TMI Blog2011 (1) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, Whenever an immovable property is sold and the whole of the consideration is paid, generally all the three documents, i.e., agreement to sell, general power of attorney as well as possession letter, are executed. all these ingredients as are required to be complied with for the applicability of section 53A of the Transfer of Property Act were satisfied in this case on 5-9-2002 and accordingly I am of the opinion that the transfer of the land has duly taken place on 5-9-2002 itself. I, therefore, agree with the ld. A.M. that the transfer of the agricultural land in this case took place on 5-9-2002 attracting Short Term Capital Gain. Once the ground relating to the applicability of section 50C has not been pressed before the Tribunal, in my opinion, the ld. A.M. was correct in law in dismissing this ground as not pressed. Once the ground has not been pressed before the Bench, as a Third Member, in my opinion, I do not have any jurisdiction to adjudicate this issue on merit. I, accordingly, agree with the ld. A.M., dismissing the ground No. l as not pressed. Per P.K. Bansal, Accountant Member. - In this case the difference arose between the Members of the Division Bench h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered document and in the affidavit and statement recorded by the department of the possession and possesses. (6)That the appellant's craves to add or alter any other grounds of appeal as may be warranted. 3. Briefly stated, the facts of the case are that the assessee/appellant is a Private Limited Company and derived income from rent, interest on bank deposit and income from Long Term Capital Gain (LTCG) which was shown as per the Profit and Loss Account filed along with the Return of Income (ROI) for this year. During the year the assessee company purchased a piece of agricultural land situated in the revenue estate of Village Dahtora, for a consideration of ₹ 20,00,000, by means of registered power of attorney allegedly executed on 21-11-2002 in favour of Shri Mukesh Agarwal, S/o. K.P. Agarwal, R/o. Kamla Nagar, Agra. According to the assessee this land in question was purchased on 20-11-1999 for a consideration of ₹ 4,99,980 inclusive of registration fee, stamps and expenditure incurred on boundary wall of ₹ 54,980 and that the title deed was executed on 20-11-1999 in favour of the assessee. As per the assessee the land remained in its possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip of the property. Learned CIT(A) has opined that as per the power of attorney dated 5-9-2002 as has been recorded by the typist is the date on which Shri Mukesh Kumar Agarwal, the power of attorney holder, became absolute owner of the property although the power of attorney was unregistered during that period. Learned CIT(A) has also ignored the step taken by the parties during this period to verify the status of the land on the reasoning that no specific Act was explained to have been done by the parties during this period. Finally he came to the conclusion that in fact the agreement dated 5-9-2002 executed between the assessee and buyer M/s Kela Devi Real Estate represented by MD Shri Kanti Prasad Agarwal clearly indicated that the assessee is absolute owner of the property and there is no encumbrance. Now the assessee is further aggrieved and has raised the above extracted grounds of appeal. 4. We have heard the rival submissions and have carefully perused the entire materials available on record. The case of the assessee is that the power of attorney dated 5-9-2002 was only typed on that date and it was neither signed nor executed on that date. On the other hand, the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the time gap is less than 3 years (36 months) by few days, so the assessee is entitled only to Short Term Capital Gain (STCG) and not LTCG. Thus, he has calculated STCG at ₹ 18,85,000 and has taxed the same accordingly. 6. The learned CIT(A), directed the Assessing Officer, under section 250(4) through letter F.No. CIT(A)-II/Agra/19/ACIT-4(1)/05-06/665, dated 11-8-2008 to verify various crucial dates and to submit his report. The learned Assessing Officer has submitted his report and the relevant portion of his report has been extracted by learned CIT(A) at page 5 of his order. We also extract the same, verbatim, as it is very relevant for reaching at a correct conclusion :- It is submitted that it appears in appeal the assessee has been disputing the fact of sale of land shown by it. But the assessee legally cannot do so because it itself had declared in the return that the property was sold in the relevant year (computation filed along with return and para 8 of reply of assessee dated 14-2-2006 may kindly be seen). Even otherwise, as the sale consideration and possession of property along with all rights were transferred on 5-9-2002 (Agreement of power of attorne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer and Shri Rajeev Kumar, Director of the assessee-company, appeared before him on 6-10-2006. Their statements were recorded. In these statements they reiterated their old stand that the possession of this land was given/taken on 21-11-2002 and not on 5-9-2002. They also stated that they had completed certain formalities during the period between 5-9-2002 to 21-11-2002, like verification of ownership from revenue authorities/local bodies. But the Assessing Officer has submitted that they could not produce any documentary proof in this regard, so he was not satisfied that any statutory requirements etc. were carried out during this period. 8. The assessee continued to maintain that the possession of this piece of land/property was given/taken only on 21-11-2002. Shri Mukesh Kumar Agarwal, the Power-of-Attorney, also confirmed in his statement on oath recorded by learned Assessing Officer that he took the possession of the land on 21-11-2002. It was submitted that between 5-9-2002 and 21-11-2002, the buyer had made enquiries whether this land was free from any encumbrances or not from the Government Agencies and from various persons to satisfy himself regarding the owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land. He has simply considered the date of 'payment' of consideration. As per Assessing Officer, the moment consideration is received, the 'transfer' is complete. As against this, learned CIT(A) has not considered even the payment of entire sale consideration relevant for transfer , because as against 16-8-2002 as taken by Assessing Officer, he has taken it as 5-9-2002. It may be mentioned in point ( ii ) ibid , albeit he has observed that the entire sale consideration was received on 16-8-2002. 12. Insofar as conclusion No. ( i ) of ld. CIT(A) as above is concerned, it is admittedly correct to the extent that ₹ 20 lakhs were received by the assessee-company on 16-8-2002. But the other part of the finding of learned CIT(A) that because assessee-company initiated negotiation for sale of land before 36 months of its sale from its purchase, so the transfer shall be treated to have been taken place within that period is not found to be correct at all. We are afraid, the initiation of negotiation is not at all relevant for a transfer. The date of 'transfer' is only relevant for the purpose of 'capital gains'. The finding of learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supposedly, but why the other party should lie. Why the other party stand with the 2nd party of an agreement, is a question to be deeply mused over, while giving meaning to the document in question. What benefit would be drawn by the purchaser in standing with the assessee? Why learned Assessing Officer did not call the independent witness to find out the real truth, if he doubted the version of the parties to this agreement. 16. We will discuss the document in question, subsequently, but before that we may mention that whatever formalities were carried out by the purchaser during 5-9-2002 to 21-11-2002, have been just thrown and brushed aside by learned. Assessing Officer as well as learned CIT(A). If, in case his statement would have been against the assessee, the department would have readily accepted and relied upon. 17. This assessee, who was the owner in possession of 0.75 hectare of land, entered into an agreement for sale of this land with M/s Kela Real Estate Ltd., through its M.D. Shri Kanta Prasad Agarwal R/o D-15, Kamla Nagar, Agra. Through cheque No. 139962, dated 16-8-2002 drawn on HDFC Bank Ltd., an amount of ₹ 20 lakhs was paid to the assessee on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has got to be entered into by a registered instrument - Godhan v. Ram Billas AIR 1995 All 357. The Uttar Paradesh Selling of Property (Temporary Registration of Transfer) Act, requires permission to be taken by the vender by applying to the concerned authority, but such authority shall have discretion to grant or refuse the sanction, and it is immaterial that the agreement between the parties did not contain such terms as obliging the seller to take permission - Bishambhar Nath Agrawal v. Kishan Chand AIR 1998 All. 195. 20. But we are concerned with the term transfer under the Income-tax Act, 1961. 21. The meaning of the term transfer has been given in section 2(47) which is as under:- 2( 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 )in 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] [( iva )the maturity or redemption of a zero co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, were to be carried out, and only then the possession could be transferred. 25. First of all let us examine the deed/document through which transfer took place. This document is being extracted, as it is, herein below :- 26. The power of attorney, a copy of which is enclosed with the record of this case, at P.B. Pages 3 to 5 is that document. It seems that this document was not meticulously examined by ld. Assessing Officer as well as by ld. CIT(A), may be because it is written in 'Devnagri Lipi'; the very heading of this document is Mukhtarnama Aam Khandniya meaning thereby that this is a Revocable/General Power of Attorney . The nature of this document and the intention of the parties is also evident from page 3 of this document, the last sentence of paragraph 1st is that 'This is Revocable General Power of Attorney- vide which the second party would not get any ownership or any other right under the same. In the last paragraph also this very intention of the parties is reflected. In the end it has been written that this document is drafted on the advise of Pt. Hanuman Parsad Kaushal, R/o Nooridarwaja, Agra on 5-9-2002. From the above it becomes amply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has confirmed the claim of the assessee. Thus, the date, for income-tax purposes, of transfer of possession has to be taken as 21-11-2002 and not 5-9-2002. 29. It can also be mentioned that when a document is registered it has to be signed as well as thumb-impressed in the presence of the S. Registrar and the witnesses. On this document of Power of Attorney only one signature of each party is found, which goes to establish that on the date of draft i.e., 5-9-2002 no signature or thumb-impression was marked of the parties, otherwise there would have been double signatures of each one on this document. A very important fact would arise from the finding of ld. Assessing Officer that if the sale consideration was more than ₹ 20 lakhs, then how it can be said that the entire sale consideration was received by the seller. 30. In view of the above finding of facts, we set aside the order of the ld. CIT(A) and accept the appeal of the assessee. 31. In the result, the appeal of the assessee is allowed. ORDER Sanjay Arora, Accountant Member. - I have perused the order proposed by my ld. Brother and also discussed the same with him. However, with respect, I am u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transfer of its said capital asset as a long-term capital gain (LTCG), claiming the benefit of indexation in respect of its cost of acquisition, working its deemed value at ₹ 5,74,550. The Assessing Officer (Assessing Officer), however. was of the view that the transfer date was the date of execution of the GPOA and not that of its subsequent registration, so that the said gain was assessable as a short- term capital gain (STCG) and, resultantly, the assessee not entitled to the benefit of indexation of its cost in the computation of the income chargeable to tax. Also, the capital asset transferred being land, section 50C of the Income-tax Act, 1961 ('the Act' hereinafter) is applicable to the transaction and the sale consideration for the purpose of computation of the capital gains under the Act would be its value as per the stamp valuation rate, i.e., ₹ 23.25 lakhs. Accordingly, he assessed the gain as STCG at ₹ 18,85,000. This sums up the controversy. 3.2 In appellate proceedings, it was contended by the assessee that the GPOA stood in fact executed only on the date of its registration, i.e., 21-11-2002. The date (5-9-2002) was only the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horized Representative (A.R.) as to how the GPOA, the document clearly stating the date of its execution as 5-9-2002, could be said to have been actually signed and executed by the parties on that date, i.e., in the absence of the signatories putting the date of signing (or '21-11-2002', i.e., as claimed) below their signatures, or any other evidence in support of their claim, i.e., assuming that the document stood signed on that date (21-11-2002) and not on 5-9-2002. To this, he could not offer any cogent answer though he pointed to the date of registration of the document, i.e., as appearing on the backside of page 1 of the GPOA (P.B. page 3), as also referred to the confirmations filed by the contracting parties stating the date of execution of the GPOA and that of giving possession, as 21-11-2002. The ld. D.R., on the other hand, adverted our attention to the following infirmities which he claimed to prove the GPOA to have been executed on 5-9-2002 only :- -the receipt of the entire sale consideration before that date; -the admitted execution of the ATS on 5-9-2002 itself; -the reference in the ATS to the GPOA as dated 5-9-2002; -the subsequent regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Registration Act, 1908, so that it shall have force notwithstanding its non-registration, especially where it is stated to be revocable, and bears no mention of consideration, which is one of the essential ingredient of a contract. Even otherwise, the registration, where compulsory, only precludes the admissibility of the relevant document in evidence before a court of law, i.e., in case of a dispute between the parties, while there is none in the present case; the only issue being the date of its execution, and that too between the assessee, whose stand is supported by the contracting party, and the Revenue. Besides, such a document could be registered at any time after its execution, removing all the debilitating effects of non-registration and extending all the benefits as are otherwise excluded by the law of registration. Secondly, the contract or the relevant document would, on its subsequent registration, have effect or be operative from the date of execution, and not the date of its registration. As such, the non-registration of the GPOA till 20-11-2002, or its registration only on 21-11-2002, is of no moment and, hence, bearing on the issue at large. 5.3 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein, stand, as it appears, written on the same date, i.e., 5-9-2002, purchasing the stamp paper in the name of the payer-company, with the former (ATS) being executed, undeniably, on that date (5-9-2002). As such, it is inconceivable that the GPOA was not executed on that date. Would that mean, therefore, that while the proposed buyer performs its part of contract, the assessee-transferor did not perform any part of its contract? Or, that, the proposed transferee would not insist on the assessee, the transferor, also to perform its part of contract'. This is more so as the two documents, the ATS and the GPOA, only appear to have been executed, for several valid reasons and purposes, together. That the ATS also bears reference to the GPOA (executed only in favour of related party) dated 5-9-2002, even as observed by the ld. CIT(A), seals the assessee's case against it in the matter. Here it may also needs to be emphasized that the consideration (for the transfer) flows from the proposed buyer, and not from the GPOA holder. As such, the different documents (also bearing reference to the other) per which the transaction stands reduced in writing or documented, are necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracting parties to the contrary would be of no moment. 5.7 The next question incidental to the issue is the grant of possession of land by the assessee. I regard it as incidental as in the facts of the case the assessee and the revenue are in agreement, and only rightly so, that the same (the issue) is that of the execution of the GPOA, which is definitely an issue, and stands already dealt with hereinbefore. However, this aspect having been examined independently by the ld. CIT(A) and my ld. Brother, a brief discussion thereon would be in order. The GPOA confers all the right to the POA, including the right to give possession to another, i.e., without recourse to the assessee. Apart from the clear language of the GPOA, granting delivery to the Attorney, the question that begs answer is how can the right to give delivery (to another) be conferred on the POA holder if the document (GPOA) itself does not envisage, or the transaction not subsume, the grant of delivery to the POA holder ? 5.8 Coming to the assessee's explanation for non-execution of GPOA on 5-9-2002, i.e., for want of completion of certain legal formalities/procedures, I find firstly that the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated as 'revocable in the title, the same could presumably be to save on some transaction cost, as registration, stamp duty, et., al. I rest my opinion in the matter by stating it to be of no consequence. Revocable or otherwise, the parties have regarded it as a being valid for the purpose of 'transfer'; the only issue as discerned being the time of its execution and thus operation. 5.10 Finally, I deal with the aspect of the application of section 50C. The assessee has not pressed the ground before us and has also not adduced any evidence before the authorities below to make out a case for challenging the adoption of the said circle rate of ₹ 31 lakhs per square hector. As such, the deeming of the sale consideration at ₹ 23.25 lakhs by the Assessing Officer, as against ₹ 20 lakhs disclosed by the assessee, would hold. Needless to add, no adverse inference of the same, insofar as the revenue, thereby, not considering ₹ 20 lakhs to be the entire consideration exchanged between the parties, so that the transaction of transfer was hence not complete, could be drawn. The assessee, it may be added, has also stated that its cost of acquisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 50C (at ₹ 23,25,000) or as returned by the assessee (at ₹ 20 lakhs)? THIRD MEMBER ORDER P.K. Bansal, Accountant Member [As a Third Member]. - Questions referred to by the Hon'ble President under section 255(4) of the Income-tax Act, 1961 ('the Act' hereinafter) on the difference of opinion between the learned Accountant Member (A.M.) and the learned Judicial Member (J.M.) read as follows :- ( i )Whether in the given facts and circumstances of the case, the transfer of agricultural land in question took place on 5-9-2002 attracting short-term capital gain or it took place on 21-11-2002 attracting long-term capital gain. Additional question being referred by ld. Accountant Member: ( ii )Whether, in the facts and the circumstances of the case, and particularly considering the assessee's Ground No. 1 impugning the total addition sustained, including that on account of application of section 50C of the Income-tax Act, 1961, which is admittedly not in dispute, the capital gain, whether short-term or long-term, is to be computed adopting the sale consideration as deemed under section 50C (at ₹ 23,25,000) or as returned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty was sold in the relevant year (computation filed along with return and para 8 of reply of assessee dated 14-2-2006 may kindly be seen). Even otherwise, as the sale consideration and possession of property along with all rights were transferred on 5-9-2002 (Agreement of power of attorney may be seen), so the transfer of capital asset was complete on that date itself as per provisions of section 2(47). It is settled law that even if the documents are not registered but the following conditions of section 53A of the Transfer of Property Act are satisfied, ownership in the property is transferred ( a )There should be a contract in writing; ( b )The transferee has paid consideration or is willing to perform his part of the contract; and ( c )The transferee should have taken possession of the property. When these conditions are satisfied, the transaction will constitute transfer for the purpose of capital gains. All the above conditions were fulfilled in the case of the assessee. The information called for regarding dates are given as under :- Sl. No. Particulars Date 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the date of handing over of possession of the property. But they could not tell why statutory formalities were required to be done after agreement nor could they mention even a single statutory formality which they had done during the period 5-9-2002 to the date of registration i.e., 21-11-2002. Though in their statement they have stated to have done some formalities such as going to local bodies for verification of ownership but no evidence has been furnished by them even to support the above statement or any other content of the statement. On considering the non furnishing of the required details, complete ignorance/failure to state the details of statutory formalities allegedly being claimed to have been done during the said period, it is clearly established that no formalities-statutory or otherwise were done by assessee or the buyer and getting registration done on 21-11-2003 was only on LTCG in respect of a transaction which was in fact a case of STCG. 6. In the rejoinder before the CIT(A), the assessee claimed that the possession was given to Shri Mukesh Kumar Agarwal only on 21-11-2002 and not prior to that. The CIT(A) did not agree with the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done will be effective from the date of execution of the document. Thus, he contended that the ld. A.M. has correctly confirmed the order of the Assessing Officer. 8. The ld. A.R., on the other hand, made the following written synopsis :- The following questions have been referred for getting the Hon'ble Third Member decision as per provisions of section 255(4) of the Income-tax Act : (1)Whether in the given facts and circumstances of the case, the transfer of agricultural land in question took place on 5-9-2002 attracting short-term capital gain or it took place on 21-11-2002 attracting long-term capital gain. (2)Whether, in the facts and the circumstances of the case, and particularly considering the assessee's Ground No. 1 impugning the total addition sustained, including that on account of application of section 50C of the Income-tax Act, 1961, which is admittedly not in dispute, the capital gain, whether short-term or long-term, is to be computed adopting the sale consideration as deemed under section 50C (at ₹ 23,25,000) or as returned by the assessee (at ₹ 20 lakhs) ? As per section 53A of T.P. Act read with section 2(47) of Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s can be seen by three decisions of the Privy Council. Recently, para 4 of section 53A has been amended by section 10 of the Registration and Other Related Laws (Amendment) Act, 2001 (Act 48 of 2001) whereby the words 'the contract, though required to be registered, has not been registered, or' has been omitted. (2) Scope - So far applicability of section 53A of the TP Act is concerned, what is to be seen is that the section provides for a shield of protection to the proposed transferee to remain in possession against the original owner who has agreed to sell to the transferee, if the proposed transferee satisfied other conditions of section 53A. That protection is available as a shield, only against the transferor, the proposed vendor would disentitle him from disturbing the possession of the proposed transferees who are put in possession pursuant to such an agreement. However, that has nothing to do with the ownership of the proposed transferor who remains full owner of the lands till they are legally conveyed by a sale deed to the proposed transferees. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween 5-9-2002 to 21-11-2002, like verification of ownership from revenue authorities/local bodies. The copy of replies furnished in compliance to summons before the A. O. by the power of attorney holder, the seller who gave the power of attorney are placed as per paper book pp.38 and 39 and further reply filed before the CIT (Appeals) in the remand proceedings is placed as per paper book pg. No. 34. The department did not place any evidence to rebut the contents of the evidence brought on record by the Assessing Officer in the remand proceedings i.e., the specific reply from purchaser and seller placed as per paper book pages 34, 38 39 which are part of paper book placed before the Hon'ble LT.A.T. and discussed by the Hon'ble Judicial Member. When transferor and transferee both have specifically denied transfer of possession of the land before the date of registration of power of attorney on 21-11-2002, the decision of the Hon'ble Accountant Member cannot be enforced on the transferor and transferee that they took over and hand over the possession of the property on 5-9-2002 when the power of attorney was only drafted and typed. The Hon'ble Accountant Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umb impression. The Hon'ble Judicial Member has rightly observed in para 18 whereby it has been mentioned that the affidavit as well as statement on oath of Shri Mukesh Kumar Agarwal are definitely supporting evidence which can not be easily brushed aside by the department. (P.B. Pp. 34, 38 39). In para 19 the Hon'ble Judicial Member has an occasion to analyse the law as per the Transfer of the Property Act and the conclusion drawn by him are in accordance with Transfer of Property Act as applicable in the Uttar Pradesh. In para 21 the Hon'ble Judicial Member has made a detailed analysis of section 2(47) i.e., the meaning of transfer in accordance with Income-tax Act, whereby the allowing of the possession of the immovable property is a precondition. The Hon'ble Judicial Member in para 22 has further analysed the provision of section 53A whereby the ownership of the property is taking to be transferred only when the condition that transferee has taken possession of the property are complied. In para 26 the Hon'ble Judicial Member has analysed the power of attorney placed at paper book pages 3 to 5 whereby the power of attorney is found to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus it is proved that transfer did not take place on 5-9-2002 and the Hon'ble Judicial Member has under the law and on the facts of the case has very rightly held that transfer took place on the date when Power of Attorney was registered and the transaction attracted long term capital Gain. 9. I have carefully considered the rival submissions along with the orders of both the ld. Members. The relevant question before me to be decided is that on the facts of the case, as narrated above, whether transfer has taken place on 5-9-2002 or 21-11-2002. If the transfer has taken place on 5-9-2002, the capital gain arising on the sale of the land will be regarded to be Short Term Capital Gain but in case the transfer ought to have taken place on 21-11-2002 when the power of attorney was registered, the capital gain arising on the sale of agricultural land will be regarded to be Long Term Capital Gain. Section 2(47) which contains the definition of the term 'transfer' in relation to a capital asset is an inclusive definition. This section within its fold not only includes the transfers that are recognized or understood as such under general law governing transfer of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objective of introducing the said clauses. 11.1 The existing definition of the word 'transfer' in section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member of or acquiring shares in a co-operative society, company, or AOP 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 multi-storeyed constructions in big cities. The definition also does not cover cases where possession is allowed 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. Now sub-clauses ( v ) and ( vi ) have been inserted in section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. 11.2 The newly inserted sub-clause ( vi ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 13. From the reading of section 53A it is apparent that for the applicability of section 53A of the Transfer of Property Act following must be complied with :- ( a )There should be a contract for consideration; ( b )It should be in writing; ( c )It should be signed by the transferor; ( d )It should pertain to transfer of immovable property; ( e )The transferee should have taken possession of the property; ( f )Lastly, the transferee should be ready and willing to perform his part of the contract. The Scope of expression has performed or is willing to perform has been referred to in Mulla-The Transfer of Property Act (9th Edition), at page 448, by observing: The doctrine of readiness and willingness is an emphatic way of expression to establish that the transferee always abides by the terms of the agreement and is willing to perform his part of the contract. Part performance, as a statutory right, is conditioned upon the transferee's willing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession continues in possession in part performance of the contract and has done some act in furtherance of the contract. The acts claimed to be in part performance must be unequivocally referable to the pre-existing contract and the acts of part performance must unequivocally point in the direction of the existence of contract and evidencing implementation or performance of contract. 15. There is no doubt that the agreement to sell/transfer the entire right, title and interest of the owners for a consideration specified in the agreement and in accordance with the terms thereof, it fulfils the condition of a contract for consideration falling within the scope of section 53A of the Transfer of Property Act. The ld. J.M., as has been pointed out in the facts as narrated by me, has incorrectly mentioned that no agreement has been executed, while the agreement to sell was duly executed on 5-9-2002 and the copy of agreement to sell is very much on record along with the power of attorney in favour of the representative of the purchaser. The agreement to sell is very much in writing. It has duly been signed by the transferor. The agreement to sell relates to transfer of the land o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of time or the other take place in furtherance of the contract will be recorded. What is contemplated by section 2(47)( v ) is a transaction which has direct and immediate bearing on allowing the possession to be taken in part performance of the contract of transfer. It is at that point of time that the deemed transfer will take place. Entering into the agreement is a transaction in a broad sense but when the agreement envisages an event or act on the happening or doing of which alone the possession is allowed to be taken in part performance of the contract, the transaction of the nature contemplated by clause ( v ) cannot be said to have occurred before that date. The agreement may provide for immediate transfer of possession of the immovable property contracted to be sold. That may happen where the transferor receives substantial consideration on the date of agreement itself and puts the transferor in possession immediately. In this regard, the observations of a Division Bench of Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia v. CIT [2003] 260 ITR 491 / 129 Taxman 497are very relevant. The same are reproduced as under :- If the contract, read as a whole, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence are, no doubt, have evidentiary value so far criminal proceedings are concerned, but in Income-tax proceedings the oral evidences have to be looked into when written evidences are not available on record and oral evidence can be accepted only when they are corroborated by the written evidences. The ld. A.R. even though submitted the written submission but has not brought on record any evidence in writing which may prove that the possession of the land has not been given when the agreement to sell and the power of attorney was executed. Whenever an immovable property is sold and the whole of the consideration is paid, generally all the three documents, i.e., agreement to sell, general power of attorney as well as possession letter, are executed. I have specifically asked the ld. A.R. about the execution of the possession letter but he expressed his inability to produce the same. In my opinion, onus lies on the assessee to prove that the possession has not been delivered on 5-9-2002. When the power of attorney duly executed clearly speaks of that the possession has been delivered by the assessee on the date when the power of attorney was executed. Even otherwise also, in my ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
