquished by the assessee. It is our considered view that the decision of the apex Court in regard to a case of extinguishment of a capital asset, has no application to the facts .....

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is, therefore, dismissed. 10. Next judgment referred by the assessee is of Hon ble Bombay High Court in the case of CIT Vs. Tata Services Ltd., reported in 122 ITR 0594 (Bom). In this case, the facts are that the assessee had entered into an agreement with one Seth Anandji Haridas to purchase a residential plot at 29D, Doongarsey Road, Malabar Hill, Bombay and paid ₹ 90,000/- as earnest money. The agreement was in respect of 5,000 sq.yards out of a larger plot and price fixed was at the ra .....

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the subdivision of the main plot, admeasuring 7,012. Ultimately he entered into an agreement to sell the property to M/s.Advani and Batra. The assessee threatened to file a suit for specific performance. A settlement was arrived vide which the vendor has returned ₹ 90,000/- paid by the assessee as advance and compensation of ₹ 5,00,000/-. Thus, the assessee got a sum of ₹ 5,90,000/-. In the cancellation deed a sum of ₹ 5,00,000/- was mentioned as amount of consideration .....

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High Court has made an elaborate discussion on the issue and ultimately held that the money received by the assessee for assigning of its rights acquired under the agreement for obtaining a sale deed is for transfer of capital asset and assessable under the head capital gain. The following observations of the Hon ble Bombay High Court are worth to note: Whatever may have been the controversy between Anandji Haridas and the assessee prior to September 23, 1963, when the assessee executed the rec .....

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Under this tripartite agreement, the assessee was to transfer and assign in favour of M/s. Advani and Batra the right, title and interest which the assessee had under the agreement entered into with Anandji Haridas. Once the parties had decided that the rights under the agreement of sale were to be assigned in favour of Messrs. Advani and Batra, if is difficult to see how the sum of ₹ 5,00,000 received by the assessee from M/s. Advani and Batra could be claimed to have been received by was .....

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f the I.T. Act, 1961. 11. Next decision referred by the assessee is of Hon ble Bombay High Court in the case of CIT Vs. Vijay Flexible Containers, 186 ITR 0693 (Bom). In this case, the facts are that the assessee-firm entered into an agreement with Captain B.V. Dhuru on 10.11.1959 whereunder, the assessee has agreed to purchase from the said Dhuru and others immovable property described in Schedule thereto at the rate of ₹ 35 per sq.yard to be paid in the manner set out. Upon execution of .....

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e has acquired under the said agreement for sale was capital asset. Upon extinguishment of that right, the assessee has received a sum of ₹ 1,17,500/-. After deducting the cost of acquisition of the capital asset in the amount of ₹ 17,5000/- and expenses and legal charges in the sum of ₹ 17,904/-, the ITO found the capital gain to be ₹ 82,086/-. The Hon ble Bombay High Court upheld the conclusion of the AO and held that the assessee had acquired right of that capital asse .....

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ers of one firm M/s.Indian Pharmaceuticals. The firm had entered into a contract to purchase certain immovable property from Smt.Ratan Bai Tongia for ₹ 1,05,000/-. An agreement to that effect was entered into between the parties on 25.9.1970. The agreement was not carried out by the seller and hence, the assessee-firm was compelled to file a suit for specific performance of the contract against the owner of the property in civil court. Ultimately, the dispute was resolved by a compromise w .....

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e upon the decision of the Hon ble Supreme Court in the case of Vania Silk Mills P. Ltd., 191 ITR 647 has held that receipt in question cannot be regarded as and/or taxed as capital gain as defined in section 2(47) of the Act. The Hon ble Madhya Pradesh High Court has reversed the decision of the Tribunal and held that the gain arisen to the assessee for relinquishment of its rights obtained under the agreement is a capital gain. 14. Thus, on an analysis of the record, we are of the view that th .....

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y this agreement, and if she violates this agreement, she could be exposed to civil as well as criminal proceedings. Her right in the property after the execution of this agreement has been curtailed or encumbrance has been created. Issue No.(ii) 15. Under issue no.(ii) focus of our inquiry is as to what would envisage transfer of a capital asset under section 2(47) of the Income Tax Act r.w.s section 53A of the Transfer of Property Act, 1882. It is pertinent to take note of the relevant part of .....

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ty Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative 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 - 1 - For the purposes of sub-clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269UA. Ex .....

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eing effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India. 16. Clause (v) and (vi) have been introduced in section 2(47) of the Income Tax Act by Finance Act, 1987 w.e.f. April 1, 1988. The Board has issued a circular bearing no.495 dated Sept. 22, 1987 explaining the objectives and the background for inclusion of this clause in order to widen the scope of expression transfer for the purpose of taxation. We deem it app .....

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ompany or association of persons or by way of any agreement or any arrangement whereby such person acquires any right in any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multistoreyed constructions in big c .....

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e practice of enjoyment of property rights through what is commonly known as power of attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted. A person holding the power of attorney is authorised the powers of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor. 11.3 These amendments shall come into force with effect from April 1, 1988, and will, accordingly, apply t .....

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le of property at No.13, VOC Road, Cantonment, Trichy. The property was vacant land within the municipal limits. The whole idea was to develop the property and it comprises an area of about 36,873 sq. feets. The total consideration agreed was ₹ 57 lakhs. The vendee paid a sum of ₹ 2 lakhs as an advance on the date of agreement and agreed to pay a sum of ₹ 15 lakhs within two months from the date of agreement and further sum of ₹ 10 lakhs within a period of six months. The .....

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reed that the vendee/ developer would construct a separate building in area of 5,600 sq.feets at the cost of ₹ 8 lakhs and this sum of ₹ 15,40,000/- plus ₹ 8 lakhs totaling to ₹ 23,40,000/- was to be adjusted out of the total consideration. But this adjustment was to be from the last installment of the consideration payable by the vendee. The assessee had received a sum of ₹ 22 lakhs out of the consideration on his having parted with approximately 1/3rd of the total .....

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assessed at ₹ 4,74,765/-. The dispute between the assessee and the department was whether the capital gain is to be calculated with regard to the sale consideration received by the assessee on transfer of 1/3rd of the property whose possession was handed over during this year. The AO was of the view that once in a part performance of the contract, the assessee has handed over the possession of the part of the property, the transaction of the transfer of property is complete and the capital .....

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r of the Tribunal. The relevant finding of the Hon ble Madras High Court reads as under: In this case, the possession was parted with whereas the assessee/vendor received the consideration therefor. Once the possession, even a part of the property was handed over to the transferee for the purpose of Section 2(47)(v) read with Section 45, the transfer was complete and therefore the tax authorities and more particularly, the Tribunal was justified to calculate the consideration received in that pa .....

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as a completed transfer for the purpose of then Section 12(b). The Supreme Court observed that the transfer means effective conveyance of capital asset to the transferee and delivery of possession of immovable could not by itself be treated as equivalent to conveyance of the immovable property. Relying on this judgment, the learned counsel pointed out that the amendment has effected a sea change in law, inasmuch as under Section 2(47), the delivery of possession provided it is in the nature as .....

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hange, it would be clear that where there would be a transfer of possession in the nature as contemplated under Section 53A of the Transfer of Property Act, the transaction would be covered as a transfer. By the necessary logic then, that transaction would be coverable in that particular assessment year as has been done by the Delhi High Court. The only question was as to whether a transaction could be considered for the purpose of calculation of capital gains in parts. The position in law has b .....

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ssion of the property in pursuance of the said agreement. All these conditions undoubtedly and admittedly are completed here. If that is so, then there would be no question of interfering with the Tribunal's judgment. In our opinion, the Tribunal has correctly held that the assessee would have to be assessed on the basis of the transfer of the possession in proportionate to the consideration. Accordingly, the question is answered against the revenue. 18. The Hon ble Bombay High Court has als .....

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ty situated at Gamdevi during the previous year relevant to the assessment year 1996-97 was so unreasonable that no person properly instructed could ever have arrived at the same ? (iii) Whether, the Tribunal's conclusion that the appellant transferred the property situated in Gamdevi in the previous year relevant to the assessment year 1996-97 was arrived at by considering irrelevant circumstances and without appreciating and considering the relevant factual material and was contrary to the .....

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acted and in such cases, even entering into such a contract could amount to transfer from the date of the agreement itself. We have taken this view for a precise reason. Firstly, we find in numerous matters where the Assessing Officer and the Department generally proceed on the basis of substantial compliance of the contract. For example, in this very case, the Department has contended that because of substantial compliance of the contract during the financial year ending March 31, 1996, the tra .....

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of the assessee, then the Assessing Officer is entitled to take the date of the contract as the date of transfer in view of Section 2(47)(v). In this very case, the date on which the developer obtained a commencement certificate is not within the accounting year ending March 31, 1996. At the same time, if one reads the contract as a whole, it is clear that a dichotomy is contemplated between the limited power of attorney authorising the developer to deal with the property vide para. 8 and an ir .....

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nt, the question of substantial performance of the contract thereafter does not arise. This point has not been considered by any of the authorities below. No judgment has been shown to us on this point. Therefore, although there is a concurrent finding of fact in this case, we have enunciated the principles for applicability of Section 2(47)(v). We do not find merit in the argument of the assessee that the court should go only by the date of actual possession and that in this particular case, th .....

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rs becomes owner of the property by becoming a member of company, cooperative society or to include those transactions that closely resembles transfer, but are not treated as such under general law. Under section 2(47)(v) of the Act any transaction involving allowing of possession referred to section 53A of the Transfer of Property Act would come within the ambit of transfer. Even arrangement conferring privileges of ownerships without transfer of title would come within the ambit of section 2(4 .....

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ssession was also handed over, the transfer within the meaning of section 2(47)(v) and (vi) was complete. The parties to the agreement are not challenging the genuineness of the agreements. 22. Issue No.(iii). 23. The first reason assigned by the ld.First Appellate Authority for ignoring the agreement dated 4.4.2008 and 2.3.2009 for holding them invalid and non-genuine is that for harbouring any transfer within the meaning of clause (v) of section 2(47), there must be a transaction under which t .....

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rst Appellate Authority, sections 17 and 49 of the Indian Registration Act have been amended by Act No.2001 whereby it has been laid down that the registration of sale agreement/contract for the purpose of section 53A is mandatory. The ld.DR while putting reliance upon the order of the ld.CIT(A) also brought to our notice copy of the Govt. of Gujarat Extraordinary Gazette Notification published on Saturday, February, 2002 whereby amendment of the Indian Registration Act in section 17 of the Regi .....

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in the meaning of Section 53A of the TPA. In other words, the rights flowing from an agreement can only be recognized if it was duly registered. If the agreement was not registered, then the rights would not accrue to the parties to the agreement. If no rights would accrue, then it will be construed that the possession was not delivered by the assessee vide agreement dated 4.4.2008 and 2.3.2009, meaning thereby, no transfer has taken place. The ld.First Appellate Authority further put reliance u .....

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can only be completed by way of registered sale deed, as contemplated in section 17 of the Registration Act. This judgment deals with the concept of power of attorney, lease, licence etc. Definition of expression transfer provided in section 2(47) is more wider than in the general law. As observed earlier, while dealing with the issue no.(ii), the expression transfer employed in section 2(47) includes (a) any transaction which allows possession to be taken/retained in part performance of a contr .....

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oticed at the end of the ld. CIT(A). According to the assessee, the rights which have been alienated by her by virtue of agreement dated 4.4.2008 are the rights of capital nature. These rights have been alienated in favour of SDS. The ld.CIT(A) has referred to sections 17 and 49 of the Indian Registration Act, but, failed to notice the proviso appended to section 49 which has been incorporated by way of amendment subsequently. Thus, it is pertinent to take note of section 49 along with proviso w .....

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property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877), or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882 (4 of 1882) or as evidence of any collateral transaction not required to be effected by registered instrument. 25. Section 53A of the T.P. .....

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or specific performance, etc. it is to be treated as valid agreement. A controversy in this aspect had arisen whether such non-registered agreement can be entertained in evidence or not in a suit for specific performance. A reference was made before the Division Bench of Punjab & Haryana High Court in regular Second appeal No.4946 of 2011 in the case of Ram Kishan Vs. Bijeder Mann. The Hon ble High Court has resolved the controversy and held that such unregistered agreement can be produced a .....

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act accompanied by delivery of possession or executed in favour of a person in possession, is compulsorily registrable under section 17(1A) of the Registration Act, 1908, but the failure to register such a contract would only deprive the person in possession of any benefit conferred by section 53A of the 1882 Act. The proviso to section 49 of the Indian Registration Act clearly postulates that non-registration of such a contract would not prohibit the filing of a suit for specific performance ba .....

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the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the proviso to section 49 of the Indian Registration Act, 1908, put paid to any argument to the contrary. 14. We, therefore, hold that : (a) a suit .....

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nd be led into evidence as proof of the agreement or part performance of a contract." 26. Thus, if the assessee refused to honour her agreement dated 4.4.2008, SDS has a right to get this agreement enforced by way of suit for specific performance and the assessee could be persuaded to execute the sale deed in favour of SDS by virtue of this agreement. The validity of this agreement under general law viz. Specific Relief Act as well as Indian Registration Act has not been effected. This aspe .....

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tion she would get the amounts only agreed upon by way of agreement dated 4.4.2008. She could be charged for capital gain on this amount only. Even for argument s sake, the reasons of the Revenue authorities are being accepted that the agreements dated 4.4.2008 and 2.3.2009 are unregistered, therefore, they shall not goad the adjudicator to construe part performance of the contract u/s.53A of T.P. Act and no transfer of the land could be construed within the meaning of section2(47)(v) of the Act .....

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endency of the Civil Suit SDS assigned his right to a third party and ultimately that third party agreed for purchase of suit land. A settlement is arrived. The assessee would get only a consideration agreed upon by virtue of agreement dated 4.4.2008, and other consideration will go to SDS for assigning his right accrued under this agreement. The right to obtain registration of sale deed acquired by him by virtue of agreement dated 4.4.2008, is a capital right, therefore, the transfer would resu .....

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and Act, 1948 which prohibits non-agriculturists to purchase the agriculture land. As per ld. CIT(A), since SDS was not proved to be an agriculturist, therefore, he was not competent to purchase the agriculture land. Once he was prohibited by the provisions of Tenancy Act, then he cannot purchase agriculture land, meaning thereby, he will be disqualified even to enter into an agreement for purchase of the land. On consideration of all these reasons, we are of the view that the assessee and the S .....

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ned, it does not create any disqualification for entering into contract - it creates disqualification for enforcing that contract. The contractee can enforce contract in favour of a person who is an agriculturist. It is important to note that the land transacted by the parties was within the vicinity of Ahmedabad City. It was going to be converted into urban land under the Town Planning scheme and ultimately before the agreement dated 2.3.2009, the status of the land was changed from agriculture .....

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e had acquired the land in between 18.12.2007 utpo 4.3.2008. She had agreed to sell this land on 4.4.2008 to SDS for consideration of ₹ 76,75,413/-. The rate of land upto this stage was ₹ 62.03 per sq.meters, whereas, when the agreement dated 2.9.2009 was executed, it was at the rate of ₹ 860/- per sq.meter. According to the ld.CIT(A) appreciation in the price of real estate does take place over a period of time. However, it is also a fact that such appreciation also happens in .....

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culture land. The land was converted into non-agriculture land authorizing the owners to construct dwelling units on the land. This permission was granted by the District Panchyat and District Development Officer, Ahmedabad by its order no.Masal/Bakhap/SR-131/Vashi-1526 to 1552 dated 12.9.2008. This was a significant change in the character of the land. The moment, it was converted into non-agriculture land, its value increase many folds. It is also pertinent to note that as per section 40jj(i) .....

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bservation. She entered into a lawful contract, which is of binding nature, and how can she retract ? The moment she retracts, then other party can file suit for specific performance. Even if the court does not grant specific performance of the contract, then, would compensate the contractee for damage ? The damages again would be quantified considering the market value of the land. It is also pertinent to note that the assessee has purchased the land from 18.12.2007 to 4.3.2008. She had purchas .....

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rted into a non-agriculture land. From analysis of the orders, it revealed that approach of the Revenue authorities for appreciating the genuineness and veracity of the agreement is guided by the tax liability. According to the Revenue authorities, since tax liability has been avoided by the parties, therefore, their agreements are not genuine. In our opinion, genuineness of any agreement is not depended upon the actual payment of tax resulted on account of execution of these agreements. It is o .....

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143(3) of the I.T.Act. The department did not raise any objection in his assessment proceedings and did not doubt the transactions. Now, the stand of the Revenue is, since if it is taxable in the hands of the SDS, then no taxes would be collected on these transactions, because gain would be set off against brought forward loss. Even if transaction is shifted to the assessment year, in which sale deed registered, in that case, SDS will bring his losses of earlier year to A.Y.2010-11. Therefore, t .....

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to the decision of the Hon ble Gujarat High Court in the case of Banyan & Berry Vs. CIT, 222 ITR 831 made the following observations. 134. We may also refer to the judgment of Gujarat High Court in Banyan and Berry v. Commissioner of Income-Tax where referring to McDowell , the Court observed: ".....The court nowhere said that every action or inaction on the part of the taxpayer which results in reduction of tax liability to which he may be subjected in future, is to be viewed with sus .....

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cted the freedom of the citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the framework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity." This accords with our own view of the matter. In CWT v. Arvind Narottam , a case under theWealth Tax Act, three trust dee .....

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of the deeds of settlement is plain and admits of no ambiguity." Justice S. Mukherjee said, after noticing McDowell's case, (at page 487): "Where the true effect on the construction of the deeds is clear, as in this case, the appeal to discourage tax avoidance is not a relevant consideration. But since it was made, it has to be noted and rejected." In Mathuram Agrawal v. State of Madhya Pradesh another Constitution Bench had occasion to consider the issue. The Bench observed: .....

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not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature." The Constitution Bench reiterated the observations in Bank of Chettinad Ltd. v. CIT , quoting with approval the observations of Lord Russell of Killowen in IRC v. Duke of Westminster and the observations of Lord Simonds in Russell v. Scott It thus appears to us that not only is the princi .....

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the intervening legal steps as non-est based upon some hypothetical assessment of the 'real motive' of the assessee. In our view, the court must deal with what is tangible in an objective manner and cannot afford to chase a will-o'- the-wisp. 32. Next reasoning assigned by the AO is that funds have been provided by Ganesh plantation to SDS. Husband and father-in-law of the assessee were holding voting power of more than 20% in the Ganesh Plantation Ltd. Therefore, the transactions ar .....

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