DCIT 24(3), MUMBAI V. DIPESH MANIBHAI PATEL, MUMBAI

ITA 3904/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0413 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard
• Section: 143(3); 54; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3904 / MUM/20 14 ASSESSMENT YEAR: 2010 - 11 DCIT 24(3) VS. MR. DIPESH MANIBHAI PATEL R. NO. 701, C - 11 2 ND FLOOR, PRABHU NIWAS 7 TH FLOOR, BKC BANDRA (E) 99 JAWAHAR NAGAR, GOREGAON (W) MUMBAI 400051 MUMBAI - 400063 PAN NO. AABPP9544K (APPELLANT) (RESPONDENT) REVENUE BY: MR. PURUSHOTTAM KUMAR, DR ASSESSEE BY : MR. REEPAL G. TRA L SHAWALA, AR DATE OF HEARING : 15/03/2017 DATE OF PRONOUNCEMENT: 1 3 /06/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER COMMISSIONER (APPEALS) 34 , MUMBAI AND ARISES OUT OF ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUND RAISED B Y THE REVENUE IN THIS APPEAL IS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,38,30,262/ - MADE BY THE ASSESSING OFFICER (AO) IGNORING THE FACT THAT THE ASSESSEE HAD RECEIVED VALUE OF BENE FIT OF CONCESSIONAL RATE ON PURCHASE OF ASSET FROM THE EMPLOYERS ITA NO. 3904 /MUM/201 4 2 AND THE PROVISIONS OF SECTION 17(2)(III)(C) OF THE ACT ARE CLEARLY APPLICABLE TO THE ASSESSEE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO HAVING GONE THROUGH THE AIR INFORMATIO N AND OTHER DETAILS FOUND THAT (I) THE ASSESSEE HAD PURCHASED THE FOLLOWING PROPERTIES FROM M/S. LAXMI INDUSTRIAL ESTATE (LIE) WHEREIN HE WAS AN EMPLOYEE, (II) THE MARKET VALUE WAS MUCH HIGHER THAN THE SALE VALUE OF THE PROPERTIES. THE DETAILS ARE AS UNDER : SL. NO. UNIT NO AREA DATE OF AGREEMENT AMOUNT (RS.) MARKET VALUE (RS.) 1 301 500 15.10.2009 1000000 3300992 2 302 500 15.10.2009 1000000 3300992 3 401 500 15.10.2009 1000000 3094680 4 402 500 15.10.2009 1000000 3094680 5 22 500 05.11.2009 2000000 4126240 6 548 500 05.11.2009 2000000 3300992 7 549 500 15.01.2010 2000000 3300992 8 550 500 15.01.2010 2000000 2310694 3. 1 THE AO DEDUCED FROM THE ABOVE TABLE THAT THE ASSESSEE HAD PURCHASED THE PROPERTIES FROM LIE AT LOWER PRICE THA N THE MARKET VALUE. DURING THE RELEVANT PERIOD, THE ASSESSEE WAS AN EMPLOYEE OF LIE . THE AO REFERRED TO SECTION 17(III) AND ASKED THE ASSESSEE TO EXPLAIN WHY THE DIFFERENCE IN MARKET VALUE AND SALE VALUE SHOULD NOT BE TREATED AS PERQUISITE IN LIEU OF SALARY OF THE ASSESSEE. IN RESPONSE TO IT , THE ASSESSEE SUBMITTED BEFORE THE AO THAT LIE HAD ALREADY SOLD SOME GALAS TO OTHER PERSONS AT LOWER RATE THAN THE MARKET VALUE IN EARLIER YEARS. THE AO WAS NOT CONVINCED WITH THE ABOVE REPLY OF THE ASSESSEE. FINALLY THE AO NOTED THAT THE FINAL SALE WAS COMPLETED IN THE F.Y. 2009 - 10 DURING THE A.Y. 2010 - 11 AS THE FINAL SALE DEED WAS MADE . THE AO THUS WORKED OUT THE PERQUISITE IN LIEU OF SALARY AS UNDER: ITA NO. 3904 /MUM/201 4 3 SL. NO. UNIT NO AREA AMOUNT (RS.) MARKET VALUE (RS.) DIFFERENCE (RS.) 1 301 500 1000000 3300992 2300992 2 302 500 1000000 3300992 2300992 3 401 500 1000000 3094680 2094680 4 402 500 1000000 3094680 2094680 5 22 500 2000000 4126240 2126240 6 548 500 2000000 3300992 1300992 7 549 500 2000000 3300992 1300992 8 550 500 2000000 2310694 310694 TOTAL 13830262 3 . 2 THE A.O. THUS ADDED BACK THE DIFFERENCE BETWEEN THE SALE VALUE AND MARKET VALUE OF RS. 1,38,30,262/ - AS PERQUISITE IN LIEU OF SALARY AS PER PROVISIONS OF SECTION 17(III) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) HELD THAT THE ASSESSEE HAD PURCHASED THE VARIOUS PROPERTIES DURING EARLIER YEARS AND NOT DURING THE F.Y. 2009 - 10 RELEVANT TO THE A.Y. 2010 - 11 AND ONLY REGISTRATION OF THE SAID PROPERTIES WAS DONE DURING THE A.Y. 2010 - 11. THEREFORE, THE LEARNED CIT(A) DIRECTED THE AO TO DELETE THE ADDITION OF RS. 1,38,30,262/ - MADE BY THE A.O. 5. BEFORE US, THE LEARNED DR FILES A WRITTEN SUBMISSION STATING THAT AS PER SOME OF THE AGR EEMENT FOR SAID PROPERTIES AVAILABLE IN THE PAPER BOOK (P/B) FILED BY THE ASSESSEE, NOT ONLY REGISTRATION DATE, BUT ALSO THE DATE OF EXECUTION OF THESE AGREEMENTS FALL IN THE F.Y. 2009 - 10 RELEVANT TO THE A.Y. 2010 - 11. FOR EXAMPLE, THE AGREEMENT ON PAGE 30 OF P/B IS EXECUTED ON 09.10.2009. IN THIS AGREEMENT, THE CONSIDERATION IS SHOWN AT RS. 10,00,000/ - , WHICH ACCORDING TO RECEIPT ATTACHED TO SUCH AGREEMENT HAD ALREADY BEEN RECEIVED WAY BACK IN F.Y. 2003 - 04 TO F.Y. 2005 - 06. THE LEARNED DR WONDERS AS TO HO W THE LUMP SUM AMOUNT RECEIVED IN EARLIER YEARS ON WHATSOEVER AMOUNT MIGHT BE CONSIDERED AS RECEIPT TOWARDS PURCHASE OF PROPERTY BY THE ASSESSEE. THERE IS NO FORMAL AGREEMENT FOR PURCHASE OF PROPERTY EXECUTED IN EARLIER YEARS, NEITHER THE EXISTENCE THERE O F IS ITA NO. 3904 /MUM/201 4 4 ANYWHERE REFERRED IN THE SAID AGREEMENT. SIMILAR IS THE CASE FOR OTHER AGREEMENT . THE LEARNED DR OBSERVES THAT THE ASSESSEE HAS SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS THAT SECTION 2(47) SAYS TRANSFER INCLUDES POSSESSION OF IMMOVABLE PR OPERTY GIVEN WITHOUT REGISTRATION OF CONVEYANCE DEED. CLAUSE (V) OF THE SAID SECTION STATES ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882). THEN THE LEARNED DR QUOTES AT LENGTH SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND STATES THAT THERE HAS TO BE SOME CONTRACT OR INSTRUMENT OF TRANSFER, IN PURSUANCE OF WHICH POSSESSIO N HAS BEEN TAKEN. AS PER HIM, IN THE PRESENT CASE THERE WAS NO SUCH CONTRACT OR INSTRUMENT OF TRANSFER, HENCE THE TRANSFER IS NOT DEEMED TO HAVE TAKEN PLACE IN EARLIER YEARS. THE LEARNED DR THUS CONCLUDES THAT AS THE ASSESSEE, AN EMPLOYEE OF LIE HAS PURCHA SED PROPERTIES FROM THE SAID CONCERN AT MUCH BELOW THE MARKET VALUE, THE PROVISIONS OF SECTION 17(III) IS ATTRACTED TO TREAT SUCH DIFFERENCE AS PERQUISITE IN LIEU OF SALARY AND HENCE THE ADDITION OF RS. 1,38,30,262/ - MADE BY THE AO BE RESTORED. 6. PER CONTRA , THE LEARNED COUNSEL OF THE ASSESSEE FILE S A P/B CONTAINING (I) COPY OF RETURN AC KNOWLEDGEMENT, COMPUTATION OF TOTAL INCOME AND ANNUAL ACCOUNTS FOR YEAR ENDED ON 31.03.2010, (II) COPY OF LETTER TO AO DATED 19.12.2012, (III) COPY OF DETAILS OF GALAS PURCHASED ALONG WITH AGREEMENTS, (IV) COPY OF DETAILS OF RENT RECEIVED AND LEAVE & LICEN SE AGREEMENTS, (V) COPY OF ASSESSMENT ORDER, RETURN ACKNOWLEDGEMENT, COMPUTATION OF TOTAL INCOME AND ANNUAL ACCOUNTS FOR A.Y. 2006 - 07, 2007 - 08, 2008 - 09, 2009 - 10 AND (VI) COPY OF SUBMISSION TO CIT(A) VIDE LETTER DATED 20.02.2014 . ALSO THE LD. COUNSEL REFERS TO PAGE 339, 352 AND 332 OF THE P/B. THE UNITS IN ITA NO. 3904 /MUM/201 4 5 LAXMI PLAZA HAVE BEEN SHOWN AS FIXED ASSETS IN THE BALANCE SHEET AS ON 31.03.2008 (PAGE 339 OF P/B) AND AS ON 31.03.2009 (PAGE 352 OF P/B). AT PAGE 332 IS THE ASSESSMENT ORDER OF THE ASSESSEE PASSED BY THE AO FOR THE AY 2008 - 09 ACCEPTING THE RETURNED INCOME OF RS.45,98,120/ - INCLUSIVE OF INCOME FROM HOUSE PROPERTY DECLARED AT RS.34,81,474/ - FURTHER T HE LEARNED COUNSEL SUPPORTS THE ORDER PASSED BY THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS A ND PERUSED THE RELEVANT MATERIAL ON RECORD. WE MAY REFER TO PAGE 16 - 17 OF THE P/B FILED BY THE ASSESSEE. ON A SCRUTINY OF THE FACTUAL SCORE, THE FOLLOWING DETAILS ARE NOTICEABLE : SL NO. UNIT NO AREA DATE OF ORIGINAL AGREEMENT AGREEMENT DATE AGREEMENT VALUE (RS.) REGISTRATION DATE MARKET VALUE (RS.) 1 301 500 13.09.2003 09.10.2009 1000000.00 15.10.2009 3300992.00 2 302 500 31.07.2003 09.10.2009 1000000.00 15.10.2009 3300992.00 3 401 500 19.05.2005 09.10.2009 1000000.00 15.10.2009 3094680.00 4 402 500 09.05.2005 09.10.2009 1000000.00 15.10.2009 3094680.00 5 22 500 22.06.2006 04.11.2009 2000000.00 05.11.2009 4126240.00 6 548 500 06.01.2006 04.11.2009 2000000.00 05.11.2009 3300992.00 7 549 500 22.062006 28.12.2009 2000000.00 15.01.2010 3300992.00 8 550 500 26.06.2006 28.12.2009 2000000.00 15.01.2010 2310694.00 7.1. NOW WE MENTION BELOW S ECTION 17 (2)(III)(C): - 17 - FOR THE PURPOSES OF SECTION 15 & 16 AND OF THIS SECTION (2) PERQUISITE INCLUDES (III) THE VALUE OF ANY BENEFIT OR AMENITY GRANTED OR PROVIDED FREE OF COST OR AT CONCESSIONAL RATE IN ANY OF THE FOLLOWING CASES (C) BY ANY EMPLOYER (INCLUDING A COMPANY) TO AN EMPLOYEE TO WHOM THE PROVISIONS OF PARAGRAPHS (A) AND (B) OF THIS SUB - CLAUS E DO NOT APPLY AND WHOSE INCOME UNDER THE HEAD SALARIES (WHETHER DUE FROM, OR PAID OR ALLOWED BY, ONE OR MORE EMPLOYERS), EXCLUSIVE OF THE VALUE OF ALL BENEFITS OR AMENITIES NOT PROVIDED FOR BY WAY OF MOMENTARY PAYMENT, EXCEEDS FIFTY THOUSAND RUPEES ITA NO. 3904 /MUM/201 4 6 7.2 . SALE AGREEMENT IS DIFFERENT FROM SALE - DEED. SALE AGREEMENT CONTAINS AGREED UPON TERMS AND CONDITIONS BETWEEN SELLER AND BUYER FOR THE SALE OF PROPERTY. IT ALSO SPECIFIES THE DATE BY WHICH THE TRANSACTION WILL BE COMPLETED. SALE AGREEMENT IS A ROAD - MAP HOW PROPERTY TRANSACTION WILL BE COMPLETED. ON THE OTHER HAND, SALE DEED IS EXECUTED AT THE TIME OF ACTUAL TRANSFER OF PROPERTY I.E. TRANSFER OF OWNERSHIP FROM THE SELLER TO THE BUYER. 7.3. THE LEGAL NODUS CONFRONTING US HAS BEEN CONSIDERED IN SURAJ L AMP & INDUSTRIES (P) LTD. VS. STATE OF HARYANA (2 011) 14 TAXMANN.COM 103 (SC). T HE HON'BLE SUPREME COURT HAS HELD THAT (I) IMMOVABLE PROPERTY CAN BE LEGALLY AND LAWFULLY TRANSFERRED ONLY BY A REGISTERED DEED OF CONVEYANCE, (II) TRANSACTIONS OF NATURE OF GE NERAL POWER OF ATTORNEY SALES OR SALE AGREEMENT / GENERAL POWER OF ATTORNEY / WILL TRANSFERS DO NOT CONVEY TITLE AND DO NOT AMOUNT TO TRANSFER, NOR CAN THEY BE RECOGNIZED AS VALID MODE OF TRANSFER OF IMMOVABLE PROPERTY AND (III) SUCH TRANSACTIONS CANNOT BE RELIED UPON OR MADE BASIS FOR MUTATION IN MUNICIPAL OR REVENUE RECORDS. THE HON'BLE SUPREME COURT ELABORATING ON THE SCOPE OF AN AGREEMENT OF SALE HAS HELD AS UNDER: - SCOPE OF AN AGREEMENT OF SALE 11. SECTION 54 OF 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: 'A CONTRACT OF S ALE DOES NOT OF ITSELF CREATE ANY INTEREST IN, OR CHARGE ON, THE PROPERTY. THIS IS EXPRESSLY DECLARED IN SECTION 54 OF THE TRANSFER OF PROPERTY ACT. SEE RAMBARAN PROSAD V. RAM MOHIT HAZRA [1967] 1 SCR 293. THE FIDUCIARY CHARACTER OF THE PERSONAL OBLIGATION CREATED BY A CONTRACT FOR SALE IS RECOGNISED IN SECTION 3 OF THE SPECIFIC RELIEF ACT, 1963, AND IN SECTION 91 OF THE TRUSTS ACT. THE PERSONAL OBLIGATION CREATED BY A CONTRACT OF SALE IS DESCRIBED IN SECTION 40 OF THE TRANSFER OF PROPERTY ACT AS AN OBLIGAT ION ARISING OUT OF CONTRACT AND ANNEXED TO THE OWNERSHIP OF PROPERTY, BUT NOT AMOUNTING TO A N INTEREST OR EASEMENT THEREIN. ITA NO. 3904 /MUM/201 4 7 IN INDIA, THE WORD 'TRANSFER' IS DEFINED WITH REFERENCE TO THE WORD 'CONVEY'. THE WORD 'CONVEYS' IN SECTION 5 OF TRANSFER OF PROPERT Y ACT IS USED IN THE WIDER SENSE OF CONVEYING OWNERSHIP THAT ONLY ON EXECUTION OF CONVEYANCE OWNERSHIP PA SSES FROM ONE PARTY TO ANOTHER. IN RAMBHAU NAMDEO GAJRE V. NARAYAN BAPUJI DHOTRA [2004 (8) SCC 614] THIS COURT HELD: PROTECTION PROVIDED UNDER SECTION 53A OF THE ACT TO THE PROPOSED TRANSFEREE IS A SHIELD ONLY AGAINST THE TRANSFEROR. IT DISENTITLES THE TRANSFEROR FROM DISTURBING THE POSSESSION OF THE PROPOSED TRANSFEREE WHO IS PUT IN POSSESSION IN PURSUANCE TO SUCH AN AGREEMENT. IT HAS NOTHING TO DO WITH THE OWNERSHIP OF THE PROPOSED TRANSFEROR WHO REMAINS FULL OWNER OF THE PROPERTY TILL IT IS LEGALLY CONVEYED BY EXECUTING A REGISTERED SALE DEED IN FAVOUR OF THE TRANSFEREE. SUCH A RIGHT TO PROTECT POSSESSION AGAINST THE PROPOSED VENDOR CANNOT BE PRESSED I N SERVICE AGAINST A THIRD PARTY. IT IS THUS CLEAR THAT A TRANSFER OF IMMOVEABLE PROPERTY BY WAY OF SALE CAN ONLY BE BY A DEED OF CONVEYANCE (SALE DEED). IN THE ABSENCE OF A DEED OF CONVEYANCE (DULY STAMPED AND REGISTERED AS REQUIRED BY LAW), NO RIGHT, TITL E OR INTEREST IN AN IMMOVEABLE PROPERTY CAN BE TRANSFERRED. 7. 4. THE GOVERNMENT OF INDIA VIDE GAZETTE NOTIFICATION NO. 56 DATED 24.09.2001 HAS EFF ECTED THE FOLLOWING AMENDMENTS: I. AMENDMENT OF SECTION 53 A OF TRANSFER OF PROPERTY ACT, DELETING WORDS TO THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED. II. INTRODUCTION OF SECTION 17(1) (A) IN THE INDIAN REGISTRATION ACT MAKING CONTRACTS TO TRANSFER FOR CONSIDERATION OF ANY IMMOVABLE PROPERTY IN THE NATURE OF SECTION 53(A) OF THE TRANSFER OF PROPERTY ACT INCLUDING AGREEMENT TO SELL COMPULSORILY REGISTERABLE. III. ADDITION OF NEW ARTICLE NAMELY ARTICLE 23(A) OF INDIAN STAMP ACT, 1899, CONVEYANCE IN THE NATURE OF PART PERFORMANCE CHARGEABLE TO 90% OF THE DUTY PAYABLE AS A CONVEYANCE. WITH THE INTR ODUCTION OF THESE AMENDMENTS, THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY INCLUDING AGREEMENT TO SELL FOR THE PURPOSE OF SECTION 53A OF ITA NO. 3904 /MUM/201 4 8 THE TRANSFER OF PROPERTY ACT, 1882, ARE REQUIRED TO BE REGISTERED IF THEY H AVE BEEN EXECUTED ON OR AFTER 24TH SEPTEMBER, 2001. 7.5. SECTION 17 OF THE REGISTRATION ACT ENUMERATES THE DOCUMENTS OF WHICH REGISTRATION IS COMPULSORY. THE AMENDED SUB - SECTION (1A) PROVIDES THAT THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY, FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT , 1882(4 OF 1882) SHALL BE REGISTERED. THERE HAS BEEN A SIMULTANEOUS AMENDMENT OF THE PROVISO TO SECTION 49 BY DELETING THE WORDS OR AS EVIDENCE OF PART PERFORMANCE OF A CONTRACT FOR THE PURPOSE OF SECTION 53A . THE CUMULATIVE EFFECT OF THESE AMENDMENTS I S THAT WHERE A PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY IN WRITING AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE SAID PROPERTY OR ANY PART THEREOF, OR HE BEING ALREADY IN POSSESSION CONTIN UES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT, THE BENEFIT OF SECTION 53A WOULD NOT BE AVAILABLE TO HIM UNLESS THE DOCUMENT IS REGISTERED AND IN THE EVENT OF NON - REGISTRATION IT CANNOT BE USED AS EVIDENCE. WE MAY THEREFORE CONCLUDE THAT SINCE A TRA NSACTION, EVEN A PART PERFORMANCE OF WHICH IS NOT COMPLETE WITHOUT REGISTRATION AFTER 24.09.2001, WILL NOT BE A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE INCOME TAX ACT, 1961 UNLESS IT IS DULY REGISTERED. 7.6. WE WILL BE FAILING IN OUR DUTY IF W E DO NOT TAKE NOTE OF THE RELEVANT DECISIONS. IN C.S. ATWAL VS. CIT (2015) 59 TAXMANN.COM 359 (P&H) , THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS HELD THAT THERE WAS NO TRANSFER WITHIN MEANING OF SECTION 2(47) (V) OF THE ACT R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT, 1982 WHERE DEVELOPMENT AGREEMENT ENTERED INTO BETWEEN DEVELOPER AND HOUSING SOCIETY FOR DEVELOPMENT OF CERTAIN LAND OWNED BY SOCIETY WAS NOT REGISTERED. THE HON'BLE HIGH COURT HELD AS UNDER: - ITA NO. 3904 /MUM/201 4 9 DOCTRINE OF PART PERFORMANCE AS ENSHRINED IN SECTION 53A OF THE 1882 ACT IS AN EQUITABLE DOCTRINE WHICH CREATES A BAR OF ESTOPPEL IN FAVOUR OF THE TRANSFEREE AGAINST THE TRANSFEROR. SECTION 53A OF THE 1882 ACT PROVIDES PROTECTION TO A TRANSFEREE TO RETAIN HIS POSSESSION WHERE IN PART PERFORMANCE OF T HE CONTRACT, HE HAD TAKEN POSSESSION OF THE PROPERTY EVEN IF THE LIMITATION TO BRING A SUIT FOR SPECIFIC PERFORMANCE HAD EXPIRED. BUT THERE ARE CERTAIN CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED IF A TRANSFEREE WANTS TO DEFEND OR PROTECT HIS POSSESSION UNDER SECTION 53A OF THE 1882 ACT. [PARA 19] AN AGREEMENT OF SALE WHICH FULFILLED THE INGREDIENTS OF SECTION 53A OF 1882 ACT WAS NOT REQUIRED TO BE EXECUTED THROUGH A REGISTERED INSTRUMENT EITHER UNDER 1882 ACT OR THE INDIAN REGISTRATION ACT, 1908 AS ORIGI NALLY ENACTED. [PARA 20] THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 HAS BROUGHT ABOUT A RADICAL CHANGE IN THE RIGHTS FLOWING ON THE BASIS OF AGREEMENTS EXECUTED IN PART PERFORMANCE OF THE CONTRACT UNDER SECTION 53A OF THE 1882 ACT. THE A MENDMENTS HAVE BEEN MADE IN SECTION 53A OF 1882 ACT AND SECTIONS 17 AND 49 OF THE 1908 ACT. BY AMENDMENT VIDE 2001 ACT WHICH STOOD ENFORCED WITH EFFECT FROM 24 - 9 - 2001, THE WORDS 'THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR' IN SECTION 53A OF 1882 ACT HAVE BEEN OMITTED. SIMULTANEOUSLY, SECTIONS 17 AND 49 OF THE 1908 ACT HAVE BEEN AM ENDED CLARIFYING THAT UNLESS THE DOCUMENT CONTAINING CONTRACT TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF 1882 ACT IS REGISTERED, IT SHALL NOT HAVE EFFECT FOR PURPOSES OF SECTION 53A OF THE 1882 ACT. [PARA 21] SEC TION 53A OF 1882 ACT HAS BEEN BODILY TRANSPOSED INTO SECTION 2(47)(V) AND THE EFFECT OF IT WOULD BE THAT SECTION 53A OF 1882 ACT SHALL BE TAKEN TO BE AN INTEGRAL PART OF SECTION 2(47)(V). IN OTHER WORDS, THE LEGAL REQUIREMENTS OF SECTION 53A ARE REQUIRED T O BE FULFILLED SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(47)(V). [PARA 24] 7.7. IN BAGRI IMPEX (P) LTD. VS. ACIT (2013) 31 TAXMANN.COM 39 (CAL . ) , IT IS HELD BY THE HONBLE CALCUTTA HIGH COURT THAT WHERE DEED OF CONVEYANCE GOT REGISTERED IN YEAR SUBSEQU ENT TO YEAR IN WHICH CONSIDERATION WAS RECEIVED, APPLYING SECTION 50C, VALUE ASSESSED BY ITA NO. 3904 /MUM/201 4 10 STAMP VALUATION AUTHORITY IN SUBSEQUENT YEAR, SHOULD BE TAKEN AS FULL VALUE CONSIDERATION. 7. 8. IN N.A. BABY VS. DCIT [2015] 62 TAXMANN.COM 22 (KER . ), THE HON'BLE KERALA HIGH COURT HELD AS UNDER : 12. AS STATED EARLIER, APPEALS ARE RELATING TO THE ASSESSMENT YEARS 2008 - 2009 AND 2009 - 2010. TO ANSWER THE ABOVE CONTENTION OF THE APPELLANTS, WE THINK IT ONLY APPROPRIATE TO REFER TO SUB - SECTION 1A OF SECTION 17 OF THE R EGISTRATION ACT, WHICH IS EXTRACTED HEREUNDER: (1A) THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001, AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN, THEY SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A.' 13. SUB - SECTION (1A) WAS INTRODUCED AS PER THE AMENDMENT ACT 2001 AND THEREFORE, ANY AGREEMENT FOR TRANSFER OF PROPERTY AFTER INTRODUCTION OF SUB - SECTION (1A) REQUIRE MANDATORY REGISTRATION IN ORDER TO HAVE EFFECT FOR THE PURPOSE OF SECTION 53A OF THE TRAN SFER OF PROPERTY ACT. ADMITTEDLY THE APPELLANTS HAVE NOT REGISTERED THE AGREEMENTS FOR SALE AND THEREFORE, AS PROVIDED UNDER SUB - SECTION (1A) OF SECTION 17 OF THE REGISTRATION ACT, THE SAME CAN ONLY BE DEEMED AS AN INEFFECTIVE DOCUMENT FOR CONSIDERING THE QUESTION OF PART PERFORMANCE OF THE CONTRACT AS CONTENDED BY THE APPELLANTS. IN THAT CIRCUMSTANCES, THE APPELLANTS SHALL BE DEEMED TO HAVE POSSESSED THE PROPERTY TILL THE SALE DEED WAS EXECUTED. THEREFORE THE APPELLANTS ARE NOT ENTITLED TO GET ANY ADVANTAG E OUT OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, AND CANNOT CONTEND THAT THEY HAD TRANSFERRED POSSESSION OF AN AGRICULTURAL PROPERTY ENTITLING THEM TO GET EXEMPTION FROM PAYMENT OF TAX. 7. 9. THESE JUDGEMENTS TELL US THAT AFTER THE AMENDMENT, SINCE A TRANSACTION EVEN A PART PERFORMANCE OF WHICH IS NOT COMPLETE WITHOUT REGISTRATION AFTER 24.09.2001 WILL NOT BE A TRANSFER WITHIN THE ITA NO. 3904 /MUM/201 4 11 MEANING OF SECTION 2(47) OF THE INCOME TAX ACT, 1961 UNLESS IT I S DULY REGISTERED. 7.10. THE MATTER IN DISPUTE BEFORE US IS SUMMARISED BELOW . IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAD PURCHASED THE SAID PROPERTIES DURING THE EARLIER YEARS AND NOT DURING THE FY 2009 - 10 RELEVANT TO THE AY 2010 - 11 AND ONLY REGIST RATION OF THE SAID PROPERTIES WAS DONE DURING THE AY 2010 - 11. ON THE OTHER HAND, IT IS THE FINDING OF THE AO THAT EVEN THOUGH THE ASSESSEE HAD MADE AGREEMENT FOR SALE IN EARLIER YEARS, IT CANNOT BE SAID THAT THE TRANSACTION WAS COMPLETED IN EARLIER YEARS AS THE SALE DEED S FOR THESE PROPERTIES WERE REGISTERED IN THE FY 2009 - 10 RELEVANT TO THE AY 2010 - 11. 7.1 1. AS MENTIONED HERE - IN - ABOVE, T HE GOVERNMENT OF INDIA HAS AMENDED S ECTION 17A OF THE REGISTRATION ACT, 1908 IN THE YEAR 2001 IN SUCH A MANNER THAT THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION OF ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF S ECTION 53A OF THE TRANSFER OF PROPERTY ACT SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT 2001 . 7.12. WE FIND THAT NEITHER THE AO NOR THE LD. CIT(A) HAS VERIFIED THE CONTENTION OF THE ASSESSEE THAT HE HAS SHOWN INCOME FROM THE PROPERTIES IN THE RETURN OF INCOME IN EARLIER YEARS AND THE SAME HA S BEEN ASSESSED TO TAX. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO TO MAKE A FRESH ASSESSMENT AS PER THE PROVISIONS OF T HE ACT AFTER EXAMINING THE ABOVE CLAIM OF THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE THE RELEVANT DETAILS BEFORE THE AO. THE AO WOULD ALSO KEEP IN MIND THE RATIO OF THE DECISIONS DELINEATED HERE - IN - ABOVE. NEEDLESS TO SAY THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZI NG THE ASSESSMENT ORDER. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3904 /MUM/201 4 12 ORDER PRONOUNCED IN THE OPEN C OURT ON 1 3 /06/2017 SD/ - SD/ - ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 1 3 /06/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI