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TMI Blog2023 (9) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal: "(2) Whether in light of S. 17 (I)-A r/w S.49 of the Registration Act, 1908 the unregistered agreement dated 31/12/2008, can be construed as a document effecting transfer of the subject properties in terms of S. 2(47) of Income Tax Act? (3) Whether in the absence of income having accrued to the Appellant in terms of the Agreement dated 31/12/2008, Appellant can be made liable to pay tax on capital gains in terms of 8.45 r/w S.48 of the Income Tax Act?" 4. Basic facts in which the above substantial questions of law arise for determination are set out hereafter. 5. On the appellant entered into two Joint Development Agreements in respect of two plots measuring 13, 178 sq. mtrs. and 37, 500 sq. mtrs. surveyed under of Village Bainguinim. These agreements were styled as "Joint Development Agreement". Admittedly, these agreements were not registered as required under Section 17 (I-A) of the Registration Act, 1908 (Registration Act). 6. On the Revenue claimed to have come across the above two agreements during search and seizure operations in the case of Mr Prakash Kittur and others. Based upon the same, the Revenue issued notice dated 27.11.2012 to the appellant under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Revenue appealed to the Income Tax Appellate Tribunal (l TAT) against the order dated 24.03.2015 made by the Commissioner (Appeals). By impugned order dated 03.12.2016, the ITAT has allowed the Revenue's appeal, set aside the Commissioner's order dated 24.03.2015 and restored the assessment order dated 28.03.2013. Hence, this appeal under Section 260-A of the IT Act on the above- referred substantial questions of law. 13. Mr Desai pointed out that the dispute between the appellant and M/S. Unicorn Developers was referred to arbitration. The parties arrived at a settlement, and a consent award was made by the arbitral Tribunal on 22.08.2015. By this, it was agreed that the appellant would sell a smaller plot for a total consideration of Rs. 9,00,00,000/-(Rupees Nine Crores only). This was recorded in the consent award dated 22.08.2015. In October 2015, the tax was paid by the appellant on the capital gains from the sale of the smaller plot. 14. Mr Desai learned Counsel for the appellant, submitted that the Joint Development Agreements cannot be regarded as agreements for transfer even considering the legal fiction in Section 2(47) of the IT Act. He submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Souza Proenca V/s. Income Tax Officer, Ward-2(2), Panaji (2018) 90 taxmann.com 83 (Bombay) and Chaturbhuj Dwarkadas Kapadia V/s. Commissioner of Income Tax (2003) 129 Taxman 497 (Bombay). She submitted that even the decision in Commissioner of Income Tax, Bangalore V/s. Dr. T.K. Dayalu (2011) 14 taxmann.com 120 (Karnataka) supports the ITAT's judgment and order. 20. Ms Linhares submitted that for all the above reasons, this appeal may be dismissed. 21. The rival contentions now fall for determination. 22. In our judgment, the appellant must succeed on the second substantial question of law, given the decision of the Hon'ble Supreme Court in the case of Balbir Singh Maini (supra). Accordingly, there is no necessity to decide the other two substantial questions of law that are involved in this appeal. 23. Section 2(47)(v) of the IT Act reads as follows: "2. Definitions - In this Act, unless the context otherwise requires- (47) "transfer", in relation to a capital asset, includes- (i) -(iv) (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part-performance of a contract of the nature referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 53A" in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 w.e.f 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi V/s. Pralhad Bhairoba Suryavanshi (2002) 3 SCC 676, that the Section applies, and this is what is meant by the expression "of the nature referred to in Section 53A". This expression cannot be stretched to refer to an amendment that was made years later in 2001, so as to then say that though registration of a contract is required by the Amendment Act of 2001, yet the aforesaid expression "of the nature referred to in Section 53A" would somehow refer only to the nature of contract mentioned in Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted. Even in Balbir Singh Maini (supra), the Revenue, based upon clauses of JDA, had contended that there was transfer of possession. However, in paragraph 26, the Hon'ble Supreme Court rejected this contention by pointing out that the reading of the JDA would show that the owner continues to be the owner throughout the agreement and has at no stage purported to transfer rights akin to ownership to the developer. The Court noted that "At the highest, possession alone is given under the agreement and that too for a specific purpose-the purpose being to develop the property, as envisaged by all the parties". Based upon this reasoning, the Court concluded: "We are, therefore, of the view that this clause will also not rope in the present transaction". 29. Therefore, it is clear that even in the JDA with which the Hon'ble Supreme Court was concerned in the case of Balbir Singh Maini (supra), there was a clause for transfer of possession for the limited purpose of development. In the Joint Development Agreements dated 31.12.2008, the ownership of the capital asset was retained by the appellant throughout. The clauses relating to parting of possession, besides being unclear, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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