TMI Blog2023 (10) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... o decided in Balbir Singh Maini. In the present case, the controversy between parties is precisely for Income from Business head and that too whether or not M/s Govind can be said to be owner of land on the basis of unregistered agreement. In our considered view, the answer is a clear No as per decision of Hon ble Supreme Court decision in Balbir Singh Maini. Although we have confined to what has been wrongly adjudicated by CIT(A), we would like to add here that even for the purpose of Capital Gain head also, after decision of Hon ble apex court in Balbir Singh Maini, there is no sale or transfer of immovable property by an unregistered agreement. It is true that M/s Govind has declared the income but a simple glance of the financial statements of assessee and M/s Govind makes it clear to any person of common sense that the audited P L A/c of assessee shows a net profit of Rs. 37,02,451/- and the audited P L A/c of M/s Govind shows a net profit of Rs. 1,16,82,835/- [on gross receipts of Rs. 23,85,10,980/- including the shared amount of Rs. 3,50,06,136/-]. That means, had there been no sharing of Rs. 3,50,06,136/-, M/s Govind would have suffered a substantial loss but for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not Rs. 4,70,06,136/-. The AO confronted the assessee qua this difference. In reply, the assessee claimed to have sold the impugned land to M/s Shri Govind Reality Pvt. Ltd. [ M/s Govind ] through agreement dated 26.02.2011, (without executing any sale-deed) for Rs. 1,20,00,000/- and received a sum of Rs. 10,00,000/- by cheque No. 616557 dated 21.02.2011. M/s Govind agreed to pay balance consideration of Rs. 1,10,00,000/- on receipt of building permission or 40 months of the agreement i.e. by 25.06.2014. The period can be further extended for 9 months with interest @ 12% per annum. Ultimately, the land was sold on 19.03.2015 to M/s Swami for Rs. 4,70,06,136/- but since the assessee was registered-owner of land, the saledeed was executed by assessee in favour of M/s Swami in terms of Clause No. 12 of aforesaid agreement dated 26.02.2011. The assessee received consideration of Rs. 4,70,06,136/- directly from M/s Swami; retained Rs. 1,10,00,000/- and passed excess amount to M/s Govind. Thus, the assessee claimed that it s share in the proceed was Rs. 1,20,00,000/- only as per agreement [which consists of Rs. 10,00,000 (+) Rs. 1,10,00,000] and excess amount of Rs. 3,50,06,136/- [Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 2001 unless the said contract is registered (as per amendments in Section 17(1A) and Section 49 of the Registration Act, 1908). (iii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in law in not appreciating the fact that in absence of any valid agreement as well as registered sale deed executed between the appellant and M/s. Govind Reality Pvt. Ltd., the sale consideration of Rs. 4,70,06,136/- will be treated in the hands of appellant who is the registered owner of the property as per Government record as the registered sale deed was also by the appellant in favour of the purchaser M/s. Swami Vivekanand Institute of Neurology Neurosurgery Spine and M/s. Sagauya Medi Services Pvt. Ltd. (iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in law in not appreciating the fact that nowhere in the agreement dt. 28.02.2011, it is mentioned that the balance amount of Rs. 3,50,06,136/- (Rs. 4,70,06,136/- (-) Rs. 1,20,00,000/-) was payable to M/s. Govind Reality Pvt.Ltd. as balance sale proceeds. (v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,70,06,136/-, Rs. 3,45,06,136/- has been received in bank account of the assessee and of the balance amount of Rs. 1,25,00,000/- has been made directly to Bank of India on behalf of Globus Housing Pvt. Ltd. This amount was necessarily to be paid to Bank of India to get the NOC from Bank of India for transferring such plot. 9. Further, the assessee has also submitted in para 3 of reply dated 30.11.2017, that the amount of sale consideration in books of M/s. Rishi is not in proportion to sales reflected in Form 26AS because the only share of sale consideration of M/s. Rishi Construction is Rs. 1,20,00,000/- and balance Rs. 3,50,06,138/-is of Shri Govind Reality Pvt. Ltd. As per the agreement of leaving their right of property. 10. Further in para 6 of the assessee on the similar date has also submitted that Shri Govind Reality Pvt.Ltd. consented to such sale of plot with a condition that M/s. Rishi Construction shall pay the balance amount of sale price i.e. ( Rs. 3,50,06,136/-) after retaining of Rs. 1,20,00,000/- to Shri Govind Reality Pvt.Ltd. out of sale proceeds as they have consented for such sale as per agreement dt. 26.02.2011. Furthermore, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of accounts of Shri Govind Reality Private Limited for the relevant year does not hold water when sale deed has been executed between the assessee and Swami Vivekanand Institute of Neurology Neurosurgery Spine and Sagauya Mediservices and Private Limited for an amount of Rs. 4,70,06,136/- and credit of TDS u/s 194IA has been claimed by the assessee. 14. Thus the assessee s contention and the matter deliberated on the foregoing paras clarify reflects that the assessee was trying to swindle the amount of Rs. 3,50,06,136/- as income of Shri Govind Reality and eventually trying to evade the tax net by presenting an unrealistic picture of financial accounting. Hence, on the facts and circumstances of the case, I have no alternative, but to add the difference of Rs. 3,50,06,136/- ( 4,70,06,136 12,000,000) as business income of the assessee. Penalty proceedings u/s 271(1)(c) is being separately initiated. 7. Now, we refer Para No. 3.1.2 to 3.1.5 of the order of first-appeal wherein the CIT(A) has deleted this addition; the said paras are re-produced below: 3.1.2 I have considered the facts of the case, plea raised by the appellant and finding of the AO. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditional consent from the buyer i.e. M/s.Govind Reality Pvt.Ltd. Therefore, the appellant could not sell the said property to any person without having any consent from M/s. M/s. Govind Reality Pvt.Ltd. The appellant has also filed copy of affidavit dt. 23.10.2014 issued by Shri Om Prakash Kriplani, Director of M/s. Govind Reality Pvt.Ltd. giving authority to the appellant to sell the plot to M/s. Swami Vivekanand Institute of Neurology Neurosurgery Spine and M/s. Sagauya Mediservices Pt.Ltd. with a condition that the appellant shall receive its share of Rs. 1,10,00,000/- and shall pay balance amount to M/s. Govind Reality Pvt.Ltd. The appellant in compliance, vide sale deed dt. 19.03.2015 sold the said plot to M/s. Swami Vivekanand Institute of Neurology Neurosurgery Spine and M/s. Sagauya Mediservices Pt.Ltd. for sale consideration of Rs. 4,70,06,136/-. The details of amounts received against said sale are as under :- Details of amount received from Date Amount M/s. Swami Vivekanand Institute of Neurology Neurosurgery Spine and M/s. Sagauya Mediservices Pt.Ltd. 22.08.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty 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 In the instant case, the contract (agreement dt. 26.2.2011) has been partly executed within the meaning of provisions of section 53A of the Transfer of Property Act. 3.1.4 Now another question which arises out here is that whether the partly executed contract can be treated as de-facto transfer within the provisions of Income-tax Act, 1961. Hon'ble Supreme Court in the case of CIT vs. Balbir Singh Mainy, (2017) 86 taxmann.com 94 by throwing light on the objection of section 2(47)(vi) of the Act has held that 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 enabling the enjoyment of takes colour from the earlier expression transferring , so that it was clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof, the maxim noscitur a sociis has been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er within the meaning of section 2(47) of the Act. Hon'ble ITAT Ahmedabad Bench in the cased of Smt. Sapnaben Dipakbhai Patel vs. ITO, (2016) 73 taxmann.com 288 has held that even arrangements conferring privileges of ownerships without transfer of title would come within the ambit of section 2(47)(v) of the Act. Thus, M/s. Govind Reality Pvt.Ltd. was the deemed owner of the said property. 3.1.5 Once, it has been established that M/s. Govind Reality Pvt.Ltd was the deemed owner of the property, the consideration received on sale of the said property would be taxed in the hands of the said party and not in the hands of appellant. Since, the appellant was the title holder of the said property under the Civil Law until the sale deed is executed, therefore, the appellant within the terms and condition of agreement dt. 26.02.2011 read with affidavit dt. 23.10.2014 transferred the said property in the name of M/s. Swami Vivekanand Institute of Neurology Neurosurgery Spine and M/s. Sagauya Mediservices Pt.Ltd., on 19.03.2015 for sale consideration of Rs. 4,70,06,136/- The appellant after getting his balance amount of Rs. 1,10,00,000/- remitted the difference amount of Rs. 3,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made simultaneously in Section 53A of the Transfer of Property Act and Sections 17 and 49 of the Indian Registration Act. By the aforesaid amendment, the words the contract, though required to be registered, has not been registered, or in Section 53A of the 1882 Act have been omitted. Simultaneously, Sections 17 and 49 of the 1908 Act have been amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 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. Section 17(1A) and Section 49 of the Registration Act, 1908 Act, as amended, read thus: 17(1A). The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No as per decision of Hon ble Supreme Court decision in Balbir Singh Maini. Although we have confined to what has been wrongly adjudicated by CIT(A), we would like to add here that even for the purpose of Capital Gain head also, after decision of Hon ble apex court in Balbir Singh Maini, there is no sale or transfer of immovable property by an unregistered agreement. 10. Ld. DR for revenue also emphasised the strong objection made by AO in Para No. 14 of assessment-order that the assessee was trying to swindle the amount of Rs. 3,50,06,136/- as income of M/s Govind and eventually trying to evade the tax by presenting an unrealistic picture of financial accounting. On perusal of documents, we firstly find that the assessee-firm is constituted by 5 partners including (i) Shri Om Prakash Kriplani, and (ii) Shri Vashan Asnani. The unregistered agreement dated 26.02.2011 is executed between assessee-firm and Shri Vishan Asnani and the affidavit dated 23.10.2014 is signed by Shri Om Prakash Kriplani; both of these persons are directors of M/s Govind. Thus, the assessee-firm and M/s Govind are closely-related persons and effectively governed by same persons. Secondly, the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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