Sh. Rajiv Kumar, Jagadhari V. ITO, Yamunanagar

ITA 17/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9838 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2016
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Capital asset; Additional evidence; Fair market value; Competent authority; Assessment record
• Section: 54B; 54F; 45(5); 142(1); 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 17/CHD/2016 ASSESSMENT YEAR: 2007-08 SHRI RAJIV KUMAR, VS THE ITO, HOUSE NO. 15, WARD 3, KASHMIR COLONY, YAMUNA NAGAR. JAGADHRI. PAN: ADJPT2511M & ITA NO. 18/CHD/2016 ASSESSMENT YEAR: 2007-08 SHRI BANARSI LAL, VS THE ITO, HOUSE NO. 15, WARD 3, KASHMIR COLONY, YAMUNA NAGAR. JAGADHRI. PAN: ACFPL2674N & ITA NO. 19/CHD/2016 ASSESSMENT YEAR: 2007-08 SHRI TEJINDER KUMAR, VS THE ITO, HOUSE NO. 15, WARD 3, KASHMIR COLONY, YAMUNA NAGAR. JAGADHRI. PAN: ADJPT2511M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 22.06.2016 DATE OF PRONOUNCEMENT : 29.06.2016 2 O R D E R PER BHAVNESH SAINI,JM THIS ORDER SHALL DISPOSE OFF ALL THE ABOVE APPEALS FILED BY DIFFERENT ASSESSEES AGAINST DIFFERENT ORDE RS OF LD. CIT(APPEALS) PANCHKULA DATED 30.12.2015 FOR ASSESSMENT YEAR 2007-08. 2. THE ISSUES ARE IDENTICAL IN ALL THE APPEALS. LD . REPRESENTATIVES OF THE PARTIES MAINLY ARGUED IN THE CASE OF ASSESSEE SHRI RAJIV KUMAR AND SUBMITTED THAT ORDER IN THIS CASE MAY BE FOLLOWED IN OTHER APPEALS. 3. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. LD. D R PRODUCED THE ASSESSMENT RECORDS, HAS ALSO BEEN PERU SED. THE APPEAL IN THE CASE OF SHRI RAJIV KUMAR IS DISPO SED OFF AS UNDER. ITA 17/2016 ( SHRI RAJIV KUMAR) 4. IN THIS APPEAL, ON GROUND NO. 1 THE ASSESSEE CHALLENGED THE UPHOLDING OF LONG TERM CAPITAL GAIN AMOUNTING TO RS. 5,23,23,470/- IN THE YEAR UNDER CONSIDERATION I.E. 2007-08. ON GROUND NOS. 2 TO 7, THE ASSESSEE CHALLENGED THE ORDER OF THE LD. CIT(APPEAL S) IN DENYING EXEMPTION UNDER SECTION 54B AND 54F OF THE INCOME TAX ACT ON DIFFERENT AMOUNTS. ON GROUND NO. 8, 3 ASSESSEE CHALLENGED THE ORDER OF LD. CIT(APPEALS) I N NOT ALLOWING COMMISSION OF RS. 5,50,000/- PAID BY THE ASSESSEE TO THE BROKERS FROM THE SALE PROCEEDS OF AGRICULTURE LAND. ON GROUND NO. 9, ASSESSEE CHALLE NGED THE ORDER OF LD. CIT(APPEALS) IN UPHOLDING THE FAIR MARKET VALUE OF LAND TAKEN BY ASSESSING OFFICER AS ON 01.0 4.1981. ON GROUND NO. 10, ASSESSEE CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN REJECTING APPLICATION OF ADDITIONAL EVIDENCE FILED UNDER RULE 46A OF THE IT RULES. ON GROUND NO . 11, ASSESSEE CHALLENGED THE RE-OPENING OF THE ASSESSMEN T UNDER SECTION 147/148 OF THE INCOME TAX ACT WHICH I S NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE. THE S AME IS, THEREFORE, DISMISSED BEING NOT PRESSED. 5. THE MAIN ISSUE HAVE BEEN RAISED ON GROUND NO. 1 ABOVE UPHOLDING THE LONG TERM CAPITAL GAIN IN ASSES SMENT YEAR UNDER CONSIDERATION I.E. 2007-08 AMOUNTING TO RS. 5,23,23,470/-. 6. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME ON 03.03.2008 DECLARING INCOME OF RS. 99,990/- + AGRICULTURE INCOME OF RS. 1,75,000/-. T HE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 O F THE INCOME TAX ACT AND ALSO ISSUED STATUTORY NOTICES. T HE ASSESSEE IN REPLY THERETO SUBMITTED THAT RETURN FIL ED IN ORIGINAL MAY BE TREATED AS FILED IN RESPONSE TO NOT ICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICE R NOTED THAT ASSESSEE HAD SOLD THE LAND FOR A CONSIDERATION OF RS. 4 5.50 CR THROUGH A REGISTERED SALE DEED DATED 20.03. 2007. THE SALE CONSIDERATION COMPRISE OF RS. 8,50,000/- I N CASH, RS. 41,50,000/- VIDE CHEQUE DATED 15.03.2007 AND RS . 5 CRORE VIDE CHEQUE NO. 009643 UNDATED FROM M/S LINK INFRASTRUCTURE & DEVELOPERS PVT. LTD., DELHI. THE PROCEEDS OF THE AFORESAID CHEQUES WERE REALIZED BY ASSESSEE IN MARCH, 2007 AND 16.06.2008 RESPECTIVELY. THE ASSES SEE IN REPLY TO THE NOTICES OFFERED SALE CONSIDERATION OF RS. 50 LACS FOR TAX DURING THE YEAR UNDER CONSIDERATION AN D BALANCE AMOUNT OF RS. 5 CRORE FOR ASSESSMENT YEAR 2 009- 10 ON RECEIPT BASIS. 6(I) THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AND AFTER CONSIDERING ASSESSEE'S REPLY, REFERRED TO THE PROVISIONS OF SECTION 53A AND 54 OF TRANSFER OF PRO PERTY ACT AND SECTION 45 READ WITH SECTION 2(47)(IV) OF T HE ACT AS PER PARA 7 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED FROM THE SALE DEED THAT THE CLAIM OF ASSESSEE THAT SALE OF LAND MEASURING 80 KANAL FOR RS. 5,50,00,000 /- WILL TAKE EFFECT AT TWO DIFFERENT POINTS OF TIME WHEN TW O DIFFERENT CHEQUES FOR RS. 41,50,000/- AND RS. 5 CRO RE WERE ENCASHED, WAS NOT IN CONSONANCE WITH EXISTING LAW. THE ASSESSEE HIMSELF OFFERED FOR TAX AN AMOUNT OF RS. 5 0 LACS DURING THE YEAR AND FOR BALANCE AMOUNT OF RS. 5 CRO RES, THE ASSESSEE CLAIMED THAT IT WILL BE OFFERED FOR TA X IN ASSESSMENT YEAR 2009-10, WHICH WAS NOT IN ACCORDANC E WITH LAW. THE ASSESSEE EXECUTED SALE DEED ON 20.03 .2007 AND THE SALE CONSIDERATION WAS PARTLY RECEIVED AND PARTLY 5 PROMISED. THE BUYER ISSUED CHEQUE FOR RS. 5 CRORES UNDATED BEARING NO. 009643 TO THE ASSESSEE AND ALSO CONTRACTED THAT THE SALE DEED IN QUESTION SHALL AUTOMATICALLY BE STAND CANCELLED IN THE EVENT OF DI SHONOUR OF POST-DATED CHEQUE. THE ASSESSING OFFICER FRAMED THE FOLLOWING QUESTIONS TO ARRIVE AT THE DECISION : I) IF THE AMOUNT OF CHEQUE OF RS. 5 CRORE WAS REALIZED, WHAT WILL BE THE EFFECTIVE DATE OF TRANSFER ? II) IF THE AMOUNT OF CHEQUE OF RS. 5 CRORES WAS NOT REALIZED, WHAT WILL BE THE FATE OF RS. 50 LACS ALREADY PAID BY THE BUYER TO THE SELLER ? 6(II) THE ASSESSING OFFICER FURTHER OBSERVED THAT A S PER PROVISIONS OF SECTION 54 OF TRANSFER OF PROPERTY AC T, IT IS CLEAR THAT WHEN PRICE IS PARTLY PAID AND PARTLY PRO MISED, THE IMMOVABLE PROPERTY IS DEEMED TO HAVE BEEN TRANSFERRED ON EXECUTION AND REGISTRATION OF THE SA LE DEED IF THE POSSESSION OF PROPERTY HAS BEEN GIVEN TO THE BUYER. THE ASSESSEE DEPOSED BEFORE THE REGISTERING AUTHORI TY THAT POSSESSION OF LAND WAS HANDED OVER TO THE VENDEE AN D NOTHING WAS DUE FOR PAYMENT. ENTRIES OF MUTATION W OULD BE MADE BY THE PURCHASER COMPANY THROUGH ITS OFFICE RS FOR WHICH VENDOR WILL HAVE NO OBJECTION. THE ASSESSEE' S CLAIM THAT THE POSSESSION OF THE PROPERTY REMAINED WITH T HE SELLER TILL THE ENCASHMENT OF UNDATED CHEQUE AND CULTIVATION OF LAND WAS BEING DONE BY THE SELLER WA S NOT 6 MAINTAINED IN VIEW OF THE INFORMATION COLLECTED FRO M THE REVENUE AUTHORITY. 6(III) THE ASSESSING OFFICER ALSO OBSERVED THAT CLA IM OF ASSESSEE THAT ONE SALE DEED DATED 20.03.2007 WILL H AVE TWO DIFFERENT EFFECTIVE DATES OF TRANSFER, WERE NOT ACCORDING TO LAW. THE POST-DATED CHEQUE, AS PROMIS ED, HAS SINCE BEEN ENCASHED BY THE ASSESSEE ON 16.06.20 08, THEREFORE, EFFECTIVE DATE OF TRANSFER IN THIS CASE WOULD BE 20.03.2007 AS PER REGISTERED SALE DEED. THE SUBMIS SION OF THE ASSESSEE THAT THERE WOULD BE TWO DIFFERENT D ATES FOR THE EFFECTIVE TRANSFER, WAS HELD TO BE NOT TENABLE. MOREOVER, THIS CLAIM OF ASSESSEE THAT POSSESSION OF THE PROPERTY IN QUESTION REMAINED WITH THE ASSESSEE TIL L ENCASHMENT OF THE POST-DATED CHEQUE WAS FOUND FALSE . THE TEHSILDAR, JAGADHRI HAS INFORMED THAT INTAKAL HAD B EEN ACCEPTED BEFORE THE YEAR END ON 31.03.2007 IN THE N AME OF M/S LINK INFRASTRUCTURE & DEVELOPERS PVT. LTD., DEL HI AND PHYSICAL POSSESSION HAD BEEN HANDED OVER TO THE BUY ER. ACCORDINGLY, WHOLE OF THE SALE CONSIDERATION OF RS. 5.50 CR WAS HELD TO BE TAXABLE IN FINANCIAL YEAR 2006-07 RE LEVANT TO ASSESSMENT YEAR 2007-08 UNDER APPEAL. THE ASSES SEE WAS TAKING SHELTER OF THE INTENTION OF THE PARTIES WHILE TRANSFERRING AN ASSET TO BUYER. THE ASSESSEE WAS T RYING TO PROVE THAT POSSESSION OF THE LAND TILL ENCASHMENT O F POST- DATED CHEQUE REMAINED WITH THE ASSESSEE. BUT, THIS INTENTION OF THE SELLER WAS NOT CORROBORATED WITH A NY CIRCUMSTANTIAL EVIDENCES AND DOCUMENTS. 7 7. THE ASSESSING OFFICER DISTINGUISHED THE CASE LAW RELIED UPON BY THE ASSESSEE AND CONCLUDED THAT THE ENTIRE SALE CONSIDERATION OF RS. 5.50 CRORE IS TAXABLE IN ASSESSMENT YEAR UNDER APPEAL I.E. 2007-08 AND ACCORDINGLY, COMPUTED THE LONG TERM CAPITAL GAIN. 8. THE ASSESSEE CHALLENGED THE FINDINGS OF THE ASSESSING OFFICER BEFORE LD. CIT(APPEALS). IT WAS SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSEE EXE CUTED SALE DEED DATED 20.03.2007 IN FAVOUR OF M/S LINK INFRASTRUCTURE AND DEVELOPER PVT. LTD., DELHI. THE TOTAL CONTRACTED CONSIDERATION WAS RS. 5.50 CRORE. THE S ALE CONSIDERATION WAS RECEIVED AS ADVANCE OF RS. 41,50, 000/- VIDE CHEQUE ON 15.03.2007, CASH OF RS. 8,50,000/- A T THE TIME OF REGISTRATION OF THE DEED ON 20.03.2007 AND BALANCE RS. 5 CRORES THROUGH UNDATED CHEQUE WHICH WAS LATER ON ENCASHED ON 16.06.2008. AS PER TERMS OF THE SALE DEED, IT WAS STIPULATED THAT IN CASE THE CHEQUE OF BALANC E AMOUNT GETS DISHONOURED, THE SALE DEED SHALL STAND AUTOMATICALLY CANCELLED. THE ASSESSEE REFERRED TO THE TERMS OF SALE DEED FOR CANCELLATION OF THE SALE DEE D ON DISHONOUR OF UNDATED CHEQUE. REGARDING POSSESSION, ASSESSEE HAS RELIED UPON AFFIDAVIT GIVEN BY THE BUY ER AT THE TIME OF REGISTRATION. THE ASSESSEE SUBMITTED T HAT ASSESSEE RECEIVED SUM OF RS. 50 LACS ONLY AS PROCEE DS OF THE LAND AND DUE TAX/TREATMENT WAS METED OUT TO THE AFORESAID RECEIPT. 8 8(I) THE ASSESSEE FURTHER SUBMITTED THAT THOUGH THE DEFINITION OF TRANSFER OF CAPITAL ASSET UNDER SECTI ON 2(47) IS EXTENDED W.E.F. ASSESSMENT YEAR 1988-89 TO INCLU DE ANY TRANSACTION INVOLVING THE POSSESSION OF ANY IMMOVAB LE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE T.P. ACT. A COMBINED READING OF THE TWO SECTIONS S HALL INFER THAT UNLESS THE TRANSFEREE IS UNCONDITIONALLY WILLING AND READY TO DO ALL THE ACTS WHICH HE IS OBLIGED TO DO UNDER THE CONTRACT, SECTION 53A CANNOT COME INTO PL AY. WHENEVER THERE IS A SALE/TRANSFER OF IMMOVABLE PROP ERTY, THE CONSIDERATION HAS TO BE PAID BY THE TRANSFEREE TO THE TRANSFEROR. IF THE TRANSFEREE FAILS TO GIVE ANY CO NSIDERATION OR IS NOT ABLE TO CARRY OUT HIS PART OF THE CONTRAC T, THERE CANNOT BE A VALID SALE. IN THE CASE OF THE ASSESSE E, THERE WAS NOT AN ABSOLUTE AND COMPLETE SALE AS DEFINED HEREINABOVE. AT THE MOST, THE SALE DEED IN TRUE SE NSE WAS ONLY A CONTRACT FOR SALE AND AS SUCH NO INTEREST OR CHARGE IS CREATED ON THE PROPERTY. SINCE BALANCE AMOUNT O F RS. 5 CRORES WAS RECEIVED DURING THE ASSESSMENT YEAR 2009 -10, HENCE, THE TAXABILITY OF THE SAME IS TO BE CONSIDER ED IN THAT YEAR ONLY AND NOT IN ASSESSMENT YEAR UNDER APP EAL I.E. 2007-08. 9. THE ASSESSEE ALSO REFERRED TO AFFIDAVIT OF THE B UYER TO EMPHASIZE ABOUT TRANSFER OF POSSESSION AT THE TIME OF PAYMENT AS PER POST-DATED CHEQUE. THE ASSESSEE SUBMITTED THAT SALE IN RESPECT OF AMOUNT OF RS. 50 LACS 9 WAS COMPLETED DURING THE YEAR UNDER APPEAL AND THE ONE COVERED UNDER THE CHEQUE OF RS. 5 CRORES (UNDATED) WAS COMPLETED WHEN THE CHEQUE GOT ENCASHED ON 16.06.200 8 WHICH FALLS IN ASSESSMENT YEAR 2009-10. THIS POSIT ION HAS BEEN EXPLAINED IN THE AFFIDAVIT DATED 20.03.2007 EX ECUTED BY THE BUYER. THE ASSESSEE ALSO SUBMITTED THAT TAX LIABILITY HAS TO BE ASCERTAINED STRICTLY IN ACCORDA NCE WITH THE TERMS OF SALE DEED AND NOT ON THE BASIS OF ASSU MPTION. AS PER TERMS OF THE SALE DEED, SALE TOOK PLACE IN T WO PARTS I.E. ON 20.03.2007 AND THEN ON 16.06.2008. THUS, C APITAL GAIN ON AMOUNT OF RS. 4,84,06,250/- WOULD NOT ARISE IN ASSESSMENT YEAR 2007-08. 10. THE LD. CIT(APPEALS) CONSIDERING THE SUBMISSION OF THE ASSESSEE, MATERIAL ON RECORD AND CASE LAW CITED BY ASSESSEE DISMISSED THIS GROUND OF APPEAL OF THE ASS ESSEE AND HELD THAT ASSESSING OFFICER HAS RIGHTLY TAXED T HE CAPITAL GAIN ON ENTIRE SALE CONSIDERATION IN THE AS SESSMENT YEAR UNDER APPEAL 2007-08. THE FINDINGS OF LD. CIT(APPEALS) IN PARA 6 TO 6.13 OF THE IMPUGNED ORDE R ARE REPRODUCED AS UNDER : 6. I HAVE GONE THROUGH THE FACTS OF THE CASE AND W RITTEN SUBMISSION FILED BY THE APPELLANT. THE AO HAD INFORMATION AVAILABLE WITH HIM THAT THE ASSESSEE HAD SOLD HIS SHARE IN LAND IN VILLAGE JARO DA, YAMUNA NAGAR WHICH WAS SITUATED WITHIN 8 KM. OF MUNICIPAL LIMITS AND THE TAXABLE CAPITAL GAIN WAS INVOLVED. THE AO AFTER OBTAINING D UE APPROVAL U/S 151(2), ISSUED NOTICE U/S 148 DATED 21.08.2012 WHIC H WAS DULY SERVED ON THE APPELLANT. THE APPELLANT WAS REQUIRED TO FILE R ETURN WITHIN 30 DAYS OF 10 RECEIPT OF THE NOTICE. HOWEVER, NO COMPLIANCE WAS M ADE. SUBSEQUENTLY, NOTICES U/S 142(1) DATED 18.10.2013 AND 03.12.2013 WERE ISSUED BUT NO COMPLIANCE WAS MADE. AGAIN A NOTICE U/S 142(1) DATE D 08.01.2014 WAS ISSUED AND SERVED UPON THE APPELLANT. SUBSEQUENTLY, THE APPELLANT VIDE ITS REPLY DATED 14.02.2014 SUBMITTED THAT RETURN FI LED IN ORIGINAL MAY BE TREATED AS FILED IN RESPONSE TO NOTICE U/S 148 OF T HE ACT. 6.1 IT IS FURTHER NOTED THAT THE APPELLANT HAS SOL D AGRICULTURAL LAND FOR A CONSIDERATION OF RS.5,50,00,000/- THROUG H A SALE DEED REGISTERED ON 20.03.2007. AS PER THE DEED, THE SALE CONSIDERATION COMPRISED OF RS.8,50,000/- IN CASH, RS.41,50,00 0/- THROUGH CHEQUE DATED 15.03.2007 AND RS.5,00,00,000/- THROUGH UNDAT ED CHEQUE. THE FIRST TWO PAYMENTS WERE RECEIVED DURING THE YEAR UN DER CONSIDERATION ON WHICH THE APPELLANT THROUGH LETTER OFFERED CAPIT AL GAIN ON PRO RATA BASIS. THE APPELLANT HAS NOT OFFERED THE CAPITAL GA IN ON THE ENTIRE SALE PROCEED AS THE BALANCE AMOUNT OF RS.5,00,00,000/- W AS RECEIVED BY THE APPELLANT THROUGH UNDATED CHEQUE IN SUBSEQUENT YEAR RELEVANT TO A.Y. 2009-10. THE APPELLANT HAS TAKEN THIS VIEW ON THE BASIS OF CLAUSE IN SALE DEED WHICH SAYS IF THE ABOVE CHEQUE BOUNCED TH EN THE SALE DEED ITSELF IS ANNULLED. THUS, THE APPELLANT HAS TAKEN T HE VIEW THAT THE COMPLETE TRANSFER DID NOT TAKE PLACE ON THE DATE OF REGISTRATION I.E. 20.03.2007 BUT IN TWO PARTS, ONE DURING THE YEAR AN D SECOND ON THE DATE OF REALIZATION OF ENTIRE SALE CONSIDERATIO N THROUGH UNDATED CHEQUE. 6.2 ON THE OTHER HAND, THE AO REJECTED T HE APPELLANT'S STAND BY DECIPHERING THE MEANING OF SALE AS PER SECTION 54 O F TP ACT. THE AO HAS OBSERVED THAT AS PER SECTION 54 OF TP ACT, SALE MEANS TRANSFER OF THE OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART PAID OR PART PROMISED. IN SALE, THE SELLER ABSOLUTELY TRANSFER A LL RIGHTS IN THE PROPERTY SOLD AND NO RIGHT IS RETAINED BY HIM. THIS ASPECT OF SALE MAKES IT DISTINGUISHABLE FROM OTHER MODES OF TRANSFER OF IMMOVABLE PROPERTY. THE AO HAS ALSO OBSERVED THAT COMPONENTS OF EFFECTI VE SALES INCLUDE THE PARTIES I.E. SELLER AND BUYER, THE SUBJECT TO SALE, THE TRANSFER DEED OF CONVEYANCE AND THE CONSIDERATION. ALL THESE COMPONE NTS HAVE BEEN 11 EFFECTED THROUGH SALE DEED DATED 20.03.2007. THE AO HAS ALSO REFERRED TO THE PROVISIONS OF REGISTRATION ACT AND REACHED T O THE CONCLUSION THAT IN CASE OF TRANSFER OF IMMOVABLE PROPERTY AND REGISTRA TION THEREOF, THE EFFECTED DATE OF TRANSFER IS THE DATE OF REGISTRATI ON. THUS, THE AO REJECTED THE CLAIM OF ASSESSEE THAT ONE REGISTERED SALE DEED WILL HAVE TWO DIFFERENT DATES OF TRANSFER FOR COMPUTATION OF CAPITAL GAINS. 6.3 FURTHER, IT IS A FACT THAT THE SALE DEED WAS RE GISTERED ON 20.03.2007 AND AS PER THE VERIFICATION FROM THE TEHSILDAR, JAG ADHRI, THE PHYSICAL POSSESSION OF LAND TO M /S LINK INFRASTRUCTURE & DE VELOPERS PVT. LTD. DELHI WAS CONFIRMED. CHANGE IN GIRDAWARI IN BUYER' S NAME WAS ALSO CONFIRMED. INTKAL OF THE REGISTRY WAS ACCEPTED BEFO RE THE ENDING OF YEAR, I.E. 31.03.2007. THERE WAS NO PRE-CONDITION FOR EXE CUTION OF SALE DEED. IN FACT, IN THE SALE DEED ALSO THE APPELLANT HAS COMMITTED THAT NOTHING IS DUE. THE MUTATION WOULD BE ENTERED OR TH E OFFICIALS OF THE COMPANY ITSELF CAN MUTATE IN THEIR NAME, THE SELLER WILL HAVE NO OBJECTION. THUS, AS PER PROVISIONS OF TRANSFER OF PROPERTY ACT , THE TRANSFER WAS AFFECTED ON 20.03.2007. IN THE INSTANT CASE, THERE IS INTENTION OF THE SELLER TO SELL AND BUYER TO PURCHASE A PROPERTY FOR A SUM WHICH IS PAID AND PROMISED TO BE PAID, SO SALE HAS TAKEN PLACE ON 20. 03.2007 I.E. DURING YEAR UNDER CONSIDERATION. HERE, THE RELIANCE IS PLA CED ON THE DECISION OF HON'BLE TRIBUNAL HYDERABAD 'A' BENCH IN THE CASE OF DR. MAYA SHENOY 23 DTR 140, WHEREIN IT WAS HELD THAT SO LONG AS TRA NSFER IS MADE FOR A CONSIDERATION IT IS IMMATERIAL THAT CONSIDERATIO N WILL BE RECEIVED IN FUTURE. THUS,THE SALE IS COMPLETE EVEN IF PRICE IS INTENDED TO BE PAID. SO SALE HAS TAKEN PLACE DURING THE YEAR. 6.4 FURTHER, THERE IS A CERTAINTY IN PERFORMANCE O F CONTRACT AND NO RIGHT TO REVOCATION IS STIPULATED IN THE SAL E DEED OR REGISTRATION DEED. THE SAVING CLAUSE IN THE REGISTR ATION DEED THAT IN CASE OF NON REALIZATION OF UNDATED CHEQUE, THE AGRE EMENT TO SELL SHALL STAND CANCELLED IS ONLY A PROTECTION GIVEN TO THE SELLER FOR THE PURPOSES OF FILING HIS CLAIM IN THE COURT OF LA W IN CASE OF NON REALIZATION OF SALE PROCEEDS. IT ONLY STATES THAT T HE SALE DEED WILL STAND 12 CANCELLED BUT THE REGISTRATION HAVING TAKEN PLACE A ND PROPERTY HAVING BEEN TRANSFERRED IN THE NAME OF THE BUYERS, THE REG ISTRATION CANNOT BE DEEMED TO 'NOT HAVE TAKEN PLACE'. AS ALREADY STATED THIS SAVING CLAUSE IS ONLY TO PROTECT THE INTEREST OF SELLER AND TO FA CILITATE THE FILING OF CLAIMS ETC. IN COURT OF LAW. IT DOES NOT CHANGE THE TIME OF TRANSFER OF THE CAPITAL ASSET. FURTHER THERE IS MERIT IN OBSERV ATION THAT THE SAVING CLAUSE WAS TO TAKE CARE OF THE EVENTUALITY WHICH HA S NOT TAKEN PLACE, AS, AS ON THE DATE OF THE ASSESSMENT, THE PAYMENT H AS ALREADY BEEN RECEIVED. THEREFORE, EVEN IF THE APPELLANT'S CON TENTION THAT THERE WAS A RIDER IN THE REGISTRATION DEED IS ACCEPTED TH E TIME FACTORS HAVE ERODED ITS EFFECT. THE AO IS RIGHT IN OBSERVIN G THAT SUCH LIKE CLAUSE DOES NOT STATE AS TO WHAT WILL BE THE EFFECT IVE DATE OF TRANSFER IF THE CHEQUE IS REALIZED AND WHAT WILL BE FATE OF RS.41,50,000/-, THE ADVANCE WHICH HAS BEEN PAID BY THE BUYER TO THE SEL LER AND WHICH HAS ALREADY BEEN OFFERED FOR TAXATION, IF THE BALANCE A MOUNT IS NOT REALIZED. 6.5 FURTHER, REGARDING THE POSSESSION, THE REGISTR ATION DEED CLEARLY STATE THAT THE POSSESSION HAS BEEN HANDED OVER TO T HE BUYER ON THE DATE OF REGISTRY I.E. 20.03.2007. IT IS TO BE N OTED THAT THE DOCUMENT EVIDENCING THE TRANSFER OF PROPERTY HAS BE EN DULY REGISTERED BY THE COMPETENT AUTHORITY I.E. REGISTERING AUTHORI TY AND THE NECESSARY MUTATION ENTRY HAS ALSO BEEN DONE AND ACCEPTED ON 3 1.03.2007. IN SUCH CIRCUMSTANCES ONE HAS TO GO BY THE ENTRIES IN THE LAND REVENUE RECORDS. THEREFORE, THE APPELLANT'S CONTENT ION, IF ANY, THAT THE CROPS WERE GROWN BY THE APPELLANT IS NOT WELL P LACED AS THESE DO NOT NULLIFY THE EFFECT OF WHAT IS STATED IN THE REV ENUE RECORDS. THE TEHSILDAR, JAGADHRI INFORMED THAT INTKAL HAS BEEN A CCEPTED BEFORE THE YEAR END ON 31.03.2007 IN THE NAME OF M/S LINK INFR ASTRUCTURE & DEVELOPERS PVT. LTD. DELHI. THIS SHOWS THAT INTKAL OF THE REGISTRY WAS ACCEPTED BEFORE 31.03.2007 AND POSSESSION OF THE LA ND WAS ALSO NOT WITH THE APPELLANT TILL THE ENCASHMENT OF THE POST DATED CHEQUE. 6.6 REGARDING THE AFFIDAVIT OF THE BUYER STATING THAT T HE POSSESSION IS SUBJECT TO THE CLEARANCE OF POST DATE CHEQUE, IT IS NOTED THE REGISTRATION DEED DATED 20.03.2007 CLEARLY STATES THAT THE POSSESSION HAS BEEN HANDED OVER 13 TO THE BUYER ON THE DATE OF REGISTRY ITSELF. IT IS TO BE NOTED THAT THE DOCUMENT EVIDENCING THE TRANSFER OF PROPERTY HAS BE EN DULY REGISTERED BY THE COMPETENT AUTHORITY I.E. REGISTER ING AUTHORITY AND THE NECESSARY MUTATION ENTRY HAS ALSO BEEN DONE AND ACCEPTED BY 31.03.2007. TRULY SPEAKING SUCH AN AFF IDAVIT IS NOT VALID IN THE EYES OF LAW AS IT STATES SOMETHING WHICH IS NOT BORNE OUT OF LEGALLY VALID DOCUMENTS AND RECORD. IF SUCH AFFIDAVIT HAS T O TAKE PRECEDENTS OVER THE PROVISIONS OF LAW IT WILL ONLY LEAD TO ANARCHY. NATURALLY, IN SUCH CIRCUMSTANCES ONE HAS TO GO BY THE ENTRIES IN THE L AND REVENUE RECORDS AND SALE DEED. THEREFORE, THE APPEL LANT'S RELIANCE ON THE BUYER'S AFFIDAVIT FOR SECOND DATE OF SALE IS NOT WE LL PLACED AS THESE DO NOT NULLIFY THE EFFECT OF WHAT IS STATED IN THE REVENUE RECORDS AND SALE DEED REGISTERED ON 20.03.2007. 6.7 REGARDING THE CLAIM OF ASSESSEE THAT POSSESSION OF PROPERTY REMAINED WITH THE ASSESSEE' TILL THE ENCASHMENT OF POST DATED CHEQUE, THERE IS CONTRARY FINDING BY THE AO THAT THE TEHSIL DAR, JAGADHRI INFORMED THAT INTKAL HAS BEEN ACCEPTED BEFORE THE YEAR END O N 31.03.2007 IN THE NAME OF M/S LINK INFRASTRUCTURE & DEVELOPERS PVT. L TD.DELHI THIS SHOWS M/S LINK INFRASTRUCTURE & DEVELOPERS PVT. LTD . DELHI. AT INTKAL OF THE REGISTRY WAS ACCEPTED BEFORE 31.03.2007 AND POS SESSION OF THE LAND WAS ALSO NOT WITH THE APPELLANT TILL THE ENCASHMENT OF THE POST DATED CHEQUE. 6.8 THE APPELLANT HAS RELIED ON THE DECISION OF HON'BLE HIGH COURT OF PATNA IN THE CASE OF SMT. RAJ RANI DEVI RAMNA VS . CIT [1993] 201 ITR 1032. HOWEVER, THE FACT OF THAT CASE IS DISTING UISHABLE FROM THE FACTS OF INSTANT CASE. IN THAT CASE, THE REGISTERED SALE DEED IN RESPECT OF THREE SALES CLEARLY STIPULATED THAT ONLY ON PAYM ENT OF THE ENTIRE CONSIDERATION AMOUNT, THE REGISTRATION RECEIPT AND DELIVERY OF POSSESSION WILL BE GIVEN EVIDENCING THE PASSING OF TITLE TO TH E VENDEE. WHEREAS IN THE INSTANT CASE, AS PER THE REGISTERED SALE DEED T HE POSSESSION OF LAND HAS ALREADY BEEN HANDED OVER AND THE CONDITION INTE NDED IN CASE OF DISHONOR OF CHEQUE, THE SALE DEED IN QUESTION SHALL AUTOMATICALLY BE 14 STAND CANCELLED. THE REGISTERED DEED, IN THE INSTAN T CASE, DOES NOT STIPULATE THAT THE REGISTRATION RECEIPT AND DELIVER Y OF POSSESSION WILL BE GIVEN AFTER RECEIPT OF ENTIRE CONSIDERATION AMOU NT. SO, THE DECISION OF HON'BLE PATNA HIGH COURT IS NOT APPLICA BLE IN THE INSTANT CASE BEING ON DIFFERENT FACTS. 6.9 THE APPELLANT IN ITS SUBMISSION HAS PLACED RELIANCE IN THE CASES OF ITO VS. ROOP SINGH [2010] 127 TTJ 377 (DEL.); CI T VS. SMT. BURFI [2010] 8 TAXMAN.COM 248 (P&H); VEMANNA REDDY (HUF) VS. ITO [2009] 30 SOT 11 (BANG.); CIT VS. GEETADEVI PASARI [2009] 17 DTR 280 (BOM); ACIT VS. A.R. DAHIYA [2004] 89 ITD 377 ( CHD.); CIT VS. VIMAL KUMAR SURANA [2004] 269 ITR 288 (RAJ.) AND AN USANDHAN INVESTMENT LTD. VS. ITO [2010] 40 SOT 205 (MUM.). ON PERUSAL OF THESE JUDGMENTS, IT IS NOTICED THAT THE FACTS ON TH ESE CASES ARE DISTINGUISHABLE FROM THE FACTS OF THE INSTANT CASE. IN THE CASE OF ROOP SINGH (SUPRA), SMT. BURFI (SUPRA), A.R. DAHIYA (SUP RA), THE ISSUES RELATE TO TAXABILITY OF INTEREST ON ENHANCED COMPEN SATION RECEIVED ON COMPULSORY ACQUISITION OF THE LAND. IN OTHER CAS ES, THE HON'BLE COURT/TRIBUNAL HAVE HELD THAT THE TRANSFER OF CAPIT AL ASSET TAKES PLACE IN THE YEAR OF TRANSFER, SO, SUCH DECISIONS ARE IN FAVOUR OF REVENUE AND NOT APPLICABLE ON THE FACTS OF INSTANT CASE WHERE T HE APPELLANT IS CLAIMING CAPITAL GAIN AT TWO POINTS OF TIME ON REC EIPT OF PART SALE CONSIDERATION BY TWO CHEQUES ENCASHED ON DIFFERENT DATES FALLING IN TWO FINANCIAL YEARS. THEREFORE, THE APPELLANT'S RELIANC E ON THESE CASES IS NOT RELEVANT TO THE FACTS OF THE INSTANT CASE. 6.10 THE APPELLANT HAS FURTHER RELIED ON THE DECISI ON IN THE CASE OF ACIT VS. HOTEL HARBOUR VIEW [2009] 184 TAXMAN 42, W HEREIN THE HON'BLE ITAT, COCHIN BENCH ON INTERPRETATION OF SEC TION 2(47) R.W.S. 53A OF THE ACT HELD THAT THE TRANSFER OF POSSESSION OF PROPERTY TAKES PLACE ONLY WHEN SALE DEED IS EXECUTED AND TITLE OF PROPER TY IS TRANSFERRED FROM VENDOR TO VENDEE. THE APPELLANT HAS ALSO RELIED ON THE JUDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF SMT. D. KASTURI VS . CIT [2010] 323 ITR- 40 WHEREIN HON'BLE HIGH COURT HELD THAT WHERE ASSES SEE HAD EXECUTED AGREEMENT FOR TRANSFER IN RESPECT OF PROPERTY AND G IVEN POSSESSION TO 15 PARTY AND RECEIVED CONSIDERATION, DOCTRINE OF PART PERFORMANCE AS PER SECTION 53 A OF TRANSFER OF PROPERTY ACT WAS RIGHTL Y INVOKED; SUBSEQUENTLY ACT OF ASSESSEE IN EXECUTING POWER OF ATTORNEY AND SALE DEEDS EXECUTED BY PA HOLDER ON BASIS OF SUCH POWER OF ATTORNEY WOULD NOT IN ANY WAY ALTER STATUS OF THE PARTIES TO AGREEMENT. ON PERUSAL OF T HESE JUDGMENTS, IT IS NOTICED THAT THE APPELLANT'S RELIANCE ON THESE CASE S IS MISPLACED AS THE FACTS ARE DISTINGUISHABLE FROM THE FACTS OF THE INSTANT C ASE AND THE RATIOS GIVEN ON THE INTERPRETATION OF SECTION 2(47) IS VERY WELL APPLICABLE IN THE APPELLANT'S CASE WHERE THE APPELLANT HAS EXECUTED T HE SALE DEED ON 20.03.2007 RELEVANT TO A.Y. 2007-08 AND AS PER SALE DEED AND REVENUE RECORDS THE TRANSFER OF PROPERTY HAS ALREADY HAPPEN ED AND POSSESSION HAS ALSO BEEN GRANTED. SO, THE APPELLANT'S .RELIANC E IN THESE CASES DOES NOT SUPPORT ITS CONTENTION FOR TAXABILITY OF CAPITA L GAINS AT TWO DIFFERENT POINTS OF TIME ON RECEIPTS OF PART SALE CONSIDERATI ON IN TWO FINANCIAL YEARS. FURTHER, I MAKE REFERENCE TO THE WORD 'TRANSFER' OF CAPITAL ASSETS AS IN SECTION 2(47) OF THE ACT. THE TRANSFER IN RELATION TO A CAPITAL ASSET INCLUDES SALE, EXCHANGE OR RELINQUISHMENT OF THE AS SET OR THE EXTINGUISHMENT OF ANY RIGHTS THEREIN. THE DEFINIT ION OF TRANSFER U/S 2(47) IS MERELY INCLUSIVE AND DOES NOT EXHAUST OTHE R KINDS OF TRANSFER (SUNIL SIDHARATHBHAI VS. CIT 156 ITR 509 (SC)]. IF A PARTICULAR SITUATION HAS NOT BEEN CONTEMPLATED SPEC IFICALLY IN SECTION BUT IS OTHERWISE UNDERSTOOD AS TRANSFER IN COMMON P ARLANCE, IT CLEARLY STANDS COVERED WITHIN THE DEFINITION OF TERM 'TRANS FER' [CIT VS. SINGLA RICE & GENERAL MILLS 82 ITD 778 (DEL.)]. SECTION 2(47) D EALS WITH VARIOUS SITUATIONS OF 'TRANSFER' AND SUB CLAUSE (V) DEALS W ITH SPECIFIC SITUATION FOR CONSIDERING 'TRANSFER', IF A TRANSACTION WHICH INVO LVES ALLOWING THE POSSESSION OF ANY IMMOVABLE PROPERTY. ANY TRANSACTI ON INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERT Y TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53 A OF TP ACT AMOUNTS TO TRANSFER. GENERAL LY, CAPITAL GAIN IS TAXABLE IN THE YEAR IN WHICH THE CAPITAL ASSET IS T RANSFERRED. THERE CAN BE TWO DIFFERENT SITUATIONS (I) TRANSFER OF IMMOVABLE PROPERTY WHEN THE DOCUMENTS ARE REGISTERED AND (II) TRANSFER OF IMMOV ABLE PROPERTY WHEN DOCUMENTS ARE NOT REGISTERED BUT THERE IS PART OR F ULL POSSESSION GRANTED TO 16 THE BUYER. IN THE SECOND SITUATION EVEN IF THE DOCU MENTS ARE NOT REGISTERED BUT THE CONDITIONS OF SECTION 53A OF TP ACT ARE SAT ISFIED, THEN THE OWNERSHIP OF THE PROPERTY IS CONSIDERED TO BE TRANS FERRED. THE 'TRANSFER' AS PER SECTION 2(47)(V) INCLUDES SUCH SECOND SITUAT ION CASES. THIS DOES NOT MEAN THAT IN ALL SITUATIONS THE POSSESSION OF PROPE RTY IS PRE-REQUISITE BEFORE OR DURING THE REGISTRATION OF SALE DEED FOR EFFECTIVE TRANSFER OF CAPITAL ASSETS. IN THE INSTANT CASE, THE TRANSFER I S BY WAY OF REGISTERED SALE DEED WHEREIN IT HAS BEEN MENTIONED -'POSSESSION OF LAND IN QUESTION HAD BEEN HANDED OVER TO THE PURCHASER COMPANY ON THE SP OT. NOW THE PURCHASER COMPANY HAS BECOME OWNER IN POSSESSION OF THE ABOVE LAND IN MY PLACE'. THIS FACT SHOWS THAT THERE IS A REGISTER ED SALE DEED AND ACCORDING TO SALE DEED THE POSSESSION OF LAND HAS A LREADY BEEN TRANSFERRED. THE PROVISIONS OF SECTION 2(47)(I) RECOGNIZES THE S ALE OF THE CAPITAL ASSETS AS A MODE OF TRANSFER IN RELATION TO THE CAPITAL ASSET . SO, THE 'TRANSFER' OF CAPITAL ASSET IS COVERED BY SECTION 2(47)(I) OF THE ACT AND NOT BY 2(47)(V) AS CONTEMPLATED BY THE APPELLANT. IN THE JUDGMENT GIVE N BY HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CHATURBHUJ DAWARKADAS KAPA DIA VS. CIT 260 ITR 491, THE HON'BLE COURT OBSERVED THAT HOWEVER/TH E MODE OF 'TRANSFER' AS PER SECTION 2(47)(V) READ WITH SECTION 53A OF TP ACT IS IN THE CASES OF SUCH AGREEMENTS WHICH ARE IN THE NATURE OF DEVELOPM ENT AGREEMENTS WHERE THE POSSESSION HAS BEEN TRANSFERRED THE AGREE MENT HAS BEEN MADE BUT THE TITLE HAS NOT BEEN TRANSFERRED BY WAY OF REGISTRATION. THE HON'BLE HIGH COURT OF BOMBAY IN THAT CASE GAVE THE FINDINGS AS UNDER :- 'THERE IS A DIFFERENCE BETWEEN CONTRACT ON ONE HAND AND PERFORMANCE ON THE OTHER HAND. IN INSTANT CASE, THE TRIBUNAL AS WELL AS THE DEPARTMENT HAD COME TO THE CONCLUSION THAT T HE TRANSFER TOOK PLACE DURING THE ACCOUNTING YEAR ENDING 31.03.1996 AS SUBSTANTIAL PAYMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTAN TIAL PERMISSIONS WERE OBTAINED. IN SUCH CASES OF DEVELOP MENT AGREEMENTS, ONE COULD NOT GO BY SUBSTANTIAL PERFORM ANCE OF A CONTRACT. IN SUCH CASES, THE YEAR OF CHARGEABILITY IS THE YEAR IN WHICH THE CONTRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2(47)(V). 17 SO , THE HON'BLE HIGH COURT WHILE EXAMINING THE PRO VISIONS OF SECTION 2(47)(V) READ WITH SECTION 53A OF TP ACT REACHED TO THE CONCLUSION THAT THE YEAR OF CHARGEABILITY OF CAPITAL GAINS IS THE YEAR IN WHICH THE CONTRACT IS EXECUTED. 6.12 FURTHER, A REFERENCE IS MADE TO THE OBSERVATIO NS OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. GANGA PR OPERTIES LTD. 77ITR 637 WHICH IS REPRODUCED AS UNDER :- 'NOW, SECTION 17(L)(B) OF THE INDIAN REGISTRATION A CT, 1908, MAKES COMPULSORILY REGISTRABLE NON-TESTAMENTARY INS TRUMENTS WHICH PURPORT OR OPERATE TO CREATE, DECLARE, ASSIGN, LIMI T OR EXTINGUISH, WHETHER IN PRESENT OR IN FUTURE, ANY RIGHT, TITLE O R INTEREST, WHETHER VESTED OR CONTINGENT, OF THE VALUE OFRS.100 OR UPWA RDS, TO OR IN IMMOVABLE PROPERTY. AND SECTION 47 OF THE REGISTRAT ION ACT SAYS : A REGISTERED DOCUMENT SHALL, OPERATE FROM THE TIME FR OM WHICH IT WOULD HAVE COMMENCED TO OPERATE IF NO REGISTRATION THEREFORE HAD BEEN REQUIRED OR MADE, AND NOT FROM THE TIME OF ITS REGISTRATION. IT IS WELL KNOWN THAT WHERE AN INSTRUMENT WHICH PUR PORTS TO TRANSFER TITLE TO PROPERTY REQUIRES TO BE REGISTERE D, THE TITLE DOES NOT PASS UNTIL REGISTRATION HAS BEEN EFFECTED. SECT ION 47 OF THE REGISTRATION ACT DOES NOT CREATE A NEW TITLE. IT ON LY AFFIRMS A TITLE WHICH HAS BEEN CREATED BY THE DEED. THE TITLE IS CO MPLETE AND THE EFFECT OF REGISTRATION IS TO MAKE IT UNQUESTIONABLE AND ABSOLUTE ; BUT BY VIRTUE OF SECTION 47, ONCE REGISTRATION IS E FFECTED, THE TITLE RELATES BACK TO THE DATE OF EXECUTION : VIDE MULLA ON THE INDIAN REGISTRATION ACT, 6TH EDITION, PAGES 164 AND 165. ' A SIMILAR QUESTION WAS BEFORE THE HON'BLE ANDHRA P RADESH HIGH COURT IN THE CASE OF ADDL. CIT V. G.M. OMAR KHAN (116 ITR 95 0) WHICH IS REPRODUCED AS UNDER : 18 '3. WHETHER THE PROFITS OR GAINS ARISING FROM THE T RANSFER OF A 'CAPITAL ASSET' CAN BE CHARGEABLE TO INCOME-TAX IF THE TRANSFER IS EFFECTED IN THE PREVIOUS YEAR AND IF NO AMOUNT IS RECEIVED? ' THE HON'BLE HIGH COURT ANSWERED THE QUESTION IN FAV OUR OF THE REVENUE. WHILE ANSWERING THE QUESTION IN FAVOUR OF THE REVEN UE, THE HON'BLE HIGH COURT OBSERVED AS UNDER :- 'THE MADRAS HIGH COURT IN T. V. SUNDARAM LYENGAR AN D SONS LTD. V. CIT [1959137ITR 26 OPINED (PER HEADNOTE): 'IN ORDER TO ATTRACT LIABILITY TO TAX ON CAPITAL GA INS UNDER SECTION 12B OF THE INDIAN INCOME-TAX ACT, 1922, IT IS SUFFICIENT I F IN THE RELEVANT ACCOUNTING YEAR PROFITS HAVE ARISEN OUT OF THE SALE OF CAPITAL ASSETS, THAT IS TO SAY, IF THE ASSESSES HAS A RIGHT TO RECEIVE THE PROFITS. IT IS NOT NECESSARY THAT THE ASSES SEE SHOULD HAVE RECEIVED T HEM. WHEN ONCE PROFITS HAVE ARISEN IN THE ACCOUNTING YEAR OUT OF T HE SALE OF CAPITAL ASSETS, WHAT THE PARTIES DID /SUBSEQUENT TO THAT YE AR WILL NOT HAVE ANY BEARING ON THEIR LIABILITY TO TAX IN RESPECT OF THA T YEAR. THE SUPREME COURT IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185 HELD (PER HEAD NOTE) : 'BEFORE SECTION 12B OF THE INDIAN INCOME-TAX ACT, 1 922, COULD BE ATTRACTED, TITLE MUST PASS BY ANY OF THE MODES MENTIONED IN SE CTION 12B, I.E., SALE, EXCHANGE OR TRANSFER. IN THE CONTEXT 'TRANSFER' MEA NT EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET TO THE TRANSFEREE. DELIVERY OF PO SSESSION OF IMMOVABLE PROPERTY COULD NOT BY ITSELF BE TREATED AS EQUIVALE NT TO CONVEYANCE OF THE IMMOVABLE PROPERTY.' THE SUPREME COURT ALSO HELD THAT (IBID): 'THE ENTRIES IN THE ACCOUNT BOOKS OF THE APPELLANT AND OF THE COMPANY ON MARCH 20, 1948, WERE IRRELEVANT FOR THE PURPOSE OF DETERMINING THE DATE WHEN THE SALE OR TRANSFER TOOK PLACE. TITLE TO THE LAND AND BUILDINGS AND THE PLANT AND M ACHINERY AND ELECTRICAL FITTINGS PERMANENTLY EMBEDDED THEREON COULD NOT PAS S TO THE COMPANY TILL 19 THE CONVEYANCE WAS EXECUTED AND REGISTERED; AND AS -THE SALE DEED WAS EXECUTED AND REGISTERED ONLY ON NOVEMBER 22, 1948, NO SALE OR TRANSFER OF THESE ASSETS TOOK PLACE BEFORE APRIL 1, 1948, AND N O CAPITAL GAINS AROSE IN THE RELEVANT PREVIOUS YEAR. ' THEREFORE, THE TRANSFER IS EFFECTIVE ONLY FROM THE DATE WHEN THE TITLE PASSES TO THE OTHER PARTY. FOR DETERMINING THE YEAR OF CHARGE ABILITY IT IS THE DATE OF EFFECTIVE TRANSFER OF TITLE THAT IS RELEVANT AND CAPITAL GAINS ARE ASSESSABLE AS INCOME OF THE YEAR IN WHICH THE TRANSFER TOOK PL ACE, EVEN THOUGH THEY MAY BE REALIZED LATER.' 6.13 IN VIEW OF AFORESAID DISCUSSION, F ACTS OF THE CASE AND JUDICIAL PRONOUNCEMENTS, IT IS HELD THAT THE TRANSF ER OF THE PROPERTY TOOK PLACE DURING THE YEAR UNDER CONSIDERATION, I.E., A. Y. 2007-08, AND THE AO HAS RIGHTLY TAXED THE CAPITAL GAIN ARISING FROM TRANSFER OF CAPITAL ASSET, ON THE ENTIRE SALE CONSIDERATION DURING THE A.Y. 2007-08. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 11. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. HE HAS REFERRED TO PB-33 WHICH IS SALE DEED DATED 20.03.20 07 THROUGH WHICH ASSESSEE RECEIVED ONLY MEAGER ADVANCE OF 10% AND IT WAS SPECIFICALLY MENTIONED IN THE SALE D EED THAT IN CASE THE UNDATED CHEQUE OF RS. 5 CRORES IS BOUNCED, THE SALE DEED WILL BE AUTOMATICALLY CANCEL LED. HE FURTHER SUBMITTED THAT ON THE SAME DAY I.E. ON 20.03.2007, THE BUYER HAS EXECUTED THE AFFIDAVIT WH ICH IS DULY ATTESTED BY EXECUTIVE MAGISTRATE, JAGADHRI IN WHICH THE BUYER HAS SPECIFICALLY AFFIRMED THAT SALE DEED OF THE LAND HAS BEEN REGISTERED BUT THE SPOT POSSES SION WILL BE GIVEN AT THE TIME WHEN COMPANY WOULD BE PAY ING 20 THE TOTAL LAND AMOUNT OF PDC CHEQUE TO THE ASSESSEE . UNTIL THE AMOUNT OF PDC CHEQUE HAS NOT BEEN PAID, T HE BUYER COMPANY CANNOT MAKE DISCHARGE OF ANY KIND TO THE REMAINING PERSONS ETC. IF THE PDC CHEQUE COULD NOT BE PAID AT THE MENTIONED TIME, THEN OWNER WILL MADE HOLDER OF THE POSSESSION AND SALE DEED WILL BE CANC ELLED AND BUYER COMPANY WILL BE RESPONSIBLE FOR THE LOSS OF THE TREES AND CROPS, BUILDING ETC. AND THE PROPERTY WILL REMAIN WITH THE ASSESSEE. 11(I) THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBM ITTED THAT SALE DEED WAS EXECUTED WITH ADVANCE BECAUSE TH E BUYER COMPANY WILL HAVE TO GET LAND USE CHANGED FRO M THE REVENUE AUTHORITIES WITH PERMISSION TO DEVELOP BY R AISING CONSTRUCTION. IN CASE NO LAND USE CHANGE PERMISSIO N HAS BEEN GRANTED OR CONSTRUCTION IS NOT ALLOWED BY THE AUTHORITIES, THE BUYER USE TO CANCEL THE SALE DEED AND ADVANCE MANY IS REFUNDED. HE HAS, THEREFORE, SUBMI TTED THAT INTENTION OF THE PARTIES FROM THE ABOVE FACTS SHALL HAVE TO BE CONSIDERED IN THE LIGHT OF THE MATERIAL ON RECORD THAT NO SALE TRANSACTION HAS BEEN DONE OR COMPLETED IN ASSESSMENT YEAR UNDER APPEAL. THE INTENTION OF THE BUYER WAS ONLY TO PAY PART AMOUNT AND THE SUBSTANTIAL AMO UNT OF RS. 5 CR WOULD HAVE BEEN PAID ON COMPLETION OF A LL THE FUTURE TRANSACTIONS, I.E. PERMISSION TO BE OBTAINED FROM THE REVENUE AUTHORITIES. HE HAS SUBMITTED THAT ON THE BASIS OF THE CLAUSE IN THE SALE DEED AND AFFIDAVIT OF THE BUYER WOULD CLEARLY SHOW THAT THE TRANSACTION WOULD TAKE 21 PLACE ONLY ON ENCASHMENT OF THE UNDATED CHEQUE I.E. ON16.06.2008 WHEN FULL CONSIDERATION HAVE BEEN PAID AND POSSESSION OF THE LAND HAVE BEEN HANDED OVER TO THE BUYER. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT MOREOVER THE FRAUD HAS BEEN COMMITTED BY THE B UYER WITH THE HELP OF REVENUE AUTHORITIES ON INNOCENT VILLAGERS/SELLERS INCLUDING THE ASSESSEE WHO ARE IL LITERATE AND AGRICULTURISTS BY MISREPRESENTATION IN THE SALE DEED I.E. FACTUM OF POST-DATED CHEQUE WAS NOT MENTIONED, THE ADDRESS OF THE BUYER WAS FAKE. HE HAS SUBMITTED TH AT ONE OF THE ASSESSEE TEJINDER KUMAR HAS MOVED CRIMINAL MISCELLANEOUS PETITION 36372-M OF 2007 AGAINST THE STATE OF HARYANA AND OTHERS FOR DIRECTION TO THE POLICE AUTHORITIES OF DISTRICT YAMUNA NAGAR FOR REGISTRATI ON OF THE CASE AGAINST FUNCTIONARIES INCLUDING THE MANAGI NG DIRECTOR OF ZODIAC HOUSING & INFRASTRUCTURE PVT. LT D. HON'BLE HIGH COURT GAVE A DIRECTION TO THE SUPERINT ENDENT OF POLICE, YAMUNA NAGAR TO ENQUIRE INTO THE COMPLAI NTS OF PETITIONERS VIDE ORDER DATED 31.05.2007, COPY IS PL ACED ON RECORD. 11(2) THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT ONLY AFTER INTERVENTION OF THE HIGH COURT AND DISTRICT AUTHORITIES, THE ASSESSEE IS ABLE TO GET EN-CASHED THE UNDATED CHEQUE ON 16.06.2008 WHEREBY RS. 5 CRORE WA S RECEIVED BY ASSESSEE AS SALE CONSIDERATION. THEREF ORE, NO INCOME ACCRUED OR HAVE BEEN RECEIVED BY ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, NO CAPITA L GAIN 22 IS LEVIABLE IN ASSESSMENT YEAR UNDER APPEAL. HE HA S ALSO REFERRED TO PB-62 WHICH IS JUDGEMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT DATED 05.02.2009 IN WHI CH ALSO SHRI TEJINDER KUMAR & OTHERS FILED WRIT PETITI ON BEFORE HIGH COURT BECAUSE THE REAL ESTATE DEVELOPER S & BUILDERS HAVE DUPED SEVERAL FARMERS IN YAMUNA NAGAR AREA BY ALLURING THEM TO EXECUTE THE SALE DEED WITH A PROMISE TO PAY SALE CONSIDERATION THROUGH CHEQUES W HICH LATER ON BOUNCED FOR WANT OF SUFFICIENT FUNDS. HON 'BLE HIGH COURT HAD TAKEN THE COGNIZANCE OF THE SAME AND DIRECTED THE INVESTIGATION THROUGH SENIOR OFFICER O F THE CRIME BRANCH TO LOOK INTO THE ALLEGATIONS AND EVEN THE COLLECTOR, YAMUNA NAGAR WAS DIRECTED TO TAKE REMEDI AL ACTION. SPECIAL INVESTIGATION TEAM WAS FORMED UNDE R THE HEAD OF ADDITIONAL DIRECTOR GENERAL OF POILICE. TH E LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THESE FACTS WILL CLEARLY REVEAL THAT THERE WAS NO INTENTI ON OF THE BUYER TO PAY THE SALE CONSIDERATION TO THE ASSESSEE IN ASSESSMENT YEAR IN APPEAL. THE BUYERS DUPED THE ASSESSEE AND OTHERS AND GOT THE SALE DEED REGISTERE D WITHOUT GIVING ANY SALE CONSIDERATION AND ONLY AFTE R INTERVENTION OF THE HIGH COURT AND VARIOUS CIVIL AN D POLICE AUTHORITIES, ASSESSEE GOT THE AMOUNT OF UNDATED CHE QUE. THEREFORE, NO CAPITAL GAIN ARISES IN THE YEARS UNDE R CONSIDERATION. 13. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON 23 FOLLOWING DECISIONS : I) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HIRA LAL RAM DAYAL V CIT 122 ITR 461. II) ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF CIT V MRS. K.ATMA RAM 6 CCH 202. III) ORDER OF ITAT HYDERABAD BENCH IN THE CASE OF M/S MALI FLOREX LTD. V DCIT IN ITA 891/2011 DATED 28.09.2012. IV) ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF HANSMUKH CHOTTALAL PATEL VS ITO IN ITA 150/2012 DATED 14.12.2012. V) JUDGEMENT OF HON'BLE PATNA HIGH COURT IN THE CASE OF SMT. RAJ DEVI RAMNA V CIT 201 ITR 1032. VI) ORDER OF ITAT KOLKATA BENCH IN THE CASE OF CHANCHAL KUMAR SIRKAR V ITO 50 SOT 289. 14. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT NO CAPITAL GAIN IS LEVIABLE TO TAX I N ASSESSMENT YEAR UNDER APPEAL I.E. 2007-08 THEREFORE , THE WHOLE ADDITION IS UNJUSTIFIED. 14(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SALE DEED WAS EXECUTED ON 20.03.2007 THEREFORE, ON THE DATE OF REGISTERED SALE DEED, THERE IS A TRANSFER OF THE TI TLE IN FAVOUR OF THE BUYER, THEREFORE, SALE IS COMPLETE ON 24 20.03.2007. AS SUCH, CAPITAL GAIN IS LEVIABLE IN ASSESSMENT YEAR UNDER APPEAL. HE HAS SUBMITTED THA T MERELY BECAUSE ENTIRE SALE CONSIDERATION WAS NOT RE CEIVED IN ASSESSMENT YEAR UNDER APPEAL, IS NO GROUND TO AL LOW RELIEF TO THE ASSESSEE. HE HAS RELIED UPON DECISIO N OF THE SUPREME COURT IN THE CASE OF SANJIV LAL V CIT 365 ITR 389 . 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. HON'BLE HON'BLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF HIRA LAL RAM DAYA L V CIT (SUPRA) HELD AS UNDER : IT IS NO DOUBT TRUE THAT EVIDENTIARY VALUE HAS TO BE ATTACHED TO A REGISTERED DOCUMENT BUT THE SAID DOCUMENT CANNOT BE A FINAL WORD IN THE MATTER. IT HAS TO BE REMEMBERED THAT CAPITAL GA INS ACCRUE ONLY IF THERE IS SALE OR ANY OTHER TRANSFER OF THE CAPITAL ASSET AND IF THE ASSESSEE IS ABLE TO PROVE THAT IN FACT NO SALE TOOK PLACE IN THAT CASE NO CAPITAL GAINS ACCURED WHICH COULD BE ASSESSED TO IN COME TAX. IF THE ASSESSEE, EVEN IN THE FACE OF THE REGISTERED SALE D EED, IS ABLE TO PROVE BY COGNET EVIDENCE AND SATISFY THE TRIBUNAL THAT NO SALE IN FACT TOOK PLACE, IN THAT CASE, THE TRIBUNAL HAS TO COME TO TH E CONCLUSION THAT THERE WAS NO CAPITAL GAINS. AS IS APARTMENT FROM TH E OBSERVATIONS MADE IN THE ORDER OF THE TRIBUNAL, THE TRIBUNAL WAS UNDER THE MISAPPREHENSION THAT THE REGISTERED SALE DEED WAS F INAL AND, THEREFORE, REFUSED TO LOOK INTO THE OTHER MATERIAL PRODUCED BY THE ASSESSEE WITH A VIEW TO PROVE ITS CASE THAT THE SALE TRANSACTION WA S A SHAM TRANSACTION. IT IS, HOWEVER, A DIFFERENT MATTER THA T THE TRIBUNAL MAY NOT FEEL CONVINCED THAT THE SALE TRANSACTION WAS A SHAM TRANSACTION AND REFUSE TO RELY ON THE MATERIAL PRODUCED BY THE ASSE SSEE FOR GOOD REASONS, BUT THE SAID MATERIAL HAD TO BE TAKEN INTO CONSIDERED AND COULD NOT BE IGNORED. THE ENQUIRY BEFORE THE TRIBUN AL WAS TO BE DIRECTED TO FIND OUT WHETHER THERE HAD BEEN A SALE AND IF THE TRIBUNAL COMES TO THE CONCLUSION THAT THE SALE HAD TAKEN PLA CE, IN THAT CASE, THAT 25 CAPITAL GAINS TAX WOULD BECOME PAYABLE. THE MATTER CAN BE VIEWED FROM ANOTHER ANGLE. IT IS A MATTER OF DAILY HAPPENI NG THAT PEOPLE, WHO WANT TO AVOID PAYMENT OF TAX, WOULD SELL THE PROPER TY BY GETTING THE SALE DEEDS REGISTERED AT UNDER- ESTIMATED VALUE. IF IT IS HELD THAT THE SALE DEED IS FINAL, IN THAT CASE, THE IT AUTHORITIE S WILL BE DEBARRED FROM LOOKING INTO AS TO HOW MUCH SALE CONSIDERATION PASS ED UNDER THE TRANSACTION, WHICH IS NOT THE LAW. THE FACTUM OF SA LE AND THE PROCEEDS ARE THE REAL QUESTIONS TO BE DETERMINED BY THE IT A UTHORITIES. FROM WHAT HAS BEEN STATED ABOVE, IT IS CLEAR THAT THE TR IBUNAL FELL INTO AN ERROR IN REFUSING TO EXAMINE THE MATERIAL PUT FORTH BY THE ASSESSEE TO PROVE THAT THE SALE WAS A SHAM TRANSACTION. 15(I) ITAT CHANDIGARH BENCH IN THE CASE OF CIT V MR S. K. ATMA RAM (SUPRA) HELD AS UNDER : NO DOUBT THE QUESTION AS TO WHETHER THE REGISTERED DEED IS THE LAST WORD FOR THE TRANSFER AND WHETHER ORAL EVIDENCE CON TRARY TO THE TERMS OF THE REGISTERED DEEDS CAN BE ADMITTED FOR THE PUR POSE OF NULLIFYING THE EFFECTS OF REGISTERED DOCUMENTS IS A QUESTION O F LAW BUT THE TRIBUNAL HAD RELIED UPON A DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE HIRA LAL RAM DAYAL VS.CIT (1980) 14 CTR (P&H) 88 : (1980) 122 ITR 461 (P&H), FOR THE PROPOSITION THAT THE REGISTERED SALE DEED IS NOT THE LAST WORD FOR TRANSFER AND, IF THERE IS EVIDENCE AVAILABLE ON RECORD THAT THE TWO SALE DEED WERE BO GUS, SHAM OR MANIPULATED THE ASSESSEE COULD NOT BE SUBJECTED TO CAPITAL GAINS TAX ON THE TRANSFER OF THE PLOTS IN QUESTION ALTHOUGH T HIS DECISION OF THE HIGH COURT RELATES, TO A VERY IMPORTANT LEGAL ISSUE , THE ANSWER TO WHICH IS HIGHLY CONTROVERSIAL AND ORDINARILY A REFE RENCE OVER THIS QUESTION SHOULD HAVE BEEN MADE, NO SUCH REFERENCE C AN BE MADE AS THE MATTER STANDS CONCLUDED BY A DECISION OF THE JU RISDICTIONAL HIGH COURT. 26 15(III) ITAT HYDERABAD BENCH IN THE CASE OF M/S MAL I FLOREX LTD. DCIT (SUPRA) HELD AS UNDER : 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE ENTERED INTO SALE AGREEMENT ON 25/2/2007 FOR SALE OF LAND ADMEASURING 15 ACRES 39 GUNTAS. THE AS SESSEE RECEIVED RS. 8 LAKHS OUT OF TOTAL CONSIDERATION OF RS. 2.24 CRORES. ACCORDING TO THE ASSESSING OFFICER THERE IS A RELINQUISHMENT OF RIGHT OVER THE PROPERTY TO THE PURCHASER WHICH AMOUNTS TO TRANSFER U/S. (47) OF THE INCOME-TAX ACT, 1961. IN OUR OPINION THE CONCLUSION OF THE ASSESSING OFFICER IS FARFETCHED. THE ASSESSEE RECEIVED ONLY A MEAGRE CONSIDERATION OF RS. 8 LAKHS AND ALSO THE ASSESSEE STILL OWNER OF THE PROPERTY. IT IS ALSO BROUGHT TO OUR NOTICE THAT THE ASSESSEE NOT PARTED THE POSSESSION OF THE PROPERTY. IN SUCH CIRC UMSTANCES TREATING THE TRANSACTION AS TRANSFER BY HOLDING AS A RELINQUISHMENT OF RIGHT OVER THE PROPERTY IS NOT JUSTIFIED. IN THE P RESENT CASE, THE ASSESSEE EXECUTED ONLY SALE AGREEMENT ON 3/2/2OO7 WITH THE S TIPULATION OF EXECUTING THE SALE DEED WITHIN A PERIOD OF 6 MONTHS ON TERMS AND CONDITIONS STIPULATED THERE IN, WITHOUT TRANSFERRIN G ANY RIGHT OF OWNERSHIP, USE OR POSSESSION OF THE PROPERTY, OR TR ANSFERRING ANY RIGHT OVER THE INCOME ARISING FROM SUCH PROPERTY TO THE PURCHASER AND HAVING DECIDED TO EXECUTE THE SALE DEED IN A FUTURE DATE THE TRANSACTION OF SALE OF PROPERLY WAS NOT COMPLETED I N TERMS OF SECTION 2(47) OF THE ACT., SPECIFICALLY, READ WITH THE SEC 53A OF TRANSFER OF PROPERTY ACT, 1882. WE PLACE RELIANCE ON THE JUDGEM ENT OF PATNA HIGH COURT IN THE CASE OF SMT. RAJ RANI DEVI RAMNA VS. CIT ( 201 ITR 1032) WHEREIN IT WAS HELD THAT SALE DEED, THOUGH RE GISTERED, STIPULATING A CONDITION PRECEDENT THAT THE PROPERTY SHALL PASS ONLY ON RECEIPT OF SALE CONSIDERATION, TRANSACTION DID N OT TAKE PLACE ON THE DATE OF REGISTRATION OF SALE DEED. WE ALSO PLAC E RELIANCE ON THE ORDER OF THE DELHI TRIBUNAL IN THE CASE OF ITO VS. SRNT. SATWAVATI DEVI VERMA (124 ITD 467) WHEREIN HELD THAT THE ASSESSEE HAVING EXECUTED THE AGREEMENT, WHICH ONLY CONTEMPLATED THE SALE PROPERTY TO THE PURCHASER ON A FUTURE DATE ON CERTAIN TERMS WITHOUT TRANSFERRING ANY RIGHT OF OWNERSHIP, AND NO POSSESS ION OF PROPERTY IS GIVEN OR RIGHT TO USE THE PROPERTY OR RIGHT RECEIVE D INCOME ARISING IN THE PROPERTY ALSO NOT GIVEN TO THE PURCHASER, IN SU CH CIRCUMSTANCES, IT IS NOT A TRANSFER IN TERMS OF SECTION 2(47) OF THE IT ACT, 1961. WE ALSO PLACE RELIANCE ON THE DECISION OF CIT VS. RASI KLAL MANEKLAL (HUF) (177 ITR 198)(SC) WHEREIN THE APEX COURT HELD , AFFIRMING THE 27 DECISION OF THE HIGH COURT, THAT THERE WAS NEITHER AN 'EXCHANGE' NOR A 'RELINQUISHMENT' AND NO CAPITAL GAINS AROSE F ROM THE TRANSACTION. AN 'EXCHANGE' INVOLVES THE TRANSFER OF PROPERTY BY ONE PERSON TO ANOTHER AND RECIPROCALLY THE TRANSFER OF PROPERTY BY THAT OTHER TO THE FIRST PERSON. THERE MUST BE A MUTUAL T RANSFER OF OWNERSHIP OF ONE THING FOR THE OWNERSHIP OF ANOTHER . A 'RELINQUISHMENT' TAKES PLACE WHEN THE OWNER WITHDRA WS HIMSELF FROM THE PROPERTY AND ABANDONS HIS RIGHTS THERETO. IT PRESUMES THAT THE PROPERTY CONTINUES TO EXIST AFTER THE RELI NQUISHMENT. WHERE, UPON AMALGAMATION, THE COMPANY IN WHICH THE ASSESSE E HOLDS SHARES STANDS DISSOLVED, THERE IS NON 'RELINQUISHMENT' BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, THERE IS NO RELINQUIS HMENT OF RIGHT OVER THE PROPERTY. ACCORDINGLY, THE APPEAL OF THE REVENU E IS DISMISSED. 15(IV) ITAT AHMEDABAD BENCH IN THE CASE OF HANSMUK H CHOTTALAL PATEL V ITO (SUPRA) HELD AS UNDER : 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT A SSESSEE HAD SOLD AGRICULTURAL LAND ADMEASURING ABOUT 6534 SQ. Y D AT VADAJ, AHMEDABAD FOR A TOTAL CONSIDERATION OF RS. 1,69,88, 400/- AND FOR WHICH BANAKHAT WAS EXECUTED AND REGISTERED ON 18.12.2006 AND BANAKHAT MONEY OF RS.8.50 LACS WAS RECEIVED BY THE ASSESSEE. THE CONVEYANCE DEED IN RESPECT OF THE AFORESAID LAND WA S EXECUTED AND REGISTERED ON 19.3.2008. AS PER THE COPY OF THE SAL ES DEED, THE ASSESSEE RECEIVED THE SALES CONSIDERATION IN INSTAL LMENTS BY WAY OF FORWARD DATED CHEQUES. THE FIRST INSTALLMENT WAS BY WAY OF 2 CHEQUES DATED 16.12.2006 OF RS.4.25 LACS EACH AND THE LAST CHEQUE WAS DATED 28.2.2009 WAS OF RS.21,69,200/-. AS PER THE AGREEME NT IT WAS AGREED BY BOTH THE PARTIES THAT ONLY AFTER THE ENCASHMENT OF THE CHEQUES, THE SELLER WILL HAND OVER THE VACANT AND PEACEFUL POSSE SSION OF THE LAND TO THE BUYER. FROM THE TRANSLATED COPY OF THE DEED OF CONFIRMATION DATED 4.2.2009 IT IS STATED THAT THE ASSESSEE HAS HANDED OVER THE VACANT AND PEACEFUL POSSESSION OF LAND TO THE PURCHASER ON 4.2 .2009 AND THE PURCHASER BECAME THE OCCUPIER OF THE LAND FROM 4.2. 2009 AND THE PURCHASER WAS ENTITLED TO TRANSFER THE LAND IN HIS NAME IN THE GOVERNMENT RECORDS FROM THAT DATE. THUS, THE INTENT ION OF THE PARTIES APPEARS TO TRANSFER THE POSSESSION OF LAND ON RECEI PT OF FINAL AMOUNT AND WHICH IN THIS PRESENT CASE HAD TAKEN PLACE ON 4 /2/2009. FROM THE 28 ABOVE FACTS IT CAN BE CONCLUDED THAT THOUGH THE ASS ESSEE ENTERED INTO AGREEMENT FOR SALE ON 19.3.2008, THE ACTUAL RIGHTS AND BENEFITS IN THE LAND WERE TRANSFERRED BY THE ASSESSEE ON RECEIPT OF THE FINAL INSTALLMENT I.E. IN AY 2009.10. THE ASSESSEE HAS DI SCLOSED THE CAPITAL GAINS IN THE RETURN IN AY 2009-10. THE REVENUE HAS NOT BEEN IN A POSITION TO CONTROVERT THE AFORESAID FACTS BY BRING ING ANY CONTRARY MATERIAL ON RECORD. 8.1. IN THE CASE OF SMT. RAJ RANI DEVI RAMNA VS CIT (199 3) 201 ITR 1032 (PAT) THE HON'BLE HC HAS HELD THAT THE PROPERT IES DO NOT NECESSARILY PASS AS SOON AS THE INSTRUMENT IS REGIS TERED, FOR THE TRUE TEST IS THE INTENTION OF THE PARTIES. REGI STRATION IS PRIMA FACIE PROOF OF AN INTENTION TO TRANSFER, BUT IT IS NO PROOF OF AN OPERATIVE TRANSFER IF THERE IS A CONDITION PRECEDEN T AS TO THE PAYMENT OF CONSIDERATION OR DELIVERY OF THE DEED. T HUS THE SELLER MAY RETAIN THE DEED PENDING PAYMENT OF PRICE AND IN THAT CASE THERE IS NO TRANSFER UNTIL THE PRICE IS PAID AND TH E DEED IS DELIVERED. 8.2. IN THE CASE OF ITO VS SMT SATYAWATI DE VI VERMA (2010) 124 ITD 467, THE TRIBUNAL HAS CONCLUDED AS UNDER : 'ASSESSEE HAVING EXECUTED AN AGREEMENT ON 19TH OCT.,1995, WHICH ONLY CONTEMPLATED SALE OF A PROPER TY AT A FUTURE DATE ON STIPULATED TERMS AND CONDITIONS WITH OUT TRANSFERRING ANY RIGHT OF OWNERSHIP, USE OR POSSESS ION IN THE CORPUS OR THE INCOME ARISING FROM SUCH PROPERTY TO THE PURCHASES, AND EXECUTED THE REGISTERED SALE DEED ON 20TH DEC., 2,007, THE TRANSACTION OF SALE OF PROPERTY WA S NOT COMPLETED IN TERMS OF PROVISIONS OF S. 2(47)(V) OF IT ACT, 1961, R/W S. 53A OF TRANSFER OF PROPERTY ACT, 1882, AT THE TIME OF EXECUTION OF AGREEMENT DT. 19TH OCT., 1995, AND THEREFORE, CAPITAL GAIN WAS NOT CHARGEABLE IN ASST. YR. 1996- 97.' 9. CONSIDERING THE TOTALITY OF FACTS AND RELYING ON THE DECISIONS OF THE H'BLE HC IN THE CASE OF RAJ RANI DEVI RAMNA (SUPRA) AND OF THE TRIBUNAL IN THE CASE OF SATYAWATI DEVI VERMA (SUPRA ), WE ARE OF THE VIEW THAT THE ASSESSEE HAD GIVEN THE POSSESSION OF LAND IN FEBRUARY-2009 TO THE PURCHASER AND THE PURCHASER COULD ENJOY THE FRUITS OF PROPERTY ONLY AFTER THAT DATE. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT THE ASSESSEE HAS RIGHTLY TREATED THE TRANSFER OF LAND I N AY 2009-10 AND THEREFORE THE AO WAS NOT RIGHT IN TAXING THE INCOME ON SALE OF LAND IN AY 2008-09. THUS THIS GROUND OF THE ASSESSEE IS ALL OWED. WE THUS ALLOW THE APPEAL OF THE ASSESSEE. 29 15(V) HON'BLE PATNA HIGH COURT IN THE CASE OF SMT. RAJ DEVI RAMNA V CIT (SUPRA) HELD AS UNDER : THE PROPERTIES DO NOT NECESSARILY PASS AS SOON AS T HE INSTRUMENT IS REGISTERED, FOR THE TRUE TEST IS THE INTENTION OF T HE PARTIES. REGISTRATION IS PRIMA FACIE PROOF OF AN INTENTION TO TRANSFER, B UT IT IS NO PROOF OF AN OPERATIVE TRANSFER IF THERE IS A CONDITION PRECEDEN T AS TO THE PAYMENT OF CONSIDERATION OR DELIVERY OF THE DEED. THUS THE SEL LER MAY RETAIN THE DEED PENDING PAYMENT OF PRICE AND, IN THAT CASE, TH ERE IS NO TRANSFER UNTIL THE PRICE IS PAID AND THE DEED IS DELIVERED . IN THE PERCENT CASE, FROM THE STATEMENT OF CASE ITSELF AS DRAWN UP BY TH E TRIBUNAL, IT IS APPARENT THAT THE PARTIES HAD CLEARLY INTENDED THAT DESPITE THE EXECUTION AND REGISTRATION OF SALE DEEDS, TRANSFER BY WAY OF SALE WILL BECOME EFFECTIVE ONLY ON PAYMENT OF THE ENTIRE CONS IDERATION AMOUNT AND IN THIS BACKGROUND OF FACTS, IT HAS BE HELD THA T THERE WAS NO TRANSFER OF LAND COVERED BY THE THREE SALE DEEDS I N QUESTION DURING THE PERIOD UNDER CONSIDERATION MAKING THE ASSESSEE LIAB LE FOR CAPITAL GAINS TAX UNDER S. 45NITAI CHANDRA NASKAR VS. SMT. CHAMPAKLATA DEBI (1919) 29 CJL 250, PANCHOO SAHU VS. JANKU MAND AR AIR 1952 PAT 263 AND SHIVA NARAYAN SAH VS. BAIDYA NATH PRASA D TIWARY AIR 1973 PAT 386 RELIED ON. 15(VI) ITAT KOLKATA BENCH IN THE CASE OF CHANCHAL KUMAR SIRKAR V ITO (SUPRA) HELD AS UNDER : WHERE THE CONSIDERATION FOR THE TRANSFER WAS RECEI VED SEVERAL MONTHS AFTER THE DATE OF THE TRANSFER OF PROPERTY, THE PER IOD OF SIX MONTHS FOR MAKING DEPOSIT UNDER S 54EC SHOULD BE RECKONED FROM THE DATE ACTUAL RECEIPT OF THE CONSIDERATION. 15(VI) HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V MRS. HEMAL RAJ SHETE IN IT APPEAL NO. 2348 OF 2013 VIDE JUDGEMENT DATED 29.03.2016 HELD IN PARA 7 TO 12 AS UNDER: 7. MR.PINTO, LEARNED COUNSEL FOR THE REVENUE URGED THAT IN TERMS OF SECTION 45(1) OF THE ACT THAT TRANSFER OF CAPITAL A SSET WOULD ATTRACT THE 30 CAPITAL GAINS TAX. IT IS FURTHER SUBMITTED THAT THE AMOUNT TO BE TAXED UNDER SECTION 45(1) IS NOT DEPENDENT UPON THE RECEIPT OF THE CONSIDERATION. IN SUPPORT OF THE ABOVE HE INVITES OUR ATTENTION TO SE CTION 45(1)(A) AND SECTION 45(5) OF THE ACT WHICH IN CONTRAST BRINGS T O TAX CAPITAL GAINS ON AMOUNT RECEIVED. IN THE ABOVE VIEW, IT IS HIS SUBMI SSION THAT THE ASSESSING OFFICER WAS JUSTIFIED IN BRINGING TO TAX ENTIRE AMO UNT OF THE RESPONDENT- ASSESSEE'S SHARE IN RS.20 CRORES REFERRED TO IN THE AGREEMENT DATED 25TH JANUARY, 2006 AS MAXIMUM AMOUNT THAT COULD BE RECEI VED ON THE SALE OF SHARES IN M/S. UNISOL BY ITS CO-OWNERS FROM M/S. RK HS. 8. IN THE PRESENT CASE, FROM THE READING OF THE ABO VE CLAUSES OF THE AGREEMENT THE DEFERRED CONSIDERATION IS PAYABLE OVE R A PERIOD OF FOUR YEARS I.E. 2006-07, 2007-08, 2008-09 AND 2009-10. F URTHER THE FORMULA PRESCRIBED IN THE AGREEMENT ITSELF MAKES IT CLEAR T HAT THE DEFERRED CONSIDERATION TO BE RECEIVED BY THE RESPONDENT-ASSE SSEE IN THE FOUR YEARS WOULD BE DEPENDENT UPON THE PROFITS MADE BY M/S. UN ISOL IN EACH OF THE YEARS. THUS IN CASE M/S. UNISOL DOES NOT MAKE NET P ROFIT IN TERMS OF THE FORMULA FOR THE YEAR UNDER CONSIDERATION FOR PAYMEN T OF DEFERRED CONSIDERATION THEN NO AMOUNT WOULD BE PAYABLE TO TH E RESPONDENT- ASSESSEE AS DEFERRED CONSIDERATION. THE CONSIDERATI ON OF RS.20 CRORES IS NOT AN ASSURED CONSIDERATION TO BE RECEIVED BY THE SHETE FAMILY. IT IS ONLY THE MAXIMUM THAT COULD BE RECEIVED. THEREFORE IT IS NOT A CASE WHERE ANY CONSIDERATION OUT OF RS.20 CRORES OR PART THEREOF ( AFTER REDUCING RS.2.70 CRORES) HAS BEEN RECEIVED OR HAS ACCRUED TO THE RES PONDENT-ASSESSEE. AS OBSERVED BY THE APEX COURT IN MORVI INDUSTRIES LTD. VS. CIT (1971) 82 ITR 835. THE INCOME CAN BE SAID TO ACCRUE WHEN IT BECO MES DUE.... THE MOMENT THE INCOME ACCRUES, THE ASSESSEE GETS VESTED RIGHT TO CLAIM THAT AMOUNT, EVEN THOUGH NOT IMMEDIATELY. IN FACT THE APPLICATION OF FORMULA IN THE AGREEMENT DATED 25TH JANUARY, 2006 ITSELF MAKES THE AMOUNT WHICH IS RECEIVABLE AS DEFERRED CONSIDERATION CONTINGENT UPO N THE PROFITS OF M/S.UNISOL AND NOT AN ASCERTAINED AMOUNT. THUS IN T HE SUBJECT ASSESSMENT YEAR NO RIGHT TO CLAIM ANY PARTICULAR AM OUNT GETS VESTED IN THE HANDS OF THE RESPONDENT-ASSESSEE. THEREFORE, ENTIRE AMOUNT OF RS.20 CRORES WHICH IS SOUGHT TO BE TAXED BY THE ASSESSING OFFICER IS NOT THE AMOUNT WHICH HAS ACCRUED TO THE RESPONDENT-ASSESSEE . THE TEST OF ACCRUAL IS WHETHER THERE IS A RIGHT TO RECEIVE THE AMOUNT THOUGH LATER AND SUCH RIGHT IS LEGALLY ENFORCEABLE. IN FACT AS OBSER VED BY THE SUPREME COURT IN E.D. SASSOON & CO. LTD. VS. CIT (1954) 26 ITR 27 IT IS CLEAR THEREFORE THAT INCOME MAY ACCRUE TO AN ASSESEE WITHOUT THE AC TUAL RECEIPT OF THE 31 SAME. IF THE ASSESSEE ACQUIRES A RIGHT TO RECEIVE T HE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THOUGH IT MAY BE RECEIVED LATER ON ITS BEING ASCERTAINED. THE BASIC CONCEPTION IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. THERE MUST BE A DEBT O WED TO HIM BY SOMEBODY. THERE MUST BE AS IS OTHERWISE EXPRESSED D EBITUM IN PRESENTI, SOLVENDUM IN FUTURO .... .... ..... IN THIS CASE A LL THE CO-OWNERS OF THE SHARES OF M/S.UNISOL HAVE NO RIGHT IN THE SUBJECT ASSESSME NT YEAR TO RECEIVE RS.20 CRORES BUT THAT IS THE MAXIMUM WHICH COULD BE RECEIVED BY THEM. THIS AMOUNT WHICH COULD BE RECEIVED AS DEFERRED CON SIDERATION IS DEPENDENT/CONTINGENT UPON CERTAIN UNCERTAIN EVENTS, THEREFORE, IT CANNOT BE SAID TO HAVE ACCRUED TO THE RESPONDENT-ASSESSEE. THE TRIBUNAL IN THE IMPUGNED ORDER HAS CORRECTLY HELD THAT WHAT HAS TO BE TAXED IS THE AMOUNT RECEIVED OR ACCRUED AND NOT ANY NOTIONAL OR HYPOTHE TICAL INCOME. AS OBSERVED BY THE APEX COURT IN COMMISSIONER OF INCOM E-TAX VS. M/S. SHOORJI VALLABDAS AND CO. (1962) 46 ITR 144 INCOME -TAX IS A LEVY ON INCOME. NO DOUBT, THE INCOME-TAX ACT TAKES INTO ACC OUNT TWO POINTS OF TIME AT WHICH LIABILITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF ITS INCOME OR ITS RECEIPT; BUT THE SUBSTANCE OF THE MATTER IS INCOME, IF INCOME DOES NOT RESULT, THERE CANNOT BE A TAX,EVEN THOUGH IN BOOK-K EEPING AN ENTRY IS MADE ABOUT A HYPOTHETICAL INCOME, WHICH DOES NOT MA TERIALIZE. IN THIS CASE RS.20 CRORES CAP IN THE AGREEMENT IS NOT INCOM E IN THE SUBJECT ASSESSMENT YEAR. IT HAS BEEN OBSERVED BY THE APEX C OURT IN THE CASE OF K.P. VARGHESE VS. INCOME-TAX OFFICER, ERNAKULAM & A NR. 181 ITR PAGE 597 THAT ONE HAS TO READ CAPITAL GAIN PROVISION ALO NG WITH COMPUTATION PROVISION AND THE STARTING POINT OF THE COMPUTATION IS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING. IN THIS CASE T HE AMOUNT OF RS.20 CRORES IS NEITHER RECEIVED NOR IT HAS ACCRUED TO TH E RESPONDENT-ASSESSEE DURING THE SUBJECT ASSESSMENT YEAR. WE ARE INFORMED THAT FOR THE SUBSEQUENT ASSESSMENT YEAR (SAVE ASSESSMENT YEAR 20 07-08 FOR WHICH THERE IS NO DEFERRED CONSIDERATION ON APPLICATION O F FORMULA), THE ASSESSEE HAS OFFERED TO TAX THE AMOUNTS WHICH HAVE BEEN RECE IVED ON THE APPLICATION OF FORMULA PROVIDED IN THE AGREEMENT DA TED 25TH JANUARY, 2006 PERTAINING TO THE TRANSFER OF SHARES. 9. THE CONTENTION OF THE REVENUE THAT THE IMPUGNED ORDER IS SEEKING TO TAX THE AMOUNT ON RECEIPT BASIS BY NOT HAVING BR OUGHT IT TO TAX IN THE SUBJECT ASSESSMENT YEAR, IS NOT CORRECT. THIS FOR T HE REASON, THAT THE AMOUNTS TO BE RECEIVED AS DEFERRED CONSIDERATION UN DER THE AGREEMENT COULD NOT BE SUBJECTED TO TAX IN THE ASSESSMENT YEA R 2006-07 AS THE SAME 32 HAS NOT ACCRUED DURING THE YEAR. AS POINTED OUT ABO VE, ACCRUAL WOULD BE A RIGHT TO RECEIVE THE AMOUNT AND THE RESPONDENT-ASSE SSEE ALONGWITH ITS CO- OWNERS HAVE NOT UNDER THE AGREEMENT DATED 25TH JANU ARY, 2006 OBTAINED A RIGHT TO RECEIVE RS.20 CRORES OR ANY SPECIFIED PA RT THEREOF IN THE SUBJECT ASSESSMENT YEAR. 10. IN THE ABOVE VIEW THERE COULD BE NO OCCASION T O BRING THE MAXIMUM AMOUNT OF RS. 20 CRORES, WHICH COULD BE REC EIVED AS DEFERRED CONSIDERATION TO TAX IN THE SUBJECT ASSESSMENT YEAR AS IT HAD NOT ACCRUED TO THE RESPONDENT-ASSESSEE. 11. WE FIND THAT BOTH THE COMMISSIONER OF INCOME-TA X (APPEALS) AND THE TRIBUNAL HAVE IN VIEW OF THE CLEAR CLAUSES OF A GREEMENT DATED 25TH JANUARY, 2006 HAVE IN THE FACTS OF THE PRESENT CASE CORRECTLY HELD THAT THE RESPONDENT-ASSESSEE AND THE CO-OWNERS OF THE SHARES DID NOT HAVE A RIGHT TO RECEIVE RS.20 CRORES IN THE SUBJECT ASSESSMENT Y EAR. 12. IN THE ABOVE VIEW, IN THE PRESENT FACTS THE QUE STION OF LAW AS FRAMED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTI ON OF LAW. ACCORDINGLY, APPEAL IS DISMISSED. NO ORDER AS TO COSTS. 16. IN THE INSTANT CASE, THE SALE DEED DATED 20.03. 2007 IN QUESTION MENTIONED THE SALE CONSIDERATION OF RS. 5.50 CRORES OUT OF WHICH ADVANCE OF RS. 50 LACS HAVE BEE N GIVEN ON THE DATE OF EXECUTION OF THE SALE DEED. THE SUB STANTIAL BALANCE CONSIDERATION OF RS. 5 CRORES WAS TO BE PAI D THROUGH UNDATED CHEQUE NO. 009643. FURTHER, IT IS MENTIONED THAT DUE TO BOUNCING OF THE AFORESAID CHE QUE, SALE DEED WILL BE CANCELLED. THEREFORE, ESSENTIAL CONDITION OF THE SALE DEED IS TRANSFER OF THE PROPERTY ON FUL L PAYMENT MADE BY THE PURCHASER. ON THE SAME DAY, THE BUYER M/S LINK INFRASTRUCTURE & DEVELOPER P. LTD. THROUGH SHR I PARVEEN KUMAR EXECUTED AN AFFIDAVIT DATED 20,.03.20 07 33 DULY ATTESTED BY THE EXECUTIVE MAGISTRATE, JAGADHAR I. IN THIS AFFIDAVIT, THE BUYER HAS MENTIONED/AFFIRMED TH AT THOUGH SALE DEED OF THE LAND HAS BEEN REGISTERED BU T THE SPOT POSSESSION WILL BE GIVEN AT THE TIME WHEN TOTA L SALE CONSIDERATION OF THE PDC CHEQUE IS GIVEN TO THE OWN ER. UPTIL THE AMOUNT OF THE CHEQUE HAS NOT BEEN PAID, B UYER COMPANY CANNOT MAKE DISCHARGE OF ANY KIND TO THE REMAINING PERSONS ETC. THE POSSESSION SHALL REMAIN WITH THE OWNER AND IN CASE OF CANCELLATION/DELAY, THE BU YER COMPANY SHALL BE RESPONSIBLE FOR ALL THE LOSSES AND EXPENSES TO THE OWNER. SINCE THE DATE OF SALE DEED DATED 20.03.2007 AND AFFIDAVIT OF THE BUYER DATED 20.03.2 007 ARE RELATED TO THE ALLEGED TRANSFER OF PROPERTY, TH EREFORE, CONTENTS OF THE AFFIDAVIT WOULD BE RELEVANT TO CONS IDER THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE IT WOULD SUPPORT THE CONTENTION OF THE ASSESSEE THAT T HE SALE DEED WAS EXECUTED ONLY WITH INTENTION THAT BUYER CO MPANY THEREAFTER, CAN OBTAIN LAND USE CHANGE FROM THE REV ENUE AUTHORITY WITH PERMISSION TO RAISE THE DEVELOPMENT IN THE AGRICULTURAL LAND. 16(I) IT WOULD ALSO STRENGTHEN THE CASE OF THE ASSE SSEE THAT IN CASE OF DENIAL OF LAND USE CHANGE PERMISSIO N AND DEVELOPMENT PERMISSION TO THE BUYER, THE SALE DEED WOULD BE CANCELLED BETWEEN THE PARTIES. THE ASSESSEE FUR THER EXPLAINED THAT WHEN THE UNDATED CHEQUE WAS NOT PAID BY THE BUYER COMPANY, ONE OF THE ASSESSEE SHRI TEJINDE R KUMAR FILED A CRIMINAL MISC. NO. 36372-M OF 2007 WH ICH IS 34 DECIDED BY HON'BLE PUNJAB & HARYANA HIGH COURT ON 31.05.2007 (COPY OF WHICH IS PLACED ON RECORD) IN W HICH THE PETITIONER PRAYED FOR DIRECTION TO POLICE AUTHO RITIES OF DISTRICT YAMUNA NAGAR TO REGISTER A CASE AGAINST FUNCTIONARIES INCLUDING THE MANAGING DIRECTOR OF ZO DIAC HOUSING & INFRASTRUCTURE PVT. LTD. FOR DUPING VARIO US AGRICULTURISTS INCLUDING THE PETITIONER FOR COMMITT ING FRAUD TO GRAB THEIR VALUABLE AGRICULTURAL LAND. HO N'BLE HIGH COURT DIRECTED THE SUPERINTENDENT OF POLICE, Y AMUNA NAGAR TO ENQUIRE INTO THE COMPLAINTS OF PETITIONERS IN ACCORDANCE WITH LAW AND TAKE ACTION. IT IS, THEREF ORE, CLEAR THAT TILL FILING OF THE CRIMINAL MISCELLANEOU S PETITION BEFORE HON'BLE PUNJAB & HARYANA HIGH COURT, THE BUY ER COMPANY HAD NO INTENTION TO PAY ANY AMOUNT TO THE ASSESSEE AND OTHERS (AGRICULTURISTS). THE ASSESSEE FURTHER EXPLAINED THAT WHEN NO ACTION HAVE BEEN TAKEN IN TH E MATTER, SHRI TEJINDER KUMAR & OTHERS FURTHER FILED CWP NO. 1908 OF 2009 WHICH IS DECIDED BY HON'BLE PUNJAB & HARYANA HIGH COURT VIDE JUDGEMENT DATED 05.02.2009 IN WHICH SIMILAR ALLEGATIONS WERE MADE FOR DIRECTION T O THE SUPERINTENDENT OF POLICE, YAMUNA NAGAR AND OTHERS F OR TAKING LEGAL ACTIONS AGAINST THE REAL ESTATE DEVELO PERS & BUILDERS WHO HAVE DUPED/CHEATED HUNDREDS OF FARMERS IN THE AREA OF YAMUNA NAGAR BY ALLURING THEM TO EXECUT E THE SALE DEEDS WITH A PROMISE TO PAY SALE CONSIDERATION THROUGH CHEQUES WHICH LATER ON BOUNCED FOR WANT OF SUFFICIENT FUNDS. ALL THE SUBSTANTIAL AMOUNT REMAI NED UNPAID. 35 16(II) HON'BLE HIGH COURT, CONSIDERING THE SERIOUS ALLEGATIONS AGAINST THE BUILDERS/BUYERS FOR CHEATIN G HUNDREDS OF FARMERS IN DISTRICT YAMUNA NAGAR DIRECT ED THE SENIOR OFFICERS OF THE CRIME BRANCH TO LOOK INTO TH E ALLEGATIONS OF CONNIVING WITH THE BUILDERS ALONGWIT H COLLECTOR YAMUNA NAGAR TO TAKE IMMEDIATE REMEDIAL ACTION. ADDL. DGP, CRIME BRANCH WAS ALSO DIRECTED TO CONSTITUTE SPECIAL INVESTIGATION TEAM TO CONDUCT FA IR INVESTIGATIONS. THESE FACTS WOULD ALSO SUPPORT THE CLAIM OF THE ASSESSEE THAT THE BUYER COMPANIES HAVE NO INTENTION TO PAY ANY AMOUNT TO THE AGRICULTURISTS W HO HAVE EXECUTED SALE DEED IN FAVOUR OF THE DEVELOPERS AND THE DEVELOPERS HAVE NOT PAID THE SUBSTANTIAL SALE CONSIDERATION TO THE AGRICULTURISTS INCLUDING THE A SSESSEE. IT IS ONLY WHEN THE INVESTIGATION CARRIED OUT BY TH E STATE POLICE AND CIVIL AUTHORITIES, AS PER DIRECTIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE SUBSTANTIA L AMOUNT OF SALE CONSIDERATION THROUGH UNDATED CHEQUE WAS CLEARED IN FAVOUR OF THE ASSESSEE AFTER SEVERAL MON THS. THE PROVISION OF NEGOTIABLE INSTRUMENT ACT PROVIDES THAT THE NEGOTIABLE INSTRUMENTS ( INCLUDING CHEQUE) WOUL D BE VALID FOR A PERIOD OF SIX MONTHS BUT IN THE CASE O F THE ASSESSEE, WITH THE INTERVENTION OF CIVIL AND POLICE AUTHORITIES, AS PER DIRECTIONS OF THE HON'BLE PUNJA B & HARYANA HIGH COURT, UNDATED CHEQUE OF THE ASSESSEE WAS CLEARED AFTER ABOUT 15 MONTHS FROM THE DATE OF THE SALE DEED BECAUSE UNDATED CHEQUE IS CLEARED ON 16.06.200 8 WHILE SALE DEED WAS EXECUTED ON 20.03.2007. THE 36 INTENTION OF THE BUYER COMPANY IS, THEREFORE, VERY CLEAR FROM THE BEGINNING ITSELF THAT THE BUYER COMPANY/BU ILDERS NEVER INTENDED TO PAY SUBSTANTIAL SALE CONSIDERATIO N TO THE ASSESSEE. THE INTENTION OF THE BUYER COMPANY IS AL SO CLEAR FROM THE FACT MENTIONED IN THE SALE DEED, AFFIDAVIT AND THE ATTENDING CIRCUMSTANCES. THOUGH THE SALE DEED IS EX ECUTED IN THE MATTER BUT THE FACTS AND CIRCUMSTANCES ABOVE WILL CLEARLY EXPLAIN THAT THE SALE DEED IN-FACT WAS A CO NTRACT OF SALE OF PROPERTY ONLY AND IT WOULD NOT CREATE ANY I NTEREST OR CHARGE IN THE PROPERTY. THE SALE TRANSACTION SH ALL TAKE PLACE ON TERMS SETTLED BETWEEN THE PARTIES I.E. THE CONTENTS OF THE SALE DEED AND THE AFFIDAVIT EXECUTE D BY THE BUYER. 16(III) THE FACTS OF THE CASE ALSO CLEARLY REVEAL T HAT FULL PAYMENT ON ACCOUNT OF SALE CONSIDERATION WAS ESSENC E OF THE CONTRACT NOT SATISFIED BY THE BUYER COMPANY AT THE TIME OF EXECUTION OF THE SALE DEED. THERE IS NO TR ANSFER OF CAPITAL ASSET IN ASSESSMENT YEAR 2007-08. THUS, NO INCOME/AMOUNT ACCRUED OR RECEIVED BY THE ASSESSEE O N ACCOUNT OF TRANSFER OF CAPITAL ASSET OR ON ACCOUNT OF ANY CAPITAL GAINS TILL 16.06.2008. THEREFORE, NO CAPIT AL GAIN ARISE IN ASSESSMENT YEAR 2007-08. 17. THE SALE DEED CANNOT BE A FINAL WORD IN THE MAT TER. OUR VIEW IS SUPPORTED BY THE DECISIONS REFERRED TO ABOVE. CAPITAL GAIN ACCRUES ONLY IF THERE IS A SALE OR TRA NSFER OF CAPITAL ASSET. THE ASSESSEE IS ABLE TO PROVE ON FA CE OF SALE 37 DEED, AFFIDAVIT EXECUTED BY THE BUYER AND THE COGEN T EVIDENCE ON RECORD THAT NO SALE TOOK PLACE ON 20.03 .2007 I.E. THE DAY WHEN SALE DEED WAS REGISTERED. THE DOCUMENTS/MATERIAL PRODUCED ON RECORD PROVED NO SAL E TRANSACTIONS COMPLETED ON 20.03.2007. THE MATERIAL AND EVIDENCE BROUGHT ON RECORD, THUS, CANNOT BE IGNORED . THE CONTENTS OF SALE DEED, AFFIDAVIT AND UNDATED CHEQUE OF RS. 5 CRORES AND ORDERS OF HON'BLE PUNJAB & HARYANA HIG H COURT CLEARLY PROVED THAT THE BUYER COMPANY MANIPUL ATED THE SALE DEED TO DUPE THE ASSESSEE AND OTHER AGRICULTURISTS. UNDATED CHEQUE OF RS. 5 CRORES SHO WS NO INTENTION OF THE BUYER TO PAY ANY SALE CONSIDERATIO N IN FUTURE TO COMPLETE THE TRANSACTION. THE UNDATED CH EQUE ITSELF SHOWS THAT BUYER COMPANY WAS NOT DEFINITE OF THE PAYMENT WITHIN THE TIME-BOUND PERIOD. THE INTENTIO N OF THE PARTIES SHALL HAVE TO BE CONSIDERED ON THE FACT S AND CIRCUMSTANCES OF THE CASE. THE REGISTRATION IS PRI MA-FACIE PROOF OF AN INTENTION TO TRANSFER BUT IT IS NO PROO F OF AN OPERATIVE TRANSFER IF THERE IS A CONDITION PRECEDEN T AS TO THE PAYMENT OF CONSIDERATION OR DELIVERY OF THE DEE D OR POSSESSION. THE PROPERTIES DO NOT NECESSARILY PASS AS SOON AS THE INSTRUMENT IS REGISTERED, THE TRUE TEST IS T HE INTENTION OF THE PARTIES. IN THE INSTANT CASE, THE SALE OF PROPERTY DEPENDS UPON FULL PAYMENT AND THE BUYER COMPANY OBTAINING LAND USE CHANGE PERMISSION AND DEVELOPMENT PERMISSION ETC. THE AUTHORITIES BELOW ONLY CONSIDERED THE SALE DEED WAS FINAL BUT IGNORED THE OTHER MATERIAL EVIDENCE ON RECORD. ACCRUAL WOULD BE RIGH T TO 38 RECEIVE THE AMOUNT BUT NO RIGHT ACCRUED AS ASSESSEE WAS INTENTIONALLY DUPED BY THE BUYER. SINCE ONE OF THE ASSESSEE SHRI TEJINDER KUMAR & OTHERS HAVE MADE ALLEGATION AGAINST THE DEVELOPERS/BUYERS CONNIVING WITH THE REVENUE AUTHORITIES AND DIRECTIONS HAVE BEEN IS SUED TO TAKE ACTION INTO THE MATTER BY FORMING A SPECIAL INVESTIGATION TEAM ALSO, THEREFORE, THE MUTATION DO NE BY THE REVENUE AUTHORITIES IN FAVOUR OF BUYERS AS PER REGISTERED SALE DEED WOULD NOT BE SIGNIFICANT TO DE CLARE ANY CAPITAL GAIN ACCRUED OR ARISE IN THE ASSESSMENT YEAR UNDER APPEAL. THE DECISIONS RELIED UPON BY THE AS SESSEE CLEARLY APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE DECISION IN THE CASE OF SANJEEV LAL VS CIT (SUP RA) RELIED UPON BY LD. DR IS DISTINGUISHABLE ON FACTS O F THE CASE AND WOULD NOT SUPPORT CASE OF THE REVENUE. 18. CONSIDERING THE ABOVE DISCUSSION AND MATERIAL O N RECORD, WE ARE OF THE VIEW THERE IS NO TRANSFER OF CAPITAL ASSET IN ASSESSMENT YEAR 2007-08. THERE IS NO ACCR UAL OR RECEIPT OF ANY INCOME IN FAVOUR OF THE ASSESSEE ON ACCOUNT OF CAPITAL GAINS IN ASSESSMENT YEAR 2007-08. THERE FORE, WHOLE OF THE ADDITION IN ASSESSMENT YEAR UNDER APPE AL I.E. 2007-08 IS UNJUSTIFIED. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTI RE ADDITION ON ACCOUNT OF CAPITAL GAINS IN ASSESSMENT YEAR UNDER APPEAL, HOWEVER, REVENUE AUTHORITIES ARE AT L IBERTY TO CONSIDER THE ISSUE OF ACCRUAL OR RECEIPT OF CAPI TAL GAIN 39 IN ASSESSMENT YEAR 2009-10 IN ACCORDANCE WITH LAW, IF SO ADVISED. 19. IN THE RESULT, GROUND NO. 1 OF APPEAL OF THE AS SESSEE IS ALLOWED. 20. IN VIEW OF THE ABOVE FINDINGS, THERE IS NO NEED TO DECIDE THE REMAINING GROUNDS OF APPEAL WITH REGARD TO CLAIMING EXEMPTION UNDER SECTION 54B AND 54F ALONGW ITH DEDUCTION ON ACCOUNT OF COMMISSION AND CONSIDERING FAIR MARKET VALUE OF THE PROPERTY. THESE GROUNDS HAVE B ECOME INFRUCTUOUS IN VIEW OF THE FINDING ABOVE THAT NO CA PITAL GAIN ACCRUED OR ARISES IN ASSESSMENT YEAR UNDER APP EAL. THESE ISSUES MAY BE CONSIDERED BY BOTH THE PARTIES IN THE YEAR WHEN CAPITAL GAIN WOULD ARISE. THESE GROUNDS, THEREFORE, STAND DISPOSED OFF. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ITA 18/2016 ( SHRI BANARSI LAL) & ITA 19/2016 ( SHRI TEJINDER KUMAR ) 22. IN BOTH THE APPEALS, ISSUES ARE SAME AS HAVE BE EN CONSIDERATION IN ITA 17/2016. IN ITA 18/2016, ASSE SSEE CHALLENGED THE UPHOLDING OF LONG TERM CAPITAL GAIN AMOUNTING TO RS. 5,06,25,600/- AND IN ITA 19/2016, ASSESSEE CHALLENGED UPHOLDING OF LONG TERM CAPITAL GAIN AMOUNTING TO RS. 4,99,37,010/-. THE ISSUE IS IDENTI CAL AS HAVE BEEN CONSIDERED IN ITA 17/2016. WE, THEREFORE , 40 FOLLOWING THE REASONS FOR DECISION IN CASE OF RAJIV KUMAR (SUPRA), SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITIONS ON ACCOUNT OF LONG TERM CAPITAL GAIN IN ASSESSMENT YEAR 2007-08. THE REVENUE AUTHO RITIES ARE AT LIBERTY TO TAKE UP THIS ISSUE IN ASSESSMENT YEAR 2009-10 IF SO ADVISED IN ACCORDANCE WITH LAW. 23. IN THE RESULT, GROUND NO. 1 OF THESE APPEALS AR E ALLOWED AND REMAINING GROUNDS OF CLAIM OF DEDUCTION/EXEMPTION UNDER SECTION 54B AND 54F, COMMISSION AND LAND VALUE ETC. STAND DISPOSED OFF. 24. IN THE RESULT, BOTH THE APPEALS IN ITA 18/2016 AND ITA 19/2016 ARE ALLOWED. 25. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH JUNE,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD