TMI Blog2018 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... ated on mutual consent will not improve the case of the assessee to wriggle out of the the purview of Section 2(47) of the Act and the liability to pay tax on short term capital gains under Section 45 of the Act. Returns were filed there was a right conferred on the tranferee as per Section 53A of the T.P. Act. The transferor though subsequently was absolved from the rigour of Section 53A; in the close of assessment year was obliged to return the capital gains as per Section 2(47) (v). The IT Act by the definition clause includes a transaction in accordance with Section 53A as a transfer in relation to a capital asset. The consequence flowing from the inclusive definition has to be given effect as on the subject assessment year and the transferor being absolved subsequently from the rigour of Section 53A as against the transferee is of no consequence in applying the rigour under the taxation enactment. The transaction failed and the parties settled between themselves, but the voluntary act of the parties cannot efface the tax liability. We hence answer the questions of law on the facts arising in the above case against the assessee and in favour of the revenue. It is howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,87,00,000/- as being concealed income under 'short-term capital gain'. The assessee, which was a partnership firm and later registered as a Company, owns 30.7 cents of land in a prime location at Ernakulam. While the assessee was a firm, it started construction of a building and from out of that, a constructed area of 4,300 sq.ft. on the ground floor was agreed to be sold to M/s.Sai Sales and Services, vide Annexure-A agreement dated 12.4.1996 for a sale consideration of ₹ 2.58 crores and received a sum of ₹ 1.25 crores. The building was intended for the purpose of Indica Car Showroom. However, the showroom was not commenced due to technical reasons and thereafter, M/s.Sai Sales and Services formed another Company by name M/s.Malabar Automobiles (P) Ltd. (MAPL) and entered into Annexure-B renewed agreement with the assessee on 4.12.1998 for the same sale consideration and with the same advance; which was adjusted by way of refund and receipt. One-twelfth undivided share in the land over which the building was constructed, was also agreed to be sold to the purchaser. Permissions were obtained under Section 269UL of the Act on 6.1.1999 for registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous assessment year 1999-2000 and concluded that the parties have voluntarily rescinded from the agreement and a major portion of the consideration was also returned to the assessee and therefore, the Tribunal held that, in the circumstances, the AO was wrong in finding that there was a transfer of possession and part performance of contract making out the transfer to result in accrual of 'short term capital gains' at the hands of the assessee, and confirmed the order of the CIT (Appeals) deleting the assessment and dismissing the appeal, which is not sustainable, is the submission. 6. Per contra, the assessee would contend that unless there is transfer of asset as envisaged under Section 2(47), no capital gains can be computed under Section 45. Electricity and phone connections were taken by M/s.MAPL with the intention to start business, which was a non starter, and ultimately ended up in rescission of contract. The learned counsel for the assessee points out that there is no recital in the agreement for sale produced at Annexures-A and B regarding possession being handed over to the vendee. Certain acts such as taking of electric and phone connections, alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer 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 the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no dispute that the possession was handed over in pursuance to the agreement for sale. It is also admitted in the deposition as well as in the letter that the building continues to be in the possession of M/s.MAPL during the assessment period. 13. There is no doubt that only when the agreement to sell is coupled with delivery of possession, does it confer right on the vendee to defend his possession under Section 53A of the TP Act. In this proceedings, however, we are not concerned about whether the vendee is entitled to protect their possession or not. What we are concerned is whether there was a sale and handing over of possession as contemplated under Section 53A of the TP Act attracting Section 2(47)(v) of the Act. The decision in Balbir Singh Maini(supra) can be distinguished on facts. In that case, there was a tripartite Joint Development Authority(JDA) between the owner of the land i.e, Pujabi Co-operative Housing building Society Ltd., and the developers, Hash Builders Pvt. Ltd., and Tata Housing Development Company Ltd. The JDA was to develop the land belonging to the Society. Different amounts were payable and flats allotable to members having different plot sizes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the commencement of the Registration and other related laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A. 16. Additional condition of registration of an agreement for sale in which there is a claim of part performance, was introduced only by way of amendment of the Registration Act in 2001. The proposition propounded in Balbir Singh Maini (supra), on the basis of Section 17(1A) has no application because, the transaction in that case was in 2007, subsequent to the amendment of the Registration Act. Annexures-A and B transactions took place much prior to the amendment, and sub-Section (1A) of Section 17 of the Registration Act has no retrospective effect. Hence, the argument of the learned counsel that Section 53A of the TP Act will not be attracted as the agreements are not registered, will not hold good. 17. Hence, we find that the Tribunal went wrong in holding that the possession was not handed over in pursuance to the agreement for sale as contemplated under Section 53A of the TP Act. Once the sale agreement comes under the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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