TMI Blog2001 (6) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-1973 transferring lease-hold rights in favour of the transferee. The Tribunal has recorded a finding that the accounting year of the assessee was samvat year 2029 ending on 26-10-1973. The ITO also dealt with the matter on the basis that previous year of the assessee was samvat year 2029. It seems that the document was presented before the sub-Registrar of documents at Daman on 5-1-1974 and registration was completed on 2-3-1974. Thus, document was executed during samvat year 2029 and the registration was completed in samvat year 2030, assessment year being 1975-76. 4. Question before the Court was, whether transfer in question was effected in the accounting year (samvat year 2029) relevant to the assessment year 1974-75, i.e., on 13-10-1973 when the document in question was executed or the transfer in question was effected in the accounting year (samvat year 2030) relevant to the assessment year 1975-76, i.e., the year in which document was presented for registration on 5-1-1974 or the registration of the document was completed on 2-3-1974. The Court also raised question whether the date of presenting the document for registration is the decisive date or whether the date of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property. Section 47 of the Registration Act : Time from which registered document operates.-A registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration. Before the Division Bench, it was argued that in view of the aforesaid statutory provisions coupled with the fact that the document in question was executed on 13-10-1973, transfer of property in question was effected in samvat year 2029 relevant to the assessment year 1974-75. 8. The learned counsel appearing for the revenue drew the attention of the Court to the decision of the Division Bench of this Court in the case of Arundhati Balkrishna v. CIT [1982] 138 ITR 245 , while the counsel appea-ring for the assessee drew the attention of the Division Bench to a reported decision of the Division Bench in the case of Darbar Shivrajkumar v. CGT [1981] 131 ITR 6471 (Guj.). The Division Bench while referring the matter in para 10 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to the scope of this provision arose before the Supreme Court in Ram Saran Lall v. Mst. Domini Kuer AIR 1961 SC 1747. The Supreme Court observed that section 47 of the Registration Act does not say when a sale would be deemed to be complete. It only permits a document, when registered, to operate from a certain date which may be earlier than the date when it was registered. The pertinent observations as regards the scope and object of the section made therein are- The object of this section is to decide which of two or more registered instruments in respect of the same property is to have effect . The scope of section 47 of the Registration Act again came up for consideration before the Supreme Court in Hiralal Agrawal v. Rampadarath Singh AIR 1969 SC 244. The point was canvassed before the Supreme Court that the title acquired under a document which is subsequently registered would relate back to the date of execution. This argument was in terms repelled by the Supreme Court in para 11 of its decision, wherein reliance has been placed on its earlier decision in Ram Saran s case AIR 1961 SC 1747. . . . (p. 648) It appears that the judgment of the Division Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, namely, to tax the income , the owner is a person who is entitled to receive income from the property in his own right. Thus, while interpreting the provisions contained in the taxing statute, the objectives differ and, therefore, one will have to look to the provisions contained in the Income-tax Act. Clauses (14) and (47) of section 2 of the Income-tax Act read as under : (14) capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (i)any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession; (ii)personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him. Explanation. -For the purposes of this sub-clause, jewellery includes- (a)ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with clause (47) of section 2 and the person would be chargeable to income-tax as indicated in section 45. 10. Larger Bench of five learned Judges of the Bombay High Court in the case of Atmaram Sakharam Kalkye v. Vaman Janardhan Kashelikar AIR 1925 Bom. 210 at length considered the provisions contained in the Transfer of Property Act as also the provisions contained in the Registration Act. The plaintiff in that case executed a deed of gift in favour of defendant No. 1 on 17-9-1917. It seems that thereafter there was some dispute between the parties and criminal proceedings were initiated. The deed was presented for registration by defendant No. 1 on 26-9-1917. The plaintiff No. 1 did not appear before the sub-Registrar and the sub-Registrar refused to register the deed. Defendant No. 1 appealed to the Registrar and during the course of hearing, plaintiff No. 1 appeared but resiled from his action and denied execution. The Registrar ordered it to be registered in November 1917 and, accordingly, it was registered on 18-12-1917. Thereafter a suit was filed to set aside the gift deed and for possession of the property described in the plaint. Preliminary issue was raised as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to the registration. Under part 12 of the Indian Registration Act, the Registrar has power to register a document despite the refusal of the transferor, provided he is satisfied that it has been executed. [See section 75(1)]. It is only if he refuses to order registration that there is an appeal to the civil court under section 77. Consequently, sections 54 and 59 of the Transfer of Property Act are construed as necessitating two things, viz., (a) transfer executed by the transferor and (b) registration which may be effected by either of the parties, but which does not depend on the consent of the transferor. (p. 218) It is further pointed out as under- It is, however, said that we ought to adopt different constructions because the transfers referred to in sections 54 and 59 are for consideration, but section 123 refers to a transfer without consideration. I agree that in some cases this distinction may make a practical difference as to whether, quite apart from the validity of the transfer, you can obtain specific performance of any antecedent agreement for such transfer. But I entirely fail to see that it affects the validity of the transfer itself. The Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered . Section 47(viii) provides that any transfer of agricultural land in India effected before the 1st day of March, 1970, shall not be treated as a transfer for the purpose of capital gains . The important aspect to be considered was transfer effected . The date on which transfer was effected can but mean only one thing, viz., the date on which the transfer became operative or complete or the date on which the transfer was brought about. The Court examined the provisions contained in the Transfer of Property Act and the Registration Act. The counsel for the assessee argued that upon the vendor executing a sale deed so long as it is not registered, it would not extinguish the right of the vendor and create a title in the vendee, but once it is registered the transaction would become operative retrospectively from the date on which it was executed. The revenue contended that section 47 will have to be considered in a situation where there are two competing sale deeds in the field and the question arises is as to which of the two documents would prevail. It was contended that the document which was executed earlier would prevail notwithstanding the fact that it might have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 30-11-1964, transferee s title under the sale deed would relate back to the date of its execution, i.e., on 9-10-1964 (see para 11). The Supreme Court negatived this plea relying on the decision of Ram Saran Lall (supra). 14. The Division Bench pointed out that in none of these cases, the Supreme Court was concerned with the vital question as regards inter se rights of the vendor vis-a-vis vendee in relation to the property sold by vendor to vendee. In other words, the question as to when the transaction of sale became complete as between the vendor and vendee in the sense of extinguishment of the right of the vendor and the creation of right of the vendee was never in issue. The question was when did the vendor cease to be the owner and when did the vendee become owner of the property? On the date of execution of the sale deed which was subsequently registered or on some later date when it was presented for registration or was copied out in the registration book ? The Court further pointed out that it is a vital question from the stand point of the Income-tax Act and the Wealth-tax Act because the date of transmission of title from the vendor to the vendee is extremely re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be able to calculate his profits or gains or to include such profits or gains in the return under the head of Capital gains nor would he be able to decide whether or not the asset in question should be treated as his property during relevant period. If his title is not extinguished till document is copied out in the books of Registrar, he would have to treat the property in question as his capital asset notwithstanding the fact that he has executed the sale deed, admitted its execution before the Registrar, done every thing within his power, received consideration and parted with the possession. So also the vendee would not be able to include this property in the net wealth of his wealth-tax return not knowing whether he had become owner in respect of that property, transaction not having been copied out in the register and not having been thus completed. Thus, if these views were to be taken in the context of the Income-tax Act and the Wealth-tax Act, it would create tremendous uncertainty and chaos in the very sensitive field. Both the transferor and the transferee must be in a position to know with certainty whether or not ownership of the title has been transmitted on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in dispute was leased to the plaintiff by the lamberdar and the deed was executed on 5-12-1949 which was registered on 3-4-1950. It was contended that the deed having been registered on 3-4-1950 was void under section 6 of the Madhya Pradesh Abolition of Proprietary Rights Act, 1950 as the land had been vested in the State on 31-3-1950. The Court in para 3 pointed out that section 47 of the Registration Act provides that a registered document shall operate from the time it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration. It is well established that a document so long as it is not registered is not valid, yet once it is registered it takes effect from the date of its execution - Ram Saran Lall s case (supra) at p. 1749 and Nanda Ballabh Gurnani v. Smt. Maqbool Begum 1980 UJ (SC) 597. The Court pointed out that since admittedly the lease deed was executed on 5-12-1949, the plaintiff after registration on 3-4-1950 became owner by operation of law on the date when the deed was executed. Therefore, the land did not vest in the State. 17. In the case of Hamda Ammal v. Avadiappa Pathar [1991] 1 SCC 715, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on perpetual lease. Name of the original lessee was not known. However, the company known as Ansal Sehgal (P.) Ltd. entered into an agreement with the lessee and constructed multi-storeyed building on the said piece of land. The assessee claimed and it was not disputed that he has paid entire price thereof and got possession of three flats. It is also claimed by the appellant that he had absolute rights of disposal over them and that he had let out these flats to different tenants and he was deriving income from the flats and was paying municipal taxes in respect thereof. The net income from these flats was indicated by way of rent to the tune of ₹ 18,403. The said net income was arrived at after deducting the municipal taxes as well as statutory deduction of 1/6 of annual value of account of repairs as provided in section 24 of the Act. The ITO while accepting the return denied the deduction of the repairs claimed by the assessee on the ground that the income could be assessed under the head Income from other sources under section 56. It was contended before the Court that the word owner in section 22 should be understood in its general sense. According to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n raised was can it then be said that the recipient of the income being the assessee and only having exclusive control over the property without any let or hindrance on the part of the so-called vendors which, indeed, under law it was not entitled to do, as we shall presently show, shall be immune from the taxing provision in section 22 of the Act ? The Court further pointed out as under : ...The answer in our view is clearly in the negative. The reason is simple. The consideration money has been paid in full. The assessee has been put in exclusive and absolute possession of the property. It has been empowered to deal with the income as it likes. It had been empowered to dispose of and even to alienate the property. Reference to section 54 or, for that matter, section 55 of the Transfer of Property Act by the Tribunal merely emphasises the fact that the legal title does not pass unless there is a deed of conveyance duly registered. The agreement is in writing and the value of the property is admittedly worth more than hundred rupees. Section 54 of the Transfer of Property Act would, therefore, exclude the conferment of absolute title by transfer to the assessee. That, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the trans- feror or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession other than a right expressly provided by the terms of the contract. . . . If the view that without there being registration, the transferor continues to be the owner is taken, still the question which arises is that the income has not been received by the owner and, therefore, whether the assessment of the transferee can be made by considering that there was diversion of income or the transferor has ceased to have any right to have income received ? This section debars the transferor from enforcing his 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 interpreti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer of attorney. By this method tax evaders are securing double benefits, i.e., avoidance of income-tax and stamp duty. It seems that considering various devices which the tax evaders are applying, the Legislature, therefore, amended by inserting clauses in the definition of transfer by clause (47) of section 2 which is as under : (47) transfer , in relation to a capital asset, includes,- (i)the sale, exchange or relinquishment of the asset; or (ii)the extinguishment of any rights therein; or (iii)the compulsory acquisition thereof under any law; or (iv)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 (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 co-operative society, company or other association of persons or by way of any agreement or any a ..... 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