TMI Blog2001 (1) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of lack of completion of certain sale formalities and also non-receipt of approval from the Bombay Port Trust being the owner of the land. During the previous year, corresponding to the assessment year' l991-92, the assessee entered' into a Memorandum of Understanding (MoU) with Reliance. The actual date of the MoU was 3-8-1990. In accordance with this MoU, it was decided upon that the advance of Rs. 18.9 crores received by the assessee would become non-refundable. The assessee-company also agreed to grant Reliance, i.e., the purchaser, a licence to use the basement, ground floor and also the first floor of the said property. It is required to be mentioned in this connection that as per clause 20 of the original agreement dated 99-1989, it had been decided upon that vacant possession of the basement, ground and first floors would have to be given by the assessee to the purchaser immediately upon execution of the Deed of Assignment of the property. It was furthermore clatified that possession of the second floor of the property would be transferred by the assessee after one year from the execution of the aforesaid deed of Assignment of payment of full purchase price, whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l pay to the Vendor on demand the actual charges for the electricity and water consumed; and also paragraph 11 stating that the purchaser shall pay to the Vendor on demand operating and maintenance costs/charges in respect of the aforesaid property and the lifts installed in the said property proportionate to the area in the house of the licensing. On the basis of the above discussion, the Assessing Officer ultimately held that it cannot be said that possession of the property, or even a part thereof, had been handed over to Reliance in the real sense involving 'part performance' of the Agreement for sale. It was contended by the Assessing Officer that the assessee had merely allowed Reliance to use the property as a licensee. 4. Another point which was also emphasised upon by the Assessing Officer was that the property was agreed upon to be sold as a whole and the transaction should, therefore, be considered as one and sole transaction. The Assessing Officer thus contended that it would not be possible to conceive of the property having been sold in parts and hence there could not be any question of subjecting the sale consideration of the property to capital gains tax in two di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A of the Transfer of Property Act, 1882. He contends that, so far as the assessment year 199 1 92 is concerned, the handing over of possession of a part of the property, would come within the ambit of "part performance' of the original agreement as per the provisions of section 53A of the Transfer of Property Act and hence also within the ambit of section 2(47)(v). In this connection, he relies on the judgment of the Supreme Court in the case of CIT v. Podar Cement (P.) Lid [1997] 226 ITR 625 to contend that the transfer of ownership of a property, for income-tax purposes, does not require transfer of the full ownership in the true legal sense by way of execution of the Registered Conveyance Deed. On the other hand, the Id. DR strongly relied on the orders of both the lower authorities. 8. Before proceeding on with the issue any further, it would first of all be required by us to examine the relevant provisions of the two Acts under consideration. So far as the Income-tax Act, 1961 is concerned, the following are the relevant provisions : "Section 2(47) - 'transfer', in relation to a capital asset, includes - (v) any transaction involving the allowing of the possession of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as mentioned above and was also willing to pay the balance amount on completion of conveyance of the property. It is also an undisputed fact that by the licence agreement, the possession of a part of the property viz. basement, ground and first floor therein, was handed over to the transferee. The question is now whether the said handing over of the possession is to be considered as merely a licence arrangement enabling the transferee simply to use the property or exact handing over of the possession of that part of the property to Reliance as a purchaser of the property. We have studied both the agreement dated 9-9-1989 and the MoU dated 3-8-1990 and we are of the opinion that the MoU is merely an addendum or a supplement to the earlier agreement and cannot be considered to form a completely separate and independent licence agreement. The MoU clearly mentions the earlier agreement dated 9-9-1989 and all the terms and contracts of the MoU are actually based on such agreement. It is also mentioned in the MoU that despite best efforts made by the Vendor, the Trustees of the Port of Bombay had so far not updated its records pertaining to the said property by bringing the name of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as transferred under the deeming provisions of section 2(47)(v) in one year and the balance portion under the actual provisions of section 45 in the later year. The theory of "part performance' applies to the whole property and hence even though the possession of a part of the property was merely handed over by the assessee in the assessment year 1991-92, it has got to be held that there was "part performance' by both the sides in respect of agreement for sale of the entire property by the assessee to Reliance in the assessment year 1991-92 itself. Therefore, ultimately, we are of the opinion that the provisions of section 2(47)(v) would apply to the entire property and not to basement, ground and first floors of it only. Furthermore, there is nothing on record to show that the total price of Rs. 27 crores was allocated as Rs. 18.9 crores corresponding to basement, ground and first floors and the balance corresponding to other floors, Ultimately, therefore, we consider that the capital gains under consideration in respect of the entire property is exigible to tax in the assessment year 1991-92 only and not in the assessment year 1992-93 at all. 11. In these appeals, only a porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction in respect of the entire amount of Rs. 75 lakhs; as against the earlier claim in respect of Rs. 10,05,384. The Assessing Officer furthermore states in this connection that on examining the matter, he finds that in earlier years the assessee had made valid and prudent claim in accordance with the accounting norms. In that way, the Assessing Officer disallowed the fresh claim of Rs. 75 lakhs. At the same time, however, he allowed the original claim to the extent of Rs. 10,05,384. 14. At the stage of hearing before us, the ld. counsel for the assessee relied on the judgment of the Calcutta High Court in the case of CIT v. Tungabhadra Industries Ltd. [1994] 207 ITR 553. On the other hand, the Id. DR relied on the Supreme Court decision in the case of Madras Industrial Investment Corpn. Ltd. v. CIT [1997] 225 ITR 802. 15. We find that in the above-mentioned judgment in the case of Madras Industrial Investment Corpn. Ltd., the Supreme Court has indirectly overruled the earlier decision of the Calcutta High Court in the case of Tungabhadra Industries Ltd. According to the said decision of the Supreme Court the amount of discount allowed by the assessee on debentures in one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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