TaxTMI 
TaxTMI 
2022 (3) TMI 1009
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....f Property Act and the capital gains is required to be computed in the year under consideration and that the gain is to be taxed as Short Term Capital Gain. 3. The Ld. CIT(A) has further erred in law and in facts in confirming the action of the Ld. A.O. in assessing the sale proceeds of Rs. 2,31,67,620/- as gain without allowance of any costs in relation thereto. 4. The Ld. CIT(A) has erred in law and in facts in confirming the addition of Interest income of Rs. 23,08,797/- on mercantile basis as against the amount of Rs. 1,40,436/- received during the year accounted on cash basis without allowance of expenditure of Rs. 25,279/- as claimed to be allowed in the case of Companies under liquidation. 5. Your appellant craves liberty to add, alter, amend, substitute or withdraw any of the ground(s) of appeal hereinabove contained." 2. Ground No. 1:- The Ld. Counsel appearing for the assessee submitted before us that he is not proceeding with the ground as per instruction. In that view of the matter, the ground is dismissed as not pressed. 3. We have heard the respective parties and we have also considered the relevant materials available on record. 4. Ground No. 2 & 3 are....
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....s. In fact, the direction in Petition No. 34 of 1991was given to the vendor to execute necessary sale deeds of full and final payment in favour of the nominee of the Confirming Party No. 2 i.e. Vaibhav Industries for total sale price of Rs. 3,78,00,000/-. The sale of assets of company liquidation has been demarcated by GSFC and SBI from the proceeds of the sale of assets on the following ratio:- SBI(%) GSFC(%) Land 58.54 41.46 Assets other than land 60.72 39.27 5. It further appears that the total sale consideration of Rs. 3,78,00,000/- out of the execution of the sale deed on 01.10.2013 which was paid by the purchaser to the Confirming Party No. 2 i.e. Vaibhav Industries has been confirmed by the said Vaibhav Industries with the following schedule:- Amount (Rs.) Bank Name Cheque No. Date 10,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000002 25-01-2012 10,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000006 01-02-2012 45,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000013 24-03-2012 1,04,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000019 15-01-2....
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.... its share in the said properties. The AO has observed that the appellant had sold the said assets in total consideration of Rs. 3,78,00,000/- out of which advance of Rs. 21,00,000/- as EMD were received during the year under consideration. Further, the possession of the land was also handed over to the purchaser namely; Vaibhav Industries on 22/09/2011 i.e. the year under consideration. From the deed of conveyance executed on 01/10/2013 relevant to A. Y. 2014-15. It has been noticed that the aforesaid properties were jointly held by appellant company and another party namely; M/s. Reepal Pharmacap Pvt. Ltd. Thus the AO worked out the capital gain in the ratio of area of land held by the appellant i.e. 2604 Sq Mtrs. out of the total area of land of 4248 sq. Mts. and accordingly worked out the sale proceeds in that ratio i.e. 61.29% of the total consideration of Rs. 3.78 crores which came to Rs. 2,31,67,620/-. Since part performance in view of provisions of section 53A of Transfer of Property Act, 1882 has taken place in the year under consideration, thus the same has clearly fallen under the definition of section 2(47)(v) of the I. T. Act. 5.3. If has also been noticed that in s....
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....n of Section 53A of the Transfer of Property Act, 1882 is wrong. Thus, no profit or gain which arose from transfer of a capital asset which could be brought to tax under Section 45 r.w.s. 48 of the Act. In this regard, we have further considered the judgment relied upon the Ld. AR in the case of CIT vs. Balbir Singh Maini passed by the Hon'ble Apex Court reported in, (2017) 86 taxmann.com 94 (SC) where it has been held that where for want of permission in that transaction of development of land envisaged in Joint Development Agreement (JDA) failed through, there were no profit or gain which arose from transfer of capital asset which could be brought to tax under Section 45 r.w.s 48 of the Act. While dealing with the matter the Hon'ble Apex Court has been pleased to observe as follows:- "19. It is also well-settled by this Court that the protection provided under Section 53A is only a shield, and can only be resorted to as a right of defence. Rambhau Namdeo Gajre v. Narayan Bapuji Dhgotra [2004] 8 SCC 614 , para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be executed through a registered instrument. This position was changed by the ....
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....tered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act. This being the case, we are of the view that the High Court was right in stating that in order to qualify as a "transfer" of a capital asset under Section 2(47)(v) of the Act, there must be a "contract" which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. The ITAT was not correct in referring to the expression "of the nature referred to in Section 53A" in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao ....
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....bles the enjoyment of immovable property must be enjoyment as a purported owner thereof1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 23. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose -the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction. 24. The matter can also be viewed from a slightly different angle. Shri Vohra is right when he has referred to Sections 45 and 48 of the Income Tax Act and has then argued that some real income must "arise" on the assumption that there is transfer of a capital asset. This income must have been received or have "accrued" under Section 48 as a result of the transfer of the capital asset. 25. This Court in E.D. Sassoon & Co. Ltd. v. CIT AIR 1954 SC 470 at 343 hel....
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....bserved that: (SCC p. 454, para 11) "11. ... the date of payment ... does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may not be immediately." 16. This Court further held, and in our opinion more importantly, that income accrues when there "arises a corresponding liability of the other party from whom the income becomes due to pay that amount". 17. It follows from these decisions that income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee. 18. Insofar as the present case is concerned, even if it is assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement passbook, there was no corresponding liability on the Customs Authorities to pass on the benefit of duty-free imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothet....