TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 301
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....nt of sale entered into during the year and therefore, the provisions of section 2[47][v] of the Act read with section 53A of the Transfer of Property Act was not attracted to the case of the appellant under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A] ought to have appreciated that there was only an unregistered agreement of sale dated 29/08/2012 entered into by the appellant with Mr. Srinath Hebbar in the next financial year that regulated the understandings between the appellant and Mr. Srinath Hebbar based on which the appellant had duly recognized transfer of his undivided interest in land as and when sale deeds were registered in favour of the nominees at the instance of Mr. Srinath Hebbar and therefore, the taxation of long term capital gains for the year under appeal was erroneous in law. 3. Without prejudice to the above, the learned CIT[A] erred in enhancing the extent of capital gains by erroneously reducing the extent of cost of land allowed by the learned A.O. as a deduction under the facts and in the circumstances of 7-e appellant's case. 3.1 The learned CIT[A] is not justified in enhancing the as....
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....peared and submitted various documents. At the time of scrutiny proceedings, the AO verified the books of accounts of the assessee and came to the conclusion that during the F.Y. 2011-12, the assessee had entered into a transaction with one Mr. Srinath Hebbar of Land Traders for transferring the property situated in Kadri A&B village of Mangalore for constructing a residential apartment complex. Further, based on the documents impounded and information received at the time of survey, the AO arrived a conclusion that the assessee had agreed for transferring the property to Mr. Srinath Hebbar for a sale consideration of Rs. 30,00,00,000/-. The AO treated the same as transfer and alleged that the assessee had not offered any Capital Gains on such transfer. 3. The assessee by way of objections had stated that the transaction with Mr. Srinath Hebbar should not be taxed in the A.Y. 2012-13, but taxed only in the A.Y. 2013-14. The assessee stated that the property has been agreed to be sold to Mr. Srinath Hebbar by way of an agreement dated 29/08/2012 and received a part payment and the balance would be paid at the time of registration of Sale Deed. The assessee further stated that the....
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....nt, that the possession of land has been transferred during the F.Y. 2011-12, which was also vouched by the said Mr. Srinath Hebbar by giving a statement on oath that the construction has already been started. 4. Assessee had known the facts of the transaction and admitted that possession was handed over and consideration received. 5. Commencement certificate has been obtained on 07/09/2011 from MUDA and also possession lies in the hands of the builder and the fact of the investing of money by the builder and constructing the building in the property of another, would shows that there was a transfer, attracting the provisions of Capital gains. 6. Assessee made the builder as party in the Sale Deeds and the transaction indicates that the relationship is owner and builder when the possession was handed over and sale consideration received. Further no TDS has been deducted, therefore the builder could not be treated as an agent based on the POA. 5. As against the order, the assessee filed an appeal before the Ld.CIT(A) and contended that the agreement for Sale was entered into only on 29/08/2012 and therefore the doctrine of part performance u/s. 53A of t....
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....erse orders, liable to be set aside. The Ld.AR filed a paper book and a case law compilation and prayed to allow the appeal. 9. The Ld.DR submitted that possession was handed over to Mr. Srinath Hebbar and Power of Attorney was also given on 31/01/2012 and construction was commenced after obtaining the commencement certificate on 07/09/2011 and therefore the capital asset has been transferred during the F.Y. 2011-12 and liable for Capital Gains during the A.Y. 2012-13. The Ld.DR filed the copies of the statements of the assessee as well as Mr. Srinath Hebbar and relied on the statements and submitted that the possession was handed over during the F.Y. 2011-12 and prayed to dismiss the appeal filed by the assessee. 10. We have heard the arguments of both sides and perused the materials available on record. 11. We understand that the assessee had given a Power of Attorney to Mr. Srinath Hebbar on 31/01/2012 which is an unregistered one. Subsequently, the said Mr. Srinath Hebbar made the preliminary works as an agent of the assessee. The license to construct the said project was obtained by the assessee and his wife with the Mangalore City Corporation on 13/01/2012. The said ....
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....ansfer of Property Act, 1882 (4 of 1882) ; or" (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property." 14. In order to attract the provision of transfer, the following are required: Firstly there should be an agreement for sale or any instrument as a contract as referred in section 53A of the Transfer of Property Act. Thereafter the transferee should be allowed to take possession of the immovable property or retained the possession in part performance of a contract or the nature as referred in section 53A of the Transfer of Property Act. 15. In the present case, there is only a POA appointing the said Mr. Srinath Hebbar as agent to do some works in respect of the property. The Authorities had relied on the second part of the definition and alleged that PoA has been executed, commencement certificate was obtained and construction of project had commenced and therefore the assessee had relinquished his ....
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....er, if it is not registered, shall not have any effect in law, including for section 53A of the Transfer of Property Act. Therefore from 2001, to avail the benefit conferred under section 53A of the Transfer of Property Act, the contract for transfer should be registered one. 19. In the present case, there is no iota of evidence to show that there is a registered contract available for transfer during the A.Y. 2012-13. Further there is no evidence to show that the possession was given in the year 2012- 13 based on the registered agreement for sale. When there is no registered agreement for sale or POA and also no documents available to show that the ownership has been transferred during the A.Y. 2012-13, we cannot come to the conclusion that transfer has been effected during the A.Y. 2012-13. Further, there is no evidence to show that the assessee had relinquished his right over the property in the A.Y. 2012-13. 20. We have also gone through the judgment of the Hon'ble Supreme Court relied on by the assessee reported in 86 taxmann.com 94 (SC) in the case of CIT vs. Balbir Singh Maini, wherein it was held that, "19. It is also well-settled by this Court that the prote....
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....received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1887 (1 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument." 20. The effect of the aforesaid amendment is that, on and after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, 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 Secti....
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....red document. In the present case, there is no registered document available during the A.Y. 2012-13 and therefore there is no transfer effected as per section 2(47)(v) of the Act. Further, there is only a POA given by the assessee to Mr. Srinath Hebbar, that too an unregistered document and therefore there is no valid contract available for transferring the property in the eye of law. 22. We have also gone through the another judgment of the Hon'ble Supreme Court in Civil Appeal No. 6377 of 2012 dated 01/09/2025 in the case of Ramesh Chand (D) Thr. LRS. vs. Suresh Chand & Anr. wherein it was held as follows: "16. The scope of an agreement for sale has been highlighted by this court in the case of Suraj Lamp and Industries Private Limited (2) through Director v. State of Haryana and Another 3, wherein this Court observed that "16. Section 54 of the TP Act makes it clear that a contract of sale, that is, an agreement of sale does not, of itself, create any interest in or charge on such property. This Court in Narandas Karsondas v. S.A. Kamtam [(1977) 3 SCC 247] observed: "32. A contract of sale does not of itself create any interest in, or charge on, th....