TaxTMI 
TaxTMI 
2008 (10) TMI 256
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.... (3) The learned CIT(A) erred in law and on facts because the transaction is duly covered within the provisions of s. 2(47)(v) r/w s. 53A of Transfer of Property Act, 1382, as such AO was right in holding that the proceeds were liable to be taxed as capital gain income. (4) The learned CIT(A) erred in law and on facts ignoring the transfer includes relinquishment and Department's case derives support from the following settled decisions: - CIT vs. Rasiklal Maneklal (HUF) (1989) 77 CTR (SC) 31 : (1989) 177 ITR 198 (SC); - Sunil Siddharthbhai vs. CIT (1985) 49 CTR (SC) 172 : (1985) 156 ITR 509 (SC); - Blue Bay Fisheries (P) Ltd. vs. CIT (1987) 62 CTR (Ker) 66 : (1987) 166 ITR 1 (Ker); - CIT vs. East India Charitable Trust (1994) 206 ITR 152 (Cal) : (1994) 73 Taxman 380 (Cal)." 3. Whereas in two grounds of its cross-objection, the assessee is aggrieved against the upholding of initiation of proceedings under s. 147 and the assessment order dt. 1st Nov., 2001 passed by the AO. 4. At the outset of appellate proceedings before us, the learned Authorised Representative for the assessee submitted that he does not press cross-objections filed by the assessee and the same may be dismi....
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.... be paid at the time of the registration of the title deeds in favour of the buyers, or else, to be adjusted against the cost of the flat that may be allotted to the appellant when the project comes up. It has been admitted by the Authorised Representative that the appellant had agreed to deal the property while the same had been under adverse possession, and the matter of securing free title to the property had been sub judice in Court, and in order to secure her interest, the appellant, under a bona fide belief to get the property vacated, and measured for its boundaries, thus incorporated the condition to agree to the sale of the plot on "as is where is basis". It is this particular insertion in the agreement on which the AO has based his observations, and initiated proceedings to assess the income from capital gain in the hands of the appellant. As such, while framing assessment, the AO has charged capital gain lax in the hands of the appellant, treating the transaction as one that of sale. 9. The assessee further submitted that in the instant case she did not have the possession of the property with her, the question of giving the possession to the transferee does not arise a....
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.... relevant to the facts of this case. 12. Whereas, on the other hand, the learned Authorised Representative for the assessee reiterating the submissions made before the CIT(A) contended that the CIT(A) has rightly deleted the impugned addition made by the AO. In addition thereto the learned Authorised Representative for the assessee filed the copy of the sale deed dt. 31st Dec., 2007 executed between the assessee and the same buyer M/s Nice Shelters, to show that the earlier articles of agreement were merely agreement to sell by virtue of which no transfer of property as per s. 2(47)(v) r/w s. 53A had taken place. 13. We have considered the rival submissions of both the parties, perused the records and carefully gone through the orders of tax authorities below as well as the relevant case law cited by the learned Authorised Representative for the assessee. 13.1 In order to resolve the controversy under consideration before us, we are required to decide: First whether the agreement dt. 19th Oct., 1995 constituted a sale deed or mere agreement to bind the vendor to sell and the vendee to buy on the terms and conditions governing the proposed sale of property by the vendor to the v....
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....stock-in-trade of a business carried on by him, such conversion or treatment; or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving the allowing of a possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) ......... Explanation: For the purposes of sub-cls. (v) and (vi), 'immovable property' shall have the same meaning as in cl. (d) of s. 269UA." 15. The relevant clauses of the agreement dt. 19th Oct., 1995 are placed at page Nos. 7 to 21 of the paper book dt. 27th Nov., 2007. The cl. 1 of this agreement reads as under: "(1) The vendor agrees to sell and transfer to the purchasers and the purchasers agree to purchase, takeover and acquire from the vendor on 'as is where is basis' all her rights, title and interest in the land hereditaments and premises situate at Malviya Road, Vile Parle (East) at and for the lump sum price of Rs. 71,00,000 (rupees seventy-one lakhs only) to be paid as follows i.e., to say: (a) A sum of Rs. 17 lakhs paid as earnest money immediately on the execution of these presents (the ....
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....intimation." 18. Clause 9 of the agreement reads as under: "It is hereby clarified that in the event of the purchasers being able to develop the said property, before the entire consideration hereunder has been paid by the purchasers to the vendor, the vendor shall be bound to complete the sale without varying any of the terms and conditions herein contained as to the consideration." 19. Now, reverting back to the facts of the instant case of the assessee as well as the relevant law and the case law we find that in the instant case, there was neither any transfer by way of sale nor extinguishment of the asset or the extinguishment of any right therein. The agreement dt. 19th Oct., 1995 only contained the terms and conditions to be adhered to and complied with at the time of sale of the property by the vendor and purchaser of the property at specified future date without any future addition or modification of the conditions. 20. As there was neither transfer nor extinguishment of any right, vendor remained lawful owner of the property and paid all the municipal taxes from the year of agreement to all subsequent years till date. The tax authority raised the bills in the name of t....
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....belonged to a charitable trust necessary prior permission of the office of the Charity Commr. was to be obtained and the agreement was to be implemented subject to this. Further the necessary condition was that prior approval of the office of Collector was also to be obtained and the physical possession of the land was to be handed over by the assessee to the purchasers only upon execution of the final sale deed. It is a matter of record that the transfer effectively took place only at the time of final execution of the sale deed when the physical possession of the respective plots was handed over to the final purchasers. In fact, as pointed out above, the assessee trust was in a position to handover the possession that all till 31st March, 1992 since the final permission from the office of Collector was received only in April, 1992. Thus, the transfer took place not in the assessment year under appeal i.e. asst. yr. 1992-93 but in the subsequent assessment year i.e., 1993-94 and the entire capital gains arising out of the transfer were placed before the AO but the same were not subjected to tax as these were invested in nationalized banks and post offices. This fact is clear from ....
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....hat the assessee Smt. Satyawati Devi Verma has still not conveyed the said properly to Nice Shelter and the conveyance of the said property is still to be done to effectively get the proper title to the said properly lo be sold by the owner Smt. Satyawati Devi Verma to the buyer Nice Shelter. 26. This fact now stands proved because the registered sale deed dt. 20th Dec., 2007 executed by and between the same parties indicating that the earlier agreement dt. 19th Oct., 1995 was only an agreement to sell and not a sale deed transferring the capital asset in favour of the buyer. 27. Hence in view of our detailed analysis of the relevant clauses of the original agreement dt. 19th Oct., 1995 and also applying the ratio of decision relied upon by the learned Authorised Representative for the assessee to the facts of this case, it is held that the agreement dt. 19th Oct., 1995 does not establish that the transaction of sale of property was completed in terms of provisions of s. 2(47)(v) of the IT Act, 1961 r/w s. 53A of the Transfer of Property Act and so the capital gain of Rs. 32,54,326 worked out by the AO and added to the income of the assessee in asst. yr. 1996-97 was not justified....