Vimalkumar Agarwal V. The Deputy Commissioner of Income Tax Circle 5(3), Aayakar Bhavan Hyderabad

ITTA/351/2013

AI Insights

The case involves an appeal by Vimalkumar Agarwal against the decision of the Income Tax Appellate Tribunal, which held that a property was transferred during the financial year 2005-06 based on the possession date recorded in an unregistered sale deed dated 3.9.2005. The appellant contested that the Tribunal erred by prioritizing the unregistered deed over other documentary evidence, such as telephone bills and ration cards, which allegedly proved that possession was not transferred during the said period. The legal contention centered around the interpretation of 'transfer' under the Income Tax Act and the relevance of registered versus unregistered documents in establishing possession.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 796372 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 30-08-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Transfer of Property Act, 1882
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: K VASANT KUMAR
• Keywords: Capital Gains; Income Tax; Possession; Possession; Transfer of property; Unregistered sale deed
• Section: 2(47); 53A

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU INCOME TAX APPELLATE TRIBUNAL APPEAL NO.351 OF 2013 DATED:30.8.2013 Between: Vimalkumar Agarwal … Appellant And The Deputy Commissioner of Income Tax Circle 5(3), Aayakar Bhavan Hyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A. NO.351 OF 2013 JUDGMENT: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is preferred against the judgment and order of the learned Tribunal dt.9.1.2013 and is sought to be admitted on the following suggested questions of law: 1. On the facts and in the circumstances of the case, whether the order of the Income Tax Appellate Tribunal is not perverse in holding that recitals in documents carry more weight than the documentary evidence, to hold that the possession was handed over in September, 2005 and hence there is a transfer during 2005-06? 2. On the facts and in the circumstances of the case, whether the Income Tax Appellate Tribunal is correct in law in not considering the documentary evidences to demonstrate that possession was not given during 2005-06 and further that there was no registered sale deed and hence as per provisions of Sec. 53A of T.P. Act, unless possession is given there cannot be Transfer and thereby erred in holding that there was a transfer during 2005-06? 3. On the facts and in the circumstances of the case, whether the Income Tax Appellate Tribunal is correct in law in not entertaining the plea to direct for deletion of Rs.53,75,000/- made as excess claim of deduction u/s.54, on the ground that there is no ground, though there is a ground to the effect that “Any other ground that may be urged at the time of hearing” and further that the said addition is connected to assessability of Capital Gains?” We have heard Mr. K. Vasantkumar, learned counsel appearing in support of this appeal and gone through the impugned judgment and order of the learned Tribunal. The learned Tribunal held on fact that the possession of the property was given on 3.9.2005 as per the signed original sale deed dated 3.9.2005, which remains unregistered, and the same can be treated as an agreement for sale. The learned Tribunal relied on the covenants of the aforesaid instrument. Said covenants read as follows: “4.4. The vendors hereby assure that the purchaser would at all times hereafter quietly and peacefully enter upon, occupy or hold, possess and enjoy the schedule property hereby conveyed and receive all rents, profits, thereto and income therefrom without any let up, hindrance, interruption, claim or demand whatsoever from the vendors herein or any person or persons or any party claiming through them. 5. Indemnity: The vendors hereby undertake to indemnify the purchaser in the event of any claim or right or interest over the schedule property by third party/parties or in the event the title of the vendor is found to be defective and undertake to make good the entire loss suffered by the purchaser.” The Tribunal, however, ignored the other evidences, namely telephone bills, ration cards etc. The learned Tribunal held that the terms and conditions of the unregistered sale deed, which is treated to be an agreement for sale, are evidences to establish the factum of possession. Mr. Vasantkumar, learned counsel for the appellant, submits that the learned Tribunal should not have relied on the recitals of the unregistered deed and should have looked into the other documents, namely, telephone bills and ration cards etc. According to him, the evidence adduced by the assessee is a conclusive proof that the buyer did not receive possession of the property. He also submits that the document is an unregistered one and hence it cannot be looked into. Under these circumstances, the finding of the learned Tribunal that the property has been transferred on 3.9.2005 is not correct. After considering the submissions of the learned counsel for the appellant and taking into consideration the findings of the Tribunal, firstly we have to see whether the transaction amounts to ‘transfer’ or not. We set out the definition of ‘transfer’ in Section 2(47) of the Income Tax Act, 1961, which reads as follows: 2(47). ‘Transfer’, in relation to a capital asset, includes, -- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (via) the maturity or redemption of a zero coupon bond; or (v) 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); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a cooperative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Thus, it appears that unlike the definition of ‘transfer’ in the Transfer of Property Act, the aforesaid definition is very wide and exhaustive. The aforesaid definition nowhere suggests that there must be compulsorily registerable document or deed, and all that is required is payment of some money or any factum of handing over possession in relation to an agreement. In this case, there is a covenant and pursuant to that, a deed of conveyance has been executed though not registered. Payment of consideration has also been made. The only question is whether there is any material to see that possession was delivered or not. The unregistered document, by the aforesaid covenant, which is not a recital at all, shows that possession has been handed over, so much so, that the buyer has got the dominant control and possession of the property. As such, it became an owner thereof going by above definition of transfer. In our considered view, nothing remains in the matter to transfer the property except to execute the document. The grain has already been passed over to the buyer and only chaff is remaining, namely, formality of registration. When the Tribunal and all the authorities came to a fact finding that there has been actual possession on the date of execution of the agreement on 3.9.2005, this Court cannot go into the fact finding. Depending upon appreciation of evidence, fact finding is made. We do not find any element of law in this appeal. The appeal is accordingly dismissed. There will be no order as to costs. ________________________ K.J. SENGUPTA, CJ ______________________ K.C. BHANU, J 30.8.2013 bnr "