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TMI Blog2022 (2) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of the reassessment proceedings, the assessee submitted that the transaction of sale of property was cancelled and the part of the amount earlier received was also returned by the assessee to the purchaser and hence no capital gain arose. The AO did not accept the assessee's contention by observing that sale of the house property for a sum of Rs. 26 lakhs took place vide sale deed registered and stamp duty paid on 17.04.2008. The assessee's contention that cheques amounting to Rs. 14 lakhs got dishonoured and out of the remaining amount of Rs. 12 lakhs already received by the assessee, a sum of Rs. 2 lakhs was returned and agreement to sell the property was cancelled, did not find favour with the AO in the absence of a registered cancellation deed. The AO held that the assessee concocted a story of cancellation deed in connivance with the buyer to overcome the consequences of non-declaration of capital gain in her return of income. The ld. CIT(A) echoed the assessment order. During the course of original proceedings u/s 254(1) of the Act, the assessee reiterated her submissions about the cancellation of the sale deed. The Tribunal reproduced the relevant clauses of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le deed on 15.12.2007 or on the registration of sale deed on 17.4.2008. It is only if the transfer takes place on registration of sale deed that capital gain tax liability will arise in the year under consideration. Taking support from section 47 of the Registration Act, 1908, (hereinafter called 'the Registration Act'), the ld. AR submitted that transfer is considered as operative from the date of execution of sale deed and not its registration, which was countered by the ld. DR. 5. At this juncture, it would be apt to consider the ratio of the judgment of the Hon'ble Supreme Court in CIT vs. Balbir Singh Maini (2017) 398 ITR 531 (SC). In that case, the issue was about the taxability of certain amount as capital gain pursuant to joint development agreement. The AO made out a case that the transfer took place on part performance of the contract on the developer taking possession of the property and doing various acts in furtherance of the contract and hence capital gain was chargeable to tax. Per contra, the Revenue tried to build a case before the various judicial forums, including the Hon'ble Supreme Court, that section 2(47)(v) of the Act read with section 53A of the Transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute the transfer can be ascertained with reasonable certainty, and the transferee, in part performance of the contract, has taken possession of the property etc. 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 'the contract though required to be registered, has not been registered' etc. in the manner prescribed therefor by the law for the time being in force, the transferor shall be debarred from enforcing against the transferee any right in respect of the property. The effect of this section was to treat the part performance of the contract, subject to the conditions given therein, as constituting transfer of immovable property notwithstanding the non-registration of the sale deed. Proviso to section 49 of the Registration Act, prior to 2001 amendment, also provided that an unregistered document affecting immovable property and required by this Act or the TPA, to be registered may be received, inter alia, as evidence of part performance of a contract for the purposes of section 53A of the TPA. Section 2(47)(v) of the Act provides that "transfer", in relation to a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows that the mandate of section 17 of the Registration Act requiring the registration as a pre-condition for transfer, after the 2001 amendment, applies to all the clauses of section 2(47) dealing with the immovable property including the part performance of the contract under clause (v). Transfer of any immovable property by means of sale covered u/s 2(47)(i) of the Act, which even prior to the 2001 amendments also required registration, continues to remain unaltered. It will not be treated as 'transfer' unless the sale deed is registered in the same manner, as the position has become after the 2001 amendments qua the transaction of part performance of contract as per section 53A of the TPA covered under section 2(47)(v) of the Act. The contention of the ld. AR to the effect that the 2001 amendments have no bearing and the registration is not essential in the cases covered u/s 2(47)(i) of the Act, is therefore, sans merits. 9. Now I turn to contention of the ld. AR on section 47 of the Registration Act. This section with the heading 'Time from which registered document operates' provides that : 'A registered document shall operate from the time from which it would have commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year in which the transfer takes place. 'Transfer' takes place only when it becomes operational, that is, on executing the sale deed - neither before it, that is, when the parties are in the process of negotiations, nor after it, that is, when the registration of the deed actually takes place. 11. Adverting to the facts of the extant case, I find that the sale deed, even though registered on 17.04.2008, was admittedly executed on 15.12.2007, which date falls in the previous year relevant to the A.Y. 2008-09 and, as such, the amount of capital gain becomes chargeable to tax in such preceding assessment year. Since the 'transfer' of the property took place on execution of sale deed in the preceding year, I hold that the amount of capital gain cannot be charged to tax for the A.Y. 2009-10 under consideration. On a specific query, the ld. AR candidly admitted that no capital gain was offered for taxation by the assessee in her return for the A.Y. 2008-09 or any other year. The AO is at liberty to take necessary action for taxing the amount in the correct assessment year as per law. 12. In the result, the appeal is allowed. Order pronounced in the Open Court on 17th February, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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