Smt. K. Shashikala, W/o Late Manjunath V. The Assistant Commissioner of Income Tax, Central Circle-1(2) and Prl. Commissioner of Income Tax, Central Circle and Commissioner of Income Tax (Appeals)-11

WP/22819/2021

AI Insights

The case involves Smt. K. Shashikala, the petitioner, challenging the orders related to the assessment of capital gains tax on certain transactions documented by a Sale Agreement, Agency Agreement, and General Power of Attorney, all dated 14.08.2012. The petitioner argued that these documents did not constitute a 'Transfer' as per Section 2(47)(v) of the Income Tax Act, 1961, and thus, no capital gains tax should be levied. The respondents, including various commissioners of income tax, upheld the assessment, leading to this writ petition under Articles 226 and 227 of the Constitution of India. The court examined whether the transactions met the criteria of 'Transfer' under the relevant sections of the IT Act and the Transfer of Property Act, 1882.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 688256 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-10-2022
• Assessment Year: misc
• Other Referred Cases: Delhi Development Authority Vs. Gaurav Kukreja, Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr., CIT Vs. Balbir Singh Maini, Greater Bombay Co-operative Bank Ltd. Vs. Nagraj Ganeshmal Jain & Ors., Mother Earth Environ Tech Pvt. Ltd. Vs. Authority for Advance Ruling & Anr.
• Laws Referred To: Income Tax Act, 1961, Transfer of Property Act, 1882, Registration Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M
• Assessee Lawyers: V
• Keywords: Assessment Order; Capital gains tax; Income Tax; Transfer of property; Writ of Certiorari; Writ of Mandamus
• Section: 2(47)(v); 226; 227; 17(1)(a); 53(a)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF OCTOBER, 2022 BEFORE THE HON’BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.22819/2021 (T - IT) BETWEEN: SMT.K.SHASHIKALA, W/O LATE MANJUNATH, AGED ABOUT 43 YEARS, R/AT NO.97, BILESHIVALE VILLAGE, DODDAGUBBI POST, BANGALORE NORTH TALUK, SHIVARAMA KARANTH NAGAR, BANGALORE – 560 077. ... PETITIONER (BY SRI.V.SESHACHALA, SENIOR COUNSEL FOR SRI.ARAVIND V CHAVAN, ADVOCATE) AND: 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), C.R.BUILDING, QUEENS ROAD, BANGALORE – 560 001. 2. PRL. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, C.R.BUILDING, QUEENS ROAD, BANGALORE – 560 001. 3. COMMISSIONER OF INCOME TAX (APPEALS)-11, C R BUILDING, QUEENS ROAD, BANGALORE – 560 001. … RESPONDENTS (BY SRI.M.DILEEP FOR SRI.K.V.ARAVIND, ADVOCATES) - 2 - THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE R-3 COMMISSIONER OF INCOME TAX (APPEALS) DATED 29.01.2021 VIDE ANNEXURE - F CONFIRMING THE ORDER OF ASSESSMENT DATED 28.03.2016 PASSED BY THE R-1 VIDE ANNEXURE - D FOR A.Y. 2013-14 AND ETC. THIS WRIT PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R In this petition, the petitioner has sought for the following reliefs; a. Issue a Writ of certiorari to quash the order passed by the third respondent Commissioner of Income Tax (Appeals) dated 29.01.2021 Annexure-F bearing ITA No 120 & 121/CIT(A)-11/BNG/2016- 17 confirming the order of assessment dated 28.03.2016 passed by the first respondent Annexure-D for A.Y.2013-14. b. Issue a writ of Mandamus directing the first respondent to produce the government notification dated 17.04.2007 and the information obtained from the office of the Sub Registrar showing comparative sale instances for purpose of valuation of stock on 01.04.2010 based on which assessment order against the assessee is passed. c. Issue a writ of declaration that in the light of the settlement of legal position in subsequent judgments by the Apex Court in Delhi - 3 - Development Authority Vs.Gaurav Kukreja, Suraj Lamp & Industries Pvt., Ltd., Vs. State of Haryana & Anr., & CIT Vs. Balbir Singh Maini the liability to capital gains tax would arise only after project is completed and consideration received by the assessee and not during execution of the agreements. c(i) Issue a writ of Mandamus directing the respondents to make available the material relied on by the authorities for computation of capital gains before passing such assessment order.\" d. Issue such other Writ or direction as this Hon'ble Court deem fit to grant in the facts and circumstances of the present case 2. Heard the learned Senior Counsel appearing for the petitioner and the learned counsel appearing for the respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior Counsel appearing for the petitioner invites my attention to the documents executed by the petitioner in favour of the third parties i.e., Sale Agreement, Agency Agreement and General Power of Attorney, all dated 14.08.2012 in order - 4 - to contend that none of the said documents either individually or together constitute a 'Transfer' within the meaning of Section 2(47)(v) of the Income Tax Act, 1961 (for short “IT Act”). 4. It is submitted that the Hon'ble Apex Court as well as this Court in several decisions have categorically held that the transactions comprising of documents such as Power of Attorney, Agreement, Affidavit etc., without executing a Deed of Conveyance cannot be construed or treated as a 'Transfer' under the Transfer of Property Act, 1882 (for short 'T.P. Act' and as such, in the absence of the said document constituting a transfer within the meaning of Section 2(47)(v) of the IT Act, the respondents were clearly committed an error in coming to the conclusion that the said documents constituted a transfer within the meaning of Section 2(47)(v) of the IT Act, thereby, calling upon the petitioner to pay capital gains tax on the amount received pursuant to the said documents. It is submitted apart from the fact that the Assessing Officer has failed to consider the said aspect of the matter, in particular, that in the absence of possession being delivered in part performance of the contract as mandatorily required under - 5 - Section 53-A of the T.P Act, Section 2(47)(v) of the IT Act would not be applicable and there would not be any liability to pay capital gains tax. It is submitted that the Appellate Commissioner has merely copied the opinion of the Assessing Officer in his remand report and consequently, the impugned order passed by the Appellate Commissioner also suffers from non-application of mind and the same deserves to be quashed on this ground also. 5. In support of his contention, learned counsel for the petitioner has placed reliance on the following judgments; I. Commissioner of Income Tax Vs. Balbir Singh Maini (2017) 398 ITR 0531. II. Suraj Lamp & Industries Pvt., Ltd., Vs. State of Haryana & Anr., (2012) 1 SCC 656. III. Delhi Development Authority Vs. Gaurav Kukreja (2015) 14 SCC 254. IV. Greater Bombay Co-operative Bank Ltd., Vs. Nagraj Ganeshmal Jain & Ors., (2017) 15 SCC 316. V. M/s. Mother Earth Environ Tech Pvt., Ltd., Vs. Authority for Advance Ruling & Anr., W.P.No.2140/2021 dated 07.04.2021. - 6 - 6. Per contra, learned counsel appearing for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 7. As rightly contended by the learned Senior Counsel appearing for the petitioner, in order to attract Section 2(47)(v) of the IT Act, it is absolutely essential that possession of the property in question should be delivered in terms of Section 53-A of the T.P. Act. In the instant case, a perusal of the Sale Agreement, Agency Agreement and GPA, all dated 14.08.2012 will clearly indicate that possession of the said property covered under the said documents has not been delivered as mandatorily required under Section 53-A of the T.P. Act. In fact, the contents of the said documents will clearly indicate that there is no recital with regard to the petitioner handing over possession or putting the party in possession in part performance as required under Section 53- A of the T.P. Act. Further, the Sale Agreement dated 14.08.2012 under which, the petitioner is said to have agreed to sell the said land in favour of the third party is also not a registered document as required under Section 17(1-A) of the - 7 - Registration Act and on this ground also, it cannot be said that the petitioner had delivered or put the other party in possession in part performance for the purpose of Section 53- A of the T.P. Act. 8. Under these circumstances, I am of the considered opinion that in the absence of any recital in the aforesaid three documents, much less any recital to the effect that possession of the property in question was delivered in part performance of the contract, the three documents executed by the petitioner cannot be construed or treated as constituting a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act. 9. The material on record also discloses that though the Assessing Officer and the Appellate Commissioner have referred to certain decisions during the course of their orders, the aforesaid decisions relied upon by the learned counsel for the petitioner have not adverted to or referred to the aforesaid judgments of the Hon'ble Apex Court, which clearly establishes that so long as the documents do not constitute a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act, - 8 - the petitioner cannot be made liable to pay capital gains tax on the amount received by him. 10 .Under these circumstances, I am of the considered opinion that the impugned Assessment order deserves to be quashed and the matter remitted back to respondent 1- Assessing Officer for reconsideration afresh in accordance with law. 11. In the result, I pass the following: ORDER (a) Petition is allowed. (b) The Impugned Assessment Order dated 28.03.2016 at Annexure-D, the impugned order at Annexure-F dated 29.01.2021 and the Demand Notice at Annexure- J dated 21.06.2022 are hereby set aside. (c) Matter is remitted back to respondent No.1- Assessing Officer for reconsideration afresh in accordance with law bearing in mind the observations made in this order as well as the judgments relied upon by the petitioner after - 9 - providing sufficient and reasonable opportunity to the petitioner and providing him an opportunity of personal hearing in the matter. (d) Liberty is reserved in favour of the petitioner to submit additional pleadings, documents etc., before respondent No.1, who shall consider the same and proceed further in accordance with law. Sd/- JUDGE PN "