Unregistered sale agreement and unproved consideration cannot sustain agricultural land exemption or defeat trade character findings.
An unregistered agreement for sale executed after the 2001 amendment cannot be used to invoke part performance under Section 53A of the Transfer of Property Act, so possession is not treated as having passed on that basis. The note also explains that where the assessee fails to prove the claimed purchase price, authorities may rely on a seized agreement and corroborating sworn statements to adopt the consideration actually evidenced. It further records that short holding period, absence of agricultural operations, and surrounding facts may support a finding that the transaction is an adventure in the nature of trade, with concurrent factual findings ordinarily not disturbed in appeal under Section 260A.
Issues: (i) whether the sale of the property as claimed by the assessee was exempt from capital gains on the footing that it remained agricultural land and that possession had passed under an agreement for sale; (ii) whether the sale consideration and purchase consideration could be determined on the basis of the seized agreement and the statement recorded during search; and (iii) whether the transaction was an adventure in the nature of trade.
Issue (i): whether the sale of the property as claimed by the assessee was exempt from capital gains on the footing that it remained agricultural land and that possession had passed under an agreement for sale.
Analysis: For a claim based on part performance, an agreement for transfer of immovable property executed after the 2001 amendment had to be registered to have effect for Section 53A of the Transfer of Property Act, 1882. The agreements relied on by the assessee were not registered and therefore could not be relied on to show transfer of possession under Section 53A. The factual findings below also showed that no agricultural operations were carried on and that the property was barren land at the time of transfer.
Conclusion: The claim for capital gains exemption on the basis that the property was agricultural land was rejected.
Issue (ii): whether the sale consideration and purchase consideration could be determined on the basis of the seized agreement and the statement recorded during search.
Analysis: The sale agreement seized during search, together with the corroborating sworn statements, furnished the basis for adopting the higher sale price. The assessee failed to produce reliable material to substantiate the alleged higher purchase consideration, and the burden of proving that figure remained on the assessee. The authorities were therefore justified in declining the uncorroborated claim of the assessee regarding purchase value.
Conclusion: The adoption of the consideration on the basis of the seized agreement and the rejection of the unproved purchase value were upheld.
Issue (iii): whether the transaction was an adventure in the nature of trade.
Analysis: The property was sold within a short period of purchase, no agricultural activity was shown after purchase, and the surrounding facts supported the inference that the transaction was not a mere realization of agricultural property but a commercial venture. These were factual findings based on appreciation of evidence and did not give rise to a substantial question of law.
Conclusion: The finding that the transaction was an adventure in the nature of trade was sustained.
Final Conclusion: The court declined to interfere with the concurrent factual findings of the authorities below and found no substantial question of law warranting appellate interference, resulting in dismissal of the appeals.
Ratio Decidendi: An unregistered agreement for sale executed after the 2001 amendment cannot be relied on to invoke Section 53A of the Transfer of Property Act, 1882, and where the assessee fails to prove the claimed consideration or agricultural character of the land, concurrent factual findings on capital gains and the commercial nature of the transaction will not be disturbed in appeal under Section 260A of the Income-tax Act, 1961.
TaxTMI 
AI Drafter ✕
TaxTMI 
