TaxTMI 
TaxTMI 
2026 (5) TMI 328
X X X X Extracts X X X X
X X X X Extracts X X X X
....possession to M/s.PEPL, which commenced development activities prior to 31.03.2007. 3. The main contention raised in this case by the Department is that the recitals in the Joint Venture Agreement, read with Section 2(47) of the Income Tax Act, which defines "transfer" in relation to capital assets clearly establish in this case the transfer occurred during the relevant financial year. Specifically, under the terms of the Joint Venture and Share Transfer Agreements, the respondent/assessee accrued a sum of Rs. 115 crores as consideration for transferring 50% of its shareholding in favour of the investing company, M/s.PEPL. 4. The learned counsel for the Revenue, emphasizing more on the Explanation (2) to Section 2(47) (vi) of the Income Tax Act, submitted that the Tribunal ought not to have reversed the findings of the Appellate Authority on the premise that no transfer of shares or consideration occurred during the financial year under consideration. The learned counsel argued that the law clearly fixes tax liability on an assessee who enters into a Joint Venture Agreement for consideration, as such an arrangement enables the contracting party to enjoy the immovable property....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the concerned financial year will not fall within the purview of Section 2(47) of the Income Tax Act. 8. The learned Senior Counsel further submitted that no transfer of shares or consideration was effected on the strength of the Joint Venture Agreement or Shareholders' Agreement dated 25.06.2006 till the end of the financial year (i.e.) 31.03.2007. While so, based on an unregistered Joint Venture Agreement is not enforceable in law for the purpose of transfer, taxed levied. As per terms of agreement transfer of shares must follow the statutory procedures contemplated under the relevant statutes, which were not even commenced during the concerned financial year. Consequently, there was no accrual of actual or deemed income during the concerned financial year. Therefore, the transaction cannot be viewed as a contract of "transfer" of capital asset. 9. The learned Senior Counsel also submitted that the findings of the Assessing Officer and the Appellate Authority claiming that possession of the property was transferred to M/s.PEPL and construction had commenced before 31.03.2007 is baseless and contrary to the material evidence. Evidence placed before the CIT (A) will prove tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting 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 53-A of the Transfer of Property Act. A reading of Section 17(1-A) and Section 49 of the Registration Act shows that in the eye of the law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53-A. ITAT was not correct in referring to the expression "of the nature referred to in Section 53-A" in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-clause (v) was inserted by the Finance Act of 1987 w.e.f. 1-4-1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53-A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi [Shrimant Shamrao Suryavanshi v. Pralhad Bhairoba Suryavanshi, (2002) 3 SCC 676 : 2002 SCC (Cri) 469], that the section applies, and this is what is meant by the expression "of the nature referred to in Section 53-A". This expression cannot be stretched to refer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act. 28. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessee's by the developers and therefore, the assessee's have not acquired any right to receive income under the JDA. This being so, no profits or gains "arose" from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act." 12. Regarding the charging Section, the Hon'ble Supreme Court in CIT Vs. B.C.Srinivasa Setty [1981] 128 ITR 294 (SC) laid down the principle that the charging section and the computation provisions together constitute an integrated code. It is pertinent to extract the relevant portion to better understanding that in the case in hand for the assessment year 2006-07 no taxable liability had accrue....