TMI Blog2023 (9) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 53(A) of the IT Act have been omitted. Simultaneously, Sections 17 and 49 of the Registration Act were also amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of the TP Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. The impact of the amendments to the Registration Act and the TP Act on the provisions of Section 2(47) of the IT Act was explained by the Hon'ble Supreme Court in Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] held Section 2(47) of the IT Act makes it clear that 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 in Section 53A of the TP Act will amount to a transfer in relation to a capital asset. The Court reasoned that since an unregistered agreement involving the transfer of possession of an immovable property would not qualify as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Section 153-C of the Income Tax Act, 1961 (IT Act), calling upon the appellant to file a return of income for the Assessment Year 2009-10. 7. The appellant responded on 15.01.2013 by reiterating the contents of the return of income filed on 31.03.2010. However, on 16.01.2013, the appellant was issued notices under Sections 153-A and 142(1) for Assessment Years 2005-06 to 2010-11 and notice under Section 143(2) for Assessment Year 2011-12 for holding an inquiry and the assessment of the appellant's income for the relevant years. 8. The appellant filed a detailed response on pointing out that the appellant had not received any consideration under the two Joint Development Agreements. The appellant also contended that the two Joint Development Agreements did not constitute any transfer under Section 2 (47) of the IT Act. On 08.03.2013, the appellant cancelled the two Joint Development Agreements dated 31.12.2008 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 these were Joint Development Agreements, and the clauses relating to possession, at the highest, indicated that possession was to be handed over for the limited purpose of undertaking development. The developed areas were to be shared by the co-developers. He, therefore, submits that there was no transfer as defined under Section 2(47) of the IT Act and, consequently, there was no question of any capital gains. 15. Mr Desai submitted that the appellant received no amounts whatsoever under the two Joint Development Agreements dated 31.12.2008. He submitted that no amounts accrued favouring the appellant. Therefore, the ITAT erred in reserving the Commissioner's reasoned order dated 24.03.2015. 16. Mr Desai finally submitted that the two Joint Development Agreements dated 31.12.2008 were admittedly not registered. He submitted that in the absence of compliance with the mandatory requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows: 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 in Section 53-A of the Transfer of Property Act, 1882 (4 of 1882); or 24. Admittedly, the Joint Development Agreements dated 31.12.2008 were not registered, though they were required to be compulsorily registered under Section 17 (I-A) of the Registration Act post the introduction of this provision by the Registration and Other Related Laws (Amendment) Act, 2001. 25. The Amendment Act of 2001 made simultaneous amendments in Section 53(A) of the Transfer of Property Act and Sections 17 and 49 of the Registration Act. By these amendments, the words the contract, though required to be registered, has not been registered, or in Section 53(A) of the IT Act have been omitted. Simultaneously, Sections 17 and 49 of the Registration Act were also amended, clarifying that unless the document containing the contract to transfer for consideration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no transfer can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted to the facts of this case, we need not go into any other factual question. 25. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression enab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;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, suggest that at the highest, possession was to be parted for the limited purpose of development. Accordingly, no case is made to distinguish Balbir Singh Maini (supra) or to urge that the principle in Balbir Singh Maini (supra) would not apply to the facts of the present case. 30. In Dr. Joao Souza Proenca (supra), the issue of non-registration of the contract either did not arise or was not considered. Besides, it appears that the decision of the Hon'ble Supreme Court in Balbir Singh Maini (supra), which was decided on 04.10.2017, was not brought to the notice of the Division Bench which decided Dr. Joao Souza Proenca (supra). The same is the position in Chaturbhuj Dwarkadas Kapadia (supra), which was in fact relied upon in Dr. Joao Souza Proenca (supra). Chaturbhuj Dwarkadas Kapadia (supra) was decided on and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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