TaxTMI 
TaxTMI 
2021 (9) TMI 285
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.... the following written submissions which are reproduced as under: Mr. Sikander AH - Assessee vendor - badly in need of money/funds. Mr. Sikander Ali Was in dire need of monies to pay off his debts and also to marry off his daughters and so for the purpose at one time he wanted to dispose off his house Property at D.No.8.2-413/1/A, Road No.4 Banjara Hills, Hyderabad, at same reasonable bargain. The assessee vendor in the first instance, entered into a registered agreement sale cum GPA No.3966/2007 dt 30.11.2007 with K. Vijaya Bhaskara Reddy to sell his property bearing D.No.8-2- 413/1/A, situated at Road No.4, Banjara Hills, Hyderabad for a Consideration of Rs. 1,60,00,000/-. In this connection, he was in receipt of Rs. 10,00,000/- in Cheque form and Rs. 40.00 lakhs in cash as token advance paid by the prospective vendee. As he could not pay he rest amount in time and for other reasons, the proposed sale transaction with Mr. Vijaya Bhaskara Reddy could not get Off and So Was, to be cancelled, It Was cancelled by doc. No.1140/2009 on 20.04.2009 by another registered cancellation deed. Mr. Suresh Babu - Pro. Uma Enterprises -a broker or loan facilitation cam....
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....ssion of his property to Mrs. Manju Devi and that he is still "in virtual physical occupation" of the said property even till date of this appeal before the Hon'ble. In spite of assessee vendor's strong assertions that he is still in physical possession of his property the Ld AO took a different stand, to say in hi; own words that the "law is well settled that the sub Registrar will register a sale deed, when possession and title fully without any encumbrance on the property was handed over, and the vendor agrees that he/she has received sale consideration fully". He further went to say, that Supreme Court ill the case of "Suraj Lamp Inds, Vs State of Haryalla & Ors clearly ruled that a registered sale deed is onlu the valid document in terms of. transf.er and such deed is legally, and lawfully valid", No Possession given no transfer involved:- The assessee vendor argues that he is still in virtual physical possession of his property as against What is so stated in the registered sale deed. The vendee of the property however, has not complained till date with any of the authorities or for that matter issued any" legal notice" against him ....
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.... Bank. And hence there is no "transfer of property" or sale' of property that took place with "possession of property" not being transferred from the assessee vendor and hence no capital gains would arise in the assessee hands. Case law cited on Registration of document "necessary but not conclusive of transfer" :- In: Hiralal Ramdayal V CIT (1980) 122 ITR 461 (Patt) the assessee had executed a sale deed in respect of certain immovable property and got it registered as well. But when the AO proposed to tax the capital gains arising there from, the assessee contended the sale deed was a "sham document" and no sale had in fact taken place. This contention was repeated right up to the Tribunal. But, the High Court observed that, no doubt, evidentiary value has to be attached to a registered document, but the document by itself cannot be final word in the matter. It has to be borne in mind that capital gains accrue only if there is a sale or any other transfer of capital asset and if the assessee is able to prove that in fact no sale took place, in that case, no capital gain accrued which could be assessed to income - tax. Even in the face of registered sale deed,....
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....and accepted to execute Agreement of Reconveyance or cancellation of registered sale deed on the same day where the registered sale deed will be done in favour of it. Clause No. 11 reads:- That the 02nd party hereby undertakes 'and declare that by using the registered sale deed would be executed in favor of it by the O1st party will not be misused and the 02nd party undertakes that it will not execute any deed of conveyance in favour of any third party. b) The Agreement of Reconveyance Dt. 18.05.2009 inter alia by clause No (1) reads as under. The 1st Party - Mrs. Manju Devi, and the 2nd party Mr. Sikander Ali - the assessee vendor mutuallu agreed and accepted that. to execute: the registered sale deed in favour of the first party with a condition to reconvey the scheduled property on payment of sale consideration as mutually agreed in MOU Dt. 16.04.2009. Clause No (2) of the same agreement says - the 1st party Mrs: Manju Devi hereby undertakes that NOT TO REGISTER SALE DEED or ANY DEEDS in favour any .third party(ies) within a period of 05 years from the date of execution of this Agreement of Reconveyance. MOU & Agreement of Reconve....
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....ate/society at large, Courts at times, in general, give a fair opportunity for rectification of such deficiency by the parties to make them legally enforceable for justice renderability, Thus in cases of enforceable agreements/contracts, courts are the ultimate jurisdiction to role over such matters. MOU Agreement & Agreement of Reconveyance - why they remained unregistered. Registration of any document under Registration Act 1908 has its own unique advantage of being in "public domain" and protected from fraud end forgery of documents of transfer. Further registration provides information to people who may deal with a property, as to the nature and extent of the 'rights' which persons may have, affecting the property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is (are) the person(s) presently having right, title, and interest in that property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire unique and ascertain....
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....acts copies/documents relevant to "such completed sale" of property, which make the things a bit entwined/complicated vitiating the topic of "completed sale of property". In other words, the lateral agreements/contracts viz. MOU agreement saying in the instant case the "sale of property" is subject to availing of "loan" requirements by the assessee vendor and purchaser of property agreeing to "certain conditionalities". Agreement of Reconveyance - says that "sold property" should get reconveyed to the assessee vendor with provision of certain time period limits - as are entered into by the same parties in full knowledge of their legal consequences. Thus purchaser of property is fully made aware of her "limits" which put a bar on her rightful enjoyment of property as otherwise that would have been available to her had it not been a "conditional sale". More over the purchaser is fully aware that, till date she-is nor-given "vacant possession of the property" by the assessee vendor to her though the "executed sale deed" so said which but remained only on paper". This is because that she, in* full knowledge and to her own conscience executed 02 more separate ....
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....operty" in the name of purchaser of property viz. Mrs. Manju Devi, which amount would be shared as per some agreed arrangement. For the purpose, as per broker's (Mr. CH. Suresh Babu), facilitation and his advice on the matter, the assessee vendor has agreed to "make sale of his property" in the name of Mrs. Manju Devi, through a make-believe deed only for the sale aim of obtaining a loan against security of the said house property. To that end, the assessee vendor and Mrs. Manju Devi, purchaser of property have entered into 02 more written agreements viz. (1) MOU (2) and an Agreement of Reconveyance which intend to specifically put impose "restrictions" on the rights/claims accruing from the execution and registration of sale deed of property for a certain period of time 05 years from the date of "sale deed" - until which time, the purchaser of property" as per "sale deed" shall not venture to sell or deal with the "purchased property" or enforce her "lawful rights" as the "Lawful property owner of the said property. To that end, the assessee vendor has "intentionally" NOT handed over possession of the property both as per legal advice and in "tacit concurrence "with p....
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....hin the country's economy through land/real estate business mafia openly by passing/violating established relevant laws of land and so indulging in generation of "black money" with devious methods of so called "indirect sales of immovable property" getting officially registered under the Indian Registration Act. Thus the Hon'ble Court has observed that high rates of stamp duties in respect of dealings of purchase/sale of immovable properties, existing in certain states are one of the prime causes/factors encouraging such indirect sales causing much revenue loss to the country's exchequer in the form of stamp duty, Income tax & Wealth Tax evasion. This is because a majority of dealings pertaining to immovable properties~ are being made through General Power Attorney, Agreements to sell and will whi.ch need not be "registered" as such under the Indian Registration Act. Only confirmed dealings or direct sales in immovable properties are getting registered under the- Indian Registration Act and the rest, as detailed above are not so getting registered on account of gaping hole prevailing in the present law. And hence, to curb such rampant misuse of Registr....
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....ted that a cancellation deed dt. 09.10.84 was also executed between the parties. The AO, however, rejected all the contentions and assessed the value of the property at Rs. 2,00,000/-. The assessee, aggrieved by the. order, preferred an appeal which was rejected by CIT (Appeals). The assessee went on in further appeal before the ITAT reiterating the contention raised before the AO. The Tribunal, too, rejected his appeal! citing MOU dt.12.01.1973 the lease deed dt. 14.12.1978, the cancellation deed dt.09.10.1984 and the certificate dt.15.03.1989 could not change the legal position that the property in question had stood transferred to Lake Palace Hotels & Motels (P) Ltd. Further, in the opinion of the Tribunal, the documents referred to are self serving documents and as such they cannot be acted upon being in violation of the provisions of the Transfer of Property Act, Indian Registration Act and the Stamp Duty Act. Accordingly, the Tribunal rejected the appeal. Subsequently, the assessee HUF, filed an application U/S 256(1) of ITax Act seeking certain questions to be referred to Rajasthan High Court for opinion. The Hon'ble Rajasthan High Cou....
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.... that he is still in "physical occupation" of the alleged sold property to Mr. Manju Devi Taparia. Receipt of notices from GHMC - Municipal corporation:- The 'assessee vendor also states that he is in receipt of municipal/property tax notices in his name as "owner" of the said property the latest of such notices - dt. 17.12.2014 & 09.01.2015 which go to prove his Base of argument that he is in physical occupation of the property in the records of GHMS authority. Receipt of rental income duly shown in the 1- Tax returns that come to be filed by him. Receipt and accounting of rental incomes received from Dream India Builders/Pride India Mansion (P) Ltd. are unfailingly shown in the Income Tax returns filed by the assessee vendor for AY. 2013-14 & 2014-15. Thus he has shown Rs. 4,62,500/- for the AY.2013-14 and Rs. 7,20,500/- for the AY.2014-15. Such rental income receipt declaration, as per Income Tax Act provisions would come to be shown only by the veritable "Owners" of immovable property a "term" specifically "defined" under said Act. Further the TDS form 26 AS statement downloaded from TRACES site against his PAN - ACVPA 4....
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....ceived is shown as his income in his, individual capacity as income from house property which is being accepted by the Department. The assessee filed copies of the returns and a computation of income for the AYs 2013-14 & 2014-15 for this purpose. 5. 'The assessment order, the submissions of the assessee during the assessment proceedings and the appellate proceedings and the documents placed on record are considered. It is seen that there is no ambiguity as to whether there is transfer within the meaning to Section 2(47) on account of execution of the document dated 29/04/2009. The document clearly records that the consideration has been received and the possession has been handed over to the purchaser. The assesse's reliance on earlier transaction and application of part of consideration for repayment of money to Sri K Vijaya Bhaskar Reddy with whom an earlier agreement of sale/GPA was entered into is of no .relevance to decide the nature of the transaction. The distribution of money between the broker, assessee and the purchaser of the property from the loan raised against the property is a subsequent act wl1lkh would not change character of the transaction alrea....
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.... by his son Shri Syed Md.Mustafa Ali Vs. RBL Bank and others as well as a civil suit in the learned civil court at Hyderabad qua the very asset etc. Learned counsel therefore pleads in tune with the assessee's stand through out as well as in light of these legal intervening development Assessing Officer as well as the CIT(A) have erred in law and on facts in treating the sale deed herein dt.20-04-2009 as a valid transfer u/s.2(47)(v) of the Act giving rise to the impugned long term capital gain addition. We legally made a very strong endeavour to get the impugned issue remanded back to the Assessing Officer to examine afresh in light of the findings by the foregoing judicial forums (supra). 4. We have given our thoughtful consideration to rival pleadings against and in support of the impugned addition we find no reason to express our concurrence with this taxpayer's stand. This is for the reason that he has already executed the impugned registered sale deed; treated as a valid transfer u/s.2(47)(v) of the Act which is deemed to have superseded all the oral as well as un-registered documents between the vendor and the vendee; as the case may be. And also that whatever are the doc....