TMI Blog2001 (6) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee) executed a lease deed on October 13, 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 October 26, 1973. The Income-tax Officer also dealt with the matter on the basis that the 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 January 5, 1974, and the registration was completed on March 2, 1974. Thus, the document was executed during the Samvat year 2029 and the registration was completed in Samvat year 2030, assessment year being 1975-76. The question before the court was, whether the transfer in question was effected in the accounting year (Samvat year 2029) relevant to the assessment year 1974-75, i.e., on October 13, 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 the document was presented for registration on January 5, 1974, or the registration of the document was completed on March 2, 1974. The court also ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akh rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale.--A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property." Section 47 of the Registration Act, 1908: " 47. 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 y provisions coupled with the fact that the document in question was executed on October 13, 1973, transfer of the property in question was effected in Samvat year 2029 relevant to the assessment year 1974-75. Learned counsel appearing for the Revenue drew the attention of the court to the decision of the Division Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Property Act requiring that the transaction of gift can be brought about by executing a registered document, and, transfer of gift would be effected only upon registration of the document by which the gift was made, The Division Bench dealt with the contention based on the provisions of section 47 of the Registration Act as under: "The true scope of section 47 has to be realised in order to comprehend its impact. A question pertaining to the scope of this provision arose before the Supreme Court in Ram Saran Lall v. Mst. Domni 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on which the registration of the document is completed. One should not forget that as pointed out by the apex court in the case of CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 the settled position under the common law is that owner means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, Registration Act, etc. But in the context of section 22 of the Income-tax Act, having regard to the ground realities and further having regard to the object of 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: "2. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal assets effected in the previous year as contemplated under section 45 are required to be taken into consideration and will be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. "Capital assets" means property of any kind held by an assessee. When there is a transfer of capital asset, one will have to look to clause (47) of section 2. If the property is transferred, it would attract the provisions contained in section 45 read with clause (47) of section 2 and the person would be chargeable to income-tax indicated in section 45. A 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 September 17, 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 Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instrument duly attested as required by law but not registered cannot be said to have the power to revoke the contract. Mr. Justice Marten pointed out as under: "Now as regards transfers by sale or by mortgage under sections 54 and 59, it is not contended that a vendor or a mortgagor could revoke a conveyance or a mortgage at any time before registration. And there is one very good reason for that, viz., that the Indian Registration Act does not necessitate the consent of the transferor being obtained 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." It is further pointed out as under: "It is, however, said that we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gains derived out of the transaction would be exempted from tax under the head of "Capital gains". The matter rested only on the question whether or not the transaction of sale was effected "prior" to March 1, 1970, or "subsequent" to March 1, 1970. The court was of the view that what we have to determine is whether a transaction of sale can be said to have been effected on the date on which the conveyance is "signed" or whether it can be said to have been treated as having been effected only when it is "registered". 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. Counsel for the assessee argued that upon the vendor executing a sale deed so long as it is not registered, it would not extingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered. The sale deed in question was executed by the transferor and the transferee on October 9, 1964, and the sale deed was registered on November 30, 1964. It was in the context of these facts, the question arose whether the sale had been completed on October 9, 1964, when the sale deed was executed or, on November 30, 1964, when it was registered. An argument on section 47 of the Registration Act was advanced before the Supreme Court and it was contended that having regard to section 47, once a document was registered, title under the sale deed would relate back to the date of its execution, and, therefore, though the registration was completed on November 30, 1964, the transferee's title under the sale deed would relate back to the date of its execution, i.e., on October 9, 1964. The Supreme Court negatived this plea relying on the decision of Ram Saran Lall, AIR 1961 SC 1747. 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 the vendee in relation to the property sold by the vendor to the vendee. In other words, the question as to when the transaction of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al asset", the question will have to be decided as to in which previous year the transaction was effected. In other words, the expression "effected" in the context in which it is used would mean the previous year in which the transfer of the asset became complete or operative in the sense of the title of the transferor being "extinguished" and the title of the transferee being "created". The court also pointed out that if one were to take a view that a transaction is complete when the document is copied in the book of the Registrar, the date would remain uncertain. It may be copied after a very long time since no time limit is provided by the Act. Neither the transferor nor the transferee would know whether the transfer has been effected and the vendor would not 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 the relevant period. If his title is not extinguished till the document is copied out in the books of the Registrar, he would have to treat the property in question as his capital asset notw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the context of the decisive date for ascertaining the date on which the transfer of a capital asset becomes effective under section 45 of the Income-tax Act. Once we take this view, the transaction must be treated as having become effective from the date on which the document was executed in case its registration is subsequently admitted before the Registrar and eventually it is registered." The court held on this point that the assessee was right. Thus, in view of having certainty with regard to tax provisions in the case of Arundhati Balkrishna [1982] 138 ITR 245 (Guj), the court has, in our opinion rightly decided the issue. In our opinion, considering the definition of "capital asset", "transfer" and the provisions contained in section 45 for capital gains, the view taken, by the Division Bench in the case of Arundhati Balkrishna [1982] 138 ITR 245 (Guj) is the correct view. In the case of Thakur Kishan Singh v. Arvind Kumar, AIR 1995 SC 73, the land in dispute was leased to the plaintiff by the lamberdar and the deed was executed on December 5, 1949, which was registered on April 3, 1950. It was contended that the deed having been registered on April 3, 1950, was void u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ources" under section 56 of the Income-tax Act inasmuch as the assessee-company was not the legal owner of the property in the flats. Such a claim was put forward before the Assessing Officer mainly on the ground that the title to the property had not been conveyed to the co-operative society which was formed by the purchasers of the flats and that so long as the ownership was not transferred in the name of the assessee, the rental income from the flats could not be assessed as "income from house property" (under section 22 of the Act). (ii) The flats and the parking space were given on rent at Kailash Building, Curzon Road, New Delhi, and the assessee claimed that the said income of rent must be assessed as "income from house property". However, the Income-tax Officer took the view that the assessee only had tenancy rights and, therefore, the income should be assessed under the head "Income from other sources", namely, under section 56 of the Act. (iii) The flats constructed in a building known as "Akash Deep" on a piece of land belonged to the Government but had been given on perpetual lease. The name of the original lessee was not known. However, the company known as Ansal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the property but the Tribunal held that the assessee was not the owner of the property and was not liable to be assessed as such. Considering the provisions of the Act, English decisions, Jodha Mal Kuthiala's case [1971] 82 ITR 570 (SC) and passages from the G.W. Paton on Jurisprudence, Dias on Jurisprudence, Stroud's Judicial Dictionary and Pollock on Jurisprudence, the court expressed the view and pointed out as under: "The juristic principle from the view-point of each one is to deter mine the true connotation of the term 'owner' within the meaning of section 22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more--accurately a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years?" The question raised was: "Can it then be said that the recipient of the income being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the revenue authorities necessary for such transfers and the court will direct him to do so. It cannot be said that such an agreement is void because no sanction has been obtained...." Another case with regard to section 22 of the Income-tax Act which has created charge on the income was considered by the Rajasthan High Court in the case of Maharani Yogeshwari Kumari v. CIT [1995] 213 ITR 541. The court posed a question "the question, therefore, arises is as to whether the words 'that the assessee is the owner' can be applicable only to a registered owner or also to such person in whose favour the registered sale deed has not been executed but the sale agreement has been executed, possession of the property has been given and consideration for sale has been paid." Section 53A of the Transfer of Property Act contemplates as under: "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, taken possession of the property or any part thereof, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, then there would have been specific reference. The relevant provision of clause (47) of section 2 is as under. "Unless the context otherwise requires, transfer is to be understood in the simple meaning as it is indicated which includes sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law." If the words are defined in the Act itself then it is not proper to read the meaning of the similar word given in another statute unless otherwise expressly provided. In the Income-tax Act, wherever the Legislature has thought fit to have the meaning of the word provided in a different statute, specific provision has been made. In our opinion, therefore, "transfer" as defined in the Act is to be given simple meaning as indicated. There are various methods by which there can be avoidance of tax. The tax evaders always keep faith in their-counterparts. Even property is being transferred by merely executing special power of attorney on stamp paper of Rs. 20 and the transfer deed is not executed as contemplated under the law. The transferor puts the transferee in possession but in view of the document, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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