ACIT 17(3), MUMBAI v. JAWAHARLAL L AGICHA, MUMBAI

ITA 1844/MUM/2012 | 2008-2009
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 184419914 RSA 2012
Assessee PAN ADJPA2926K
Bench Mumbai
Appeal Number ITA 1844/MUM/2012
Duration Of Justice 4 year(s) 6 month(s) 12 day(s)
Appellant ACIT 17(3), MUMBAI
Respondent JAWAHARLAL L AGICHA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Department
Bench Allotted J
Tribunal Order Date 28-09-2016
Date Of Final Hearing 01-08-2016
Next Hearing Date 01-08-2016
Assessment Year 2008-2009
Appeal Filed On 16-03-2012
Judgment Text
J IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI C.N. PRASAD JUDICIAL MEMBER AND SHRI ASHWANI TANEJA ACCOUNTANT MEMBER ITA NO.1844/MUM/2012 ASSESSMENT YEAR: 2008-09 ACIT 17(3) R.NO.614 6 TH FLOOR PIRAMAL CHAMBERS PAREL MUMBAI-400012 / VS. SHRI JAWAHARLAL L. AGICHA 99 RAY ROAD MUMBAI-400033 ( REVENUE ) ( RESPONDENT ) P.A. NO. ADJPA2926K REVENUE BY SHRI SANJAY SINGH ( CIT - D R) RESPONDENT BY SHRI HIRO RAI ( A R) / DATE OF HEARING : 07/09/2016 / DATE OF ORDER: 28/09/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST O RDER OF LD. ORDER OF LD. COMMISSIONER OF INCOME TAX(APPE ALS) -29 MUMBAI {(IN SHORT CIT} DATED 26.12.2011 PASSED AGAINST THE ASSESSMENT ORDER OF THE AO U/S 143(3) DATED 24.12.2 010 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DIRECTING T HE JAWAHARLAL L. AGICHA 2 AO TO DELETE THE ADDITION OF RS.25 81 38 515/- MADE UNDER THE HEAD CAPITAL GAIN. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DECIDING THAT FOR ARISING CAPITAL GAIN REGISTRATION OF THE DOCUMENT IS NECESSARY U/S.2(47)(I) & (V) OF THE I.T . ACT R.W.S.53A OF THE TRANSFER OF PROPERTY ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF APEX COURT IN THE CASE OF RAMCHANDRA MAHADEV JAGPAT & OTHER IN SLP(CIVIL) NO. 10281/2006. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) NOT APPRECIATED THE FACT S THAT AO HAS RIGHTLY WORKED OUT THE CAPITAL GAIN UND ER THE INCOME TAX ACT. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BEING ERRONEOUS IN FACTS AND IN LAW BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. DURING THE COURSE OF HEARING ARGUMENTS WERE MADE B Y SHRI HIRO RAI AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI SANJAY SINGH DEPARTMENTAL REPRESENTATIVE (CIT-DR) ON BEHALF OF THE REVENUE. 3 . DURING THE COURSE OF HEARING EXHAUSTIVE ARGUMENT S HAVE BEEN MADE BY BOTH THE PARTIES DRAWING OUR ATTENTION ON VARIOUS EVIDENCES ENCLOSED IN THE PAPER BOOK ORDER S OF THE LOWER AUTHORITIES AND JUDGMENTS OF VARIOUS COURTS O N THIS ISSUE AS WERE PLACED BEFORE US. THE CENTRAL ISSUE I NVOLVED IN THIS APPEAL IS WITH REGARD TO DETERMINATION TAXABIL ITY OF LONG TERM CAPITAL GAIN OF RS.25 81 38 515/- ARISING ON A CCOUNT OF A DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. SHIVALIK VENTURES A PARTNERSHIP FIRM WITH RESPECT TO PIECES AND PARCELS OF LAND LOCATED AT BANDRA (E) OWNED BY THE ASSESSEE. AS PER THE AO THE SAID DEVELOPMENT AGREE MENT GAVE JAWAHARLAL L. AGICHA 3 RISE TO TRANSFER OF LAND IN VIEW OF SECTION 2(47)(V ) OF THE ACT AND THEREFORE AS PER TERMS OF THE AGREEMENT AMOUNT OF TOTAL CONSIDERATION STIPULATED THEREIN CONSTITUTED SALE C ONSIDERATION FOR TRANSFER OF THE IMPUGNED LAND AND ACCORDINGLY TH E RESULTANT GAIN WAS HELD BY THE AO AS TAXABLE IN THE YEAR UNDER CONSIDERATION AS LONG TERM CAPITAL GAIN SUBJECT TO THE BENEFIT OF INDEXATION OF COST OF ACQUISITION OF LAND. WHEREAS AS PER THE ASSESSEE SAID DEVELOPMENT AGREEMENT DID NOT GIVE R ISE TO ANY KIND OF TRANSFER EVEN IN TERMS OF SECTION 2(47)(V) OF THE ACT AND THEREFORE NO AMOUNT OF GAIN SHOULD HAVE BEEN BROUG HT TO TAX IN THE YEAR UNDER CONSIDERATION. 3.1. THE BRIEF FACTS AND BACKGROUND OF THE ISSUES BROUG HT BEFORE US ARE THAT THE ASSESSEE HAD PURCHASED LAND AT BANDRA BY WAY OF TWO SALE DEEDS EXECUTED ON 05.09.1994 AND 08.01.1994. THE SAID LAND WAS OCCUPIED BY VARIOUS S LUM DWELLERS AND NO PORTION WAS AVAILABLE FOR PRACTICAL USE BY THE ASSESSEE. THE SAID LAND WAS DECLARED BY THE DEPUTY COLLECTOR OF THE CITY AS SLUM AREA U/S 4(1) OF THE MAHARASHTR A SLUM AREA (IMPROVEMENT CLEARANCE AND REDEVELOPMENT ACT) 1971. THE LAND ACQUIRED BY ASSESSEE WAS HELD AS SLUM AREA AND THUS USE OF SUCH LAND COULD BE MADE BY THE ASSESSEE ONLY AS PROVIDED UNDER THE SAID ACT AND VARIOUS OTHER REGUL ATIONS PRESCRIBED IN THE ALLIED LEGISLATION THAT TOO AFTER OBTAINING REQUISITE PERMISSION FROM THE COMPETENT AUTHORITY. THE ASSESSEE FOUND THAT IT WAS NOT POSSIBLE FOR HIM TO COMPLY WITH THE EXHAUSTIVE CONDITIONS TO RELOCATE THE SLUM DWEL LERS AND OTHER NUMEROUS LEGAL AND SOCIAL COMPLIANCES AND THE REFORE DURING THE YEAR UNDER CONSIDERATION IT ENTERED INTO AN JAWAHARLAL L. AGICHA 4 ARRANGEMENT WITH M/S SHIVALIK VENTURES FOR ALL THE PROCEDURAL AND SUBSTANTIVE COMPLIANCES AND FOR MAKING AGREEMEN T WITH THE SLUM DWELLERS FOR THEIR RE-LOCATION FOR AND ON BEHALF OF THE ASSESSEE AND FOR MAKING EFFECTIVE USE OF LAND AFTER CARRYING OUT REQUISITE DEVELOPMENT. AS PER THE TERMS OF THE AGRE EMENT THE ASSESSEE WAS ENTITLED TO RECEIVE 130000 SQ. FT. OF FSI OUT OF TOTAL FSI AND M/S. SHIVALIK VENTURES WAS FREE TO US E REMAINING LAND FOR ITS OWN PURPOSE IN LIEU OF SERVI CES TO BE RENDERED FOR RELOCATING THE SLUM DEVELOPERS AFTER OBTAINING PERMISSION FROM THE COMPETENT AUTHORITIES AND MAKIN G OTHER LEGAL COMPLIANCES. THE LAND COULD BE USED BY ANY PE RSON INCLUDING ASSESSEE ONLY AFTER ALL THE FORMALITIES A RE DONE AND STATUTORY PERMISSION IS ISSUED BY THE COMPETENT AUT HORITIES WITH RESPECT TO DEVELOPMENT OF LAND AND ITS FREE US E. 3.2. IT WAS STATED THAT COST OF CONSTRUCTION IN RESPECT TO 130000 SQ FT FSI TO BE GIVEN TO ASSESSEE IN PURSUAN CE TO DEVELOPMENT OF LAND BY SHIVALIK VENTURE WAS DETERMI NED AT RS 26 CRORES. THE AFORESAID COST OF CONSTRUCTION WAS T O BE INCURRED BY SHIVALIK VENTURES OR MONEY WAS TO BE PR OVIDED TO ASSESSEE FOR CONSTRUCTION. ONLY PART OF THIS SUM BE ING RS.10 CRORES WAS RECEIVED BY ASSESSEE DURING THE YEAR UND ER CONSIDERATION WHICH WAS SHOWN BY THE ASSESSEE UNDE R THE HEAD ADVANCES AS PART OF ITS LIABILITIES IN ITS BAL ANCE SHEET. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO GAVE SHOW CAUSE NOTICE THAT SAID DEVELOPMENT AGREEMENT G AVE RISE TO TRANSFER OF THE IMPUGNED LAND AND BEING NOT SAT ISFIED WITH THE REPLY OF THE ASSESSEE HE TREATED THE SUM OF RS . 26 CRORES AS SALES CONSIDERATION AND AFTER REDUCING INDEX COS T OF JAWAHARLAL L. AGICHA 5 ACQUISITION OF RS.18 61 485/- HE COMPUTED LONG TER M CAPITAL GAIN OF RS.25 81 38 515/- AND HELD THE SAME AS TAXA BLE IN THE YEAR UNDER CONSIDERATION. 3.3. BEING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A) WHEREIN EXHAUSTIVE SUBMISSIONS WERE MADE AND VARIOUS DOCUMENTARY EVIDENCES WERE ALSO SUBMITTED T O DEMONSTRATE THAT THE IMPUGNED DEVELOPMENT AGREEMENT DOES NOT GIVE EFFECT TO TRANSFER OF IMPUGNED LAND FOR VA RIOUS LEGAL AND FACTUAL REASONS. LD. CIT(A) AGREED WITH THE ARG UMENTS OF THE ASSESSEE AND AFTER PASSING A DETAILED ORDER HE TOOK THE VIEW THAT IMPUGNED DEVELOPMENT AGREEMENT DID NOT GI VE RISE TO TRANSFER OF THE IMPUGNED LAND AND THEREFORE IT WAS HELD THAT NO AMOUNT OF CAPITAL GAIN ACCRUED TO THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION AND THUS AMOUNT OF ADVANCE RECEIVED BY THE ASSESSEE WAS HELD TO BE NOT TAXABLE . 3.4. BEING AGGRIEVED THE REVENUE HAS FILED AN APPEAL B EFORE THE TRIBUNAL. DURING THE COURSE OF HEARING BOTH TH E PARTIES MADE THEIR RESPECTIVE ARGUMENTS. LD. CIT-DR TOOK US THROUGH VARIOUS CLAUSES OF THE DEVELOPMENT AGREEMENT DATED 07.11.2007. IT WAS SUBMITTED THAT ASSESSEE HAD RECE IVED A SUM OF RS.10 CRORES DURING THE YEAR UNDER CONSIDERA TION. IT WAS ALSO SUBMITTED THAT THIS AGREEMENT GIVES VARIOU S RIGHTS TO THE DEVELOPERS TO APPROACH THE AUTHORITIES AND TO M AKE DEVELOPMENT OF THE LAND. THUS FOR ALL PRACTICAL PU RPOSES THE LAND CAME INTO CONTROL AND DOMAIN OF THE DEVELOPERS . THE OWNER OF LAND ALSO EXECUTED A POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER TO ENABLE IT TO OBTAIN THE LETTER OF INTENT (LOI) IN RESPECT OF THE SAID LAND IN THE NAME OF THE DEVELOP ER. IT WAS JAWAHARLAL L. AGICHA 6 ALSO SUBMITTED THAT ALL THE INGREDIENTS OF SECTION 2(47)(V) WERE APPLICABLE AND ACCORDINGLY EVEN IF THERE WAS PART P ERFORMANCE IT AMOUNTED TO TRANSFER OF THE ASSET AND THEREFORE FULL VALUE OF SALE CONSIDERATION WAS TAXABLE IN THE YEAR BEFORE U S UNDER THE HEAD OF CAPITAL GAINS SUBJECT TO THE DEDUCTION OF I NDEXED COST OF ACQUISITION AS HAS BEEN RIGHTLY DONE BY THE AO. 3.5. BEFORE CONCLUDING HIS ARGUMENTS LD. CIT-DR SUBMIT TED THAT DEVELOPMENT AGREEMENT IS TO BE READ AS A WHOLE AND IF WE DO SO WE CAN EASILY MAKE OUT AN INTENTION OF GRANT ING OF POSSESSION FROM THE BARE PERUSAL OF THE AGREEMENT. HE SUBMITTED THAT TRANSFER OF EXCLUSIVE PHYSICAL POSIT ION IS NOT NECESSARY. IT WAS ALSO SUBMITTED THAT FULL DEVELOPM ENT RIGHTS WERE TRANSFERRED AND DEVELOPER WAS FREE TO EXECUTE THE SAME IN WHATEVER MANNER WITHOUT SEEKING ANY APPROVAL OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT AMENDMENT IN REGISTRATION ACT 1908 WILL NOT HAVE EFFECT ON TH E PROVISIONS OF SECTION 2(47)(V). HE CONCLUDED HIS ARGUMENTS BY SUBMITTING THAT IN THIS CASE POSSESSION WAS EFFECTIVELY GIVEN AND SUBSTANTIAL PART OF CONSIDERATION WAS RECEIVED AND THEREFORE IT CONSTITUTED TRANSFER AS PER SECTION 2(47)(V) OF THE ACT AND THEREFORE THE AO HAD RIGHTLY HELD THAT LONG TERM C APITAL GAIN WAS TAXABLE DURING THE YEAR UNDER CONSIDERATION. IN HIS SUPPORT LD. CIT-DR RELIED UPON FOLLOWING JUDGMENTS : 1. CHATURBUJ DWARKADAS KAPADIA VS. CIT 260 ITR 491( BOM) 2. JASBIR SINGH SARKARIA V CIT AAR. NO.724 OF 2006 DT. 30.08.2007 3. ELECTRO ZAVOD (I) PVT. LTD. VS. CIT 278 ITR 189 (CAL) 4. DR. MAYA SHENOY VS. ACIT 124 TTJ 692 (HYD) 5. SHRI MAHESH NEMICHANDRA GANESHWADE VS. ITO 594/P N/10 DATED 29.03.2012 6. V. RAMCHANDRA CONST. P. LTD. 11 TAXMANN.COM415(A GRA) JAWAHARLAL L. AGICHA 7 7. SURESHCHANDRA AGARWAL VS. ITO (2011) 15 TAXMANN 115(MUM) 8. SMT. BINDERCHOKH VS. ACIT (2013) 36 TAXMANN 503 (CHD) 9. G. SRINIVASAN VS. DCIT (2012) 28 TAXMAN 200 (COC HIN) 10. HUSSANLAL PURI VS. ITO (2013) 28 TAXMANN 7 (CHD ) 11. VRAJCHANDRA KARAR VARMA RATHOD (264 TAXMANN 391 (HYD) 12. MAHESH NIMICHANDRA GANESHWADE VS. ITO 21 TAXMANN.COM 136 (PUNE) 13. SMITA N SHAH VS. JCIT (2005) 94 ITD 492 (MUM) 3.6. PER CONTRA LD. COUNSEL OF THE ASSESSEE VEHEMENTLY OPPOSED THE ARGUMENT OF LD. CIT-DR. HE BEGAN HIS AR GUMENTS BY READING THE DETAILED FINDING OF LD. CIT(A) ON TH IS ISSUE AND VEHEMENTLY RELIED UPON THESE FINDINGS. IT WAS SUBMI TTED THAT LD. CIT(A) HAS CORRECTLY ANALYSED THE FACTS AND APT LY APPLIED THE LEGAL POSITION WHILE DECIDING THIS ISSUE AND RI GHTLY HELD THAT THE SAID DEVELOPMENT AGREEMENT DID NOT GIVE RI SE TO TRANSFER OF THE IMPUGNED LAND EVEN IF WE APPLY PRO VISIONS OF SECTION 2(47)(V) OF THE ACT. 3.7. FURTHER IT WAS SUBMITTED BY HIM THAT THE AO HAD MADE A SERIOUS ERROR BY PRESUMING THAT THE IMPUGNED DEVELO PMENT AGREEMENT WAS A REGISTERED DOCUMENT AND ON THAT ERR ONEOUS PREMISE HE HELD THAT IMPUGNED DEVELOPMENT AGREEMENT GAVE RISE TO TRANSFER OF IMPUGNED LAND IN VIEW OF PROVIS IONS OF SECTION 2(47)(V) OF THE ACT. HE SUBMITTED THAT AN A MENDMENT HAS BEEN MADE IN THE REGISTRATION ACT WHEREIN NEWL Y INSERTED SECTION 17(1A) OF THE REGISTRATION ACT 1908 CLEARL Y PROVIDED THAT DOCUMENTS CONTEMPLATING TO TRANSFER FOR CONSID ERATION ANY IMMOVABLE PROPERTY FOR THE PROPOSE OF SECTION 5 3A OF THE TRANSFER OF PROPERTY ACT 1882 SHALL BE REGISTERED AND IF THESE DOCUMENTS ARE NOT REGISTERED THEY SHALL HAVE NO EF FECT FOR THE JAWAHARLAL L. AGICHA 8 PURPOSE OF SECTION 53A. HE THUS SUBMITTED THAT IN ABSENCE OF REGISTRATION OF DOCUMENTS PROVISIONS OF SECTION 53 A CANNOT GIVE RISE TO A VALID TRANSFER AND CONSEQUENTLY PROV ISIONS OF SECTION 2(47)(V) ALSO CANNOT BE PRESSED INTO SERVIC E TO HOLD THAT THE ASSET HAD BEEN TRANSFERRED FOR THE PURPOSE OF C OMPUTING TAXABLE AMOUNT OF CAPITAL GAINS. IN THIS REGARD HE PLACED RELIANCE ON A RECENT JUDGMENT OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL V. CIT 378 ITR 244 WHICH IS DIRECTLY ON THIS ISSUE. FURTHER RELIANCE WAS PLA CED ON THE JUDGMENT OF MUMBAI BENCH OF THE TRIBUNAL IN THE CAS E OF DR. DEVENDRA H. DAVE UDGITH V. ITO 49 ITR (TRIB) 561 (M UMBAI) WHEREIN THE AFORESAID JUDGMENT OF HONBLE PUNJAB AN D HARYANA HIGH COURT HAS BEEN FOLLOWED AND IDENTICAL VIEW HAS BEEN TAKEN THAT IN ABSENCE OF REGISTRATION OF THE D OCUMENT THE PROVISIONS OF SECTION 2(47)(V) COULD NOT HAVE B EEN INVOKED AND SINCE AO HAD CONFINED HIMSELF TO 2(47)(V) ONLY AND DID NOT HOLD IT TAXABLE EVEN DE-HORS SECTION 2(47)(V) THEREFORE THE WHOLE ACTION OF LD. AO BECOMES ILLEGAL ESPECIALLY I N VIEW OF THESE DECISIONS. IT WAS FURTHER SUBMITTED BY HIM TH AT VARIOUS CLAUSES OF THE AGREEMENT CLEARLY SUGGEST THAT NO PO SSESSION WHATSOEVER HAS BEEN GIVEN BY THE ASSESSEE TO THE DE VELOPER. THE LAND STILL REMAINS UNDER DOMAIN AND CONTROL OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT FACTUALLY S PEAKING THE PHYSICAL POSSESSION IS NOT RETAINED BY THE ASSESSEE AND THEREFORE NO QUESTION ARISES OF HANDING OVER ITS P HYSICAL POSSESSION TO THE DEVELOPER. SINCE NO PHYSICAL POS SESSION HAS BEEN GIVEN BY THE ASSESSEE TO THE DEVELOPER THIS T RANSACTION CANNOT BE TESTED UNDER THE PROVISIONS OF SECTION 2( 47)(V) OF THE JAWAHARLAL L. AGICHA 9 ACT. THUS THE IMPUGNED TRANSACTION COULD GIVE RISE TO TAXABLE CAPITAL GAINS ONLY IN ACCORDANCE WITH THE MAIN PROV ISIONS OF SECTION 45 WHEREIN ADMITTEDLY NO TRANSFER OF THE IMPUGNED LAND CAN BE SAID TO HAVE TAKEN PLACE DURING THE YEA R UNDER CONSIDERATION. 3.8. IT WAS FURTHER SUBMITTED THAT SITUATION OF THE IMP UGNED LAND AS WELL AS IMPUGNED DEVELOPMENT AGREEMENT UNDE R CONSIDERATION ARE NOT COMPARABLE TO OTHER NORMAL CA SES SINCE IN THIS CASE VARIOUS STRINGS WERE ATTACHED AND THE RE WERE VARIOUS FETTERS ON THE LEGAL RIGHTS OF THE ASSESSEE AS WELL AS THE DEVELOPER FOR MAKING FREE USE OF THE LAND IN VIEW OF THE ADMITTED FACT THAT SAID LAND WAS OCCUPIED BY THE SL UM DWELLERS AND THEREFORE IT WAS SUBJECTED TO VARIOUS REGULATIONS IMPOSED BY SLUM DEVELOPMENT AUTHORITIES AND LAND CO ULD NOT HAVE BEEN USED FOR DEVELOPMENT IN ABSENCE OF LETTER OF INTENT (I.E. PERMISSION FROM SLUM REHABILITATION AUTHORITY ). OUR ATTENTION WAS ALSO DRAWN ON VARIOUS CLAUSES OF THE DEVELOPMENT AGREEMENT WHEREIN THIS FACT WAS CLEARLY MENTIONED. IT WAS SHOWN THAT THE DEVELOPER WOULD BE IN POSITION TO MAKE USE OF THE LAND ONLY AFTER THE ISS UANCE OF REQUISITE PERMISSIONS FROM SLUM REHABILITATION AUTH ORITY. 3.9. HE PLACED RELIANCE ON VARIOUS JUDGMENTS TO ARGUE T HAT THE IMPUGNED DEVELOPMENT AGREEMENT DID NOT GIVE RISE TO ANY TRANSFER IN THE EYES OF LAW. HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF AJAY KUMAR SHAH JAGATI VS. CIT 168 TAXMAN 53 WHEREIN PROVISIONS OF SECTION 2(47)(V) OF THE INCOME TAX ACT 1961 AS WELL AS SEC TION 53A OF TRANSFER OF PROPERTY ACT WERE CONSIDERED AND IT WA S HELD THAT JAWAHARLAL L. AGICHA 10 POSSESSION WAS ESSENTIAL ELEMENT TO BE CONSIDERED F OR ASCERTAINING TRANSFER OF THE PROPERTY. IT WAS EMPHA SIZED THAT JUDGMENT OF HONBLE SUPREME COURT WAS DATED 24 TH JANUARY 2008 WHICH WAS LATER IN TIME AS COMPARED TO THE JUD GMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V. CIT (SUPRA) WHICH WAS DATED 13 TH FEBRUARY 2003. IT WAS THUS SUBMITTED THAT VIEW EXPR ESSED IN MORE RECENT JUDGMENT SHOULD BE FOLLOWED. RELIANCE W AS ALSO PLACED ON THE JUDGMENT OF CIT V. GEETADEVI PASARI 1 7 DTR 280 (BOM) DATED 10 TH JULY 2008 WHEREIN IT WAS HELD THAT RELEVANT YEAR FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN WILL BE THE ASSESSMENT YEAR IN WHICH PURCHASER WAS ACTUALLY AND PHYSICALLY PUT IN THE POSSESSION. IT WAS EMPHASIZED THAT IN THIS JUDGMENT EARLIER JUDGMENT OF HONBLE BOMBAY H IGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V. CIT (SUPRA) HAS ALSO BEEN CONSIDERED. IT WAS STATED THA T SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE KARNATAKA HIGH C OURT IN THE CASE OF CIT V. DR. T. K. DAYALU 202 TAXMAN 531 WHEREIN SIMILAR VIEW HAS BEEN TAKEN AFTER CONSIDERING THE A FORESAID JUDGMENT OF HONBLE BOMBAY HIGH COURT. 3.10. LD. COUNSEL CONCLUDED HIS ARGUMENT BY SUBMITTING T HAT PECULIAR FACTS OF THE CASE BEFORE US ARE THAT THERE WERE VARIOUS LEGAL FETTERS UPON THE RIGHTS OF THE ASSESSEE FOR M AKING USE OF IMPUGNED LAND FOR HIS OWN PURPOSE AND THEREFORE WH EN THE ASSESSEE HIMSELF DID NOT HAVE ABSOLUTE LEGAL RIGHTS THESE COULD NOT HAVE BEEN TRANSFERRED TO THE DEVELOPER AN D THEREFORE NO TRANSFER OF THE IMPUGNED LAND COULD BE SAID TO H AVE TAKEN PLACE BY THE IMPUGNED DEVELOPMENT AGREEMENT WHICH W AS NOT JAWAHARLAL L. AGICHA 11 MORE THAN AN UNDERSTANDING IN REGARD TO THE PROPOSE D TRANSFER WHICH WAS TO COME INTO EFFECT ONLY WHEN PR OPER SCHEME WAS SANCTIONED BY THE SLUM REHABILITATION AU THORITY AND OTHER REQUISITE LEGAL COMPLIANCE IN THIS REGARD WERE MADE. 3.11. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AND DOCUMENTARY EVIDENCES COPIES OF JUDGMENT PLACE D AND ALSO THE ARGUMENTS MADE BY BOTH THE PARTIES BEFORE US. THE ONLY ISSUE WHICH WE HAVE BEEN CALLED UPON TO DECIDE IS WHETHER THE IMPUGNED DEVELOPMENT AGREEMENT DATED 07.11.2007 ENTERED INTO BY THE ASSESSEE WITH M/S. S HIVALIK VENTURE GIVES RISE TO TRANSFER OF THE IMPUGNED LAND OWNED BY THE ASSESSEE IN TERMS OF PROVISIONS OF SECTION 2(47 )(V) OR ANY OTHER PROVISION OF INCOME TAX ACT SO AS TO BRING T O TAX THE AMOUNT OF LONG TERM CAPITAL GAIN AS HAS BEEN COMPUT ED BY THE LD. AO OR NOT AS WAS CLAIMED BY THE ASSESSEE IN IT S RETURN OF INCOME. BEFORE THRASHING OUT THE FACTS AND APPLICAB LE LEGAL POSITION IT IS NOTED BY US THAT LD. CIT(A) HAS REC ORDED DETAILED AND WELL REASONED FINDINGS WHILE DECIDING THIS ISSU E THEREFORE WE FIND IT APPROPRIATE TO FIRST REPRODUCE THESE FIN DINGS TO MAKE OUR TASK SIMPLE AND EASY: 3.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE ARGUMENTS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE AUTHORISED REPRESENTATIVE OF THE APPELLANT HAVE PERUSED THE EVIDENCE ON RECORD. THE BRIEF FACTS IN THE CASE MAY HE RECAPITULATED. THE ASSESSEE WAS OWNER OF LAND WHICH WAS ACQUIRED IN TH E YEAR 1994 BY OBTAINING TWO SALE DEEDS ON 05/09/1994 AND 18/01/1994. THE AFORESAID LANDS WERE FULLY OCCU PIED BY VARIOUS SLUM DWELLERS. IN RESPECT TO SUCH LANDS APPELLANT HAS ENTERED INTO AN ARRANGEMENT WITH M/S SHIVALIK VENTURES WHO HAS UNDERTAKEN RESPONSIBILITI ES FOR MAKING ALL STATUTORY COMPLIANCE AS WELL AS JAWAHARLAL L. AGICHA 12 AGREEMENT WITH SLUM DWELLERS FOR DEVELOPMENT OF AFORESAID LANDS IN ACCORDANCE WITH THE SCHEME TO BE SANCTIONED BY THE SLUM REHABILITATION AUTHORITY. THE AFORESAID ARRANGEMENT HAS BEEN FORMALIZED INTO AN AGREEMENT DATED 7/11/2007 COPY OF WHICH IS PLACED ON RECORD. PERUSAL OF VARIOUS CLAUSES OF AGREEMENT SUBMITTED INDICATES THAT BASICALLY IT IS AN ARRANGEMENT WITH SHIVALIK VENTURES WHEREBY THE AFORESAID PARTY WAS TO MAKE VARIOUS COMPLIANCES FOR AVAILABILITY OF AFORESAID LAND FOR DEVELOPMENT UNDE R THE SCHEME FORMULATED BY STATE GOVERNMENT FOR REDEVELOPMENT OF SLUM DWELLERS AREA. THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THERE IS A COMPLETE TRANSFER OF LAND AND DETERMINATION OF CAPI TAL GAIN AMOUNTING TO RS 25 81 38 515/- CANNOT BE SUSTA INED FOR THE FOLLOWING REASONS. 3.2.1. THE LAND OWNED BY ASSESSEE IS FULLY OCCUPIED BY SLUM DWELLERS. THE PROVISIONS OF SECTION 22 OF MAHARASHTRA SLUM AREA (IMPROVEMENT CLEARANCE AND REDEVELOPMENT) ACT 1971 PROVIDES PROTECTION TO OCCUPIERS IN SLUM AREAS FROM EVICTION AND DISTRESS WARRANTS. ANY ACTION WITH REGARD TO EVICTI ON OF SUCH SLUM DWELLERS HAS TO BE ONLY AFTER PREVIOUS PERMISSION IN WRITING FROM THE COMPETENT AUTHORITIE S THE SLUM REHABILITATION AUTHORITIES HAS BEEN CONSTI TUTED TO TAKE CARE OF VARIOUS SLUM DWELLERS IN RESPECT OF PROTECTION PROVIDED UNDER STATUTE. THE LAND OWNED B Y ASSESSEE CANNOT BE USED FOR DEVELOPMENT UNLESS THER E IS PRIOR PERMISSION FROM SRA FOR DEVELOPMENT OF LAND. IT IS UNDISPUTED FACT ON RECORD THAT NO PERMISSION HAS BE EN ACCORDED BY SLUM REHABILITATION AUTHORITIES FOR DEVELOPMENT OF LAND IN FAVOUR OF ASSESSEE OR DEVELOPER DURING THE YEAR UNDER CONSIDERATION. 3.2.2. PERUSAL OF MAP PLACED IN PAPER BOOK INDICATE S THAT VARIOUS PORTIONS WHICH ARE MARKED IN RED COLOU R ARE AREA OF LAND BELONGING TO ASSESSEE. THE VARIOUS AREAS IN BETWEEN TWO PORTIONS OF LAND OF THE ASSESS EE DOES NOT BELONG TO ASSESSEE BUT BELONGS TO DEVELOPE R AND OTHER PERSONS FROM WHOM DEVELOPER HAS AGREED TO PURCHASE. THE LAND OWNED BY ASSESSEE IS THUS EVIDENTLY FRAGMENTED AND NOT CONTIGUOUS. THE TERMS AND CONDITIONS OF MOU WOULD INDICATE THAT JAWAHARLAL L. AGICHA 13 DEVELOPER HAS TO PROVIDE CONTIGUOUS PORTION OF LAND WHEREIN FSI 1 30 000 SQ FT CAN BE BUILT (CLAUSE 8 ) THE TOTAL AREA OF LAND MAY BE USED FOR DEVELOPMENT OF SLUM BUILDING OR FREE USE FOR PUBLIC AMENITIES OR F REE SALE BUILDING TO BE TAKEN BY THE DEVELOPER AFTER PROVIDING LAND TO ASSESSEE. ON THE DATE OF EXECUTIO N OF AGREEMENT NO SUCH CONCLUSION CAN BE DRAWN AND IT I S ONLY AFTER THE REQUISITE PERMISSIONS ARE GRANTED TO DEVELOPER FOR A PROJECT AS WHOLE AND LAND OWNED BY ASSESSEE AND OTHER LAND OWNED BY DEVELOPER THE PROJECT CAN BE IMPLEMENTED. M/S SHIVALIK VENTURES HAS AGREED TO MAKE COMPLIANCES AND ALSO INCUR EXPENSES TO OBTAIN SANCTION FROM SLUM REHABILITATIO N AUTHORITIES SO THAT LAND OWNED BY ASSESSEE CAN BE DEVELOPED. 3.2.3. IT IS SEEN THAT AGREEMENT/ARRANGEMENT WITH M/S SHIVALIK VENTURES IS IN RESPECT TO TWO ASPECTS. THE FIRST BEING OBTAINING SANCTIONED SCHEME FROM SLUM REHABILITATION AUTHORITIES SO THAT LAND CAN BE AVAILABLE FOR DEVELOPMENT AND CONSTRUCTION. THE SECOND ASPECT IS THAT AFORESAID LAND BE GIVEN TO M/S SHIVALIK VENTURES AFTER CLEARANCE FROM SRA FOR DEVELOPMENT OF LAND. THE ASSESSEE WAS ELIGIBLE FOR 1 30 000 SQ. FT. FSI OF CONSTRUCTED AREA IN THE AFO RESAID LAND OWNED BY ASSESSEE AS CONSIDERATION TOWARDS GRANTING OF DEVELOPMENT RIGHTS TO M/S. SHIVALIK VENTURES. IT IS SEEN THAT RIGHT OF DEVELOPMENT OF L AND COMMENCES ONLY AFTER DEVELOPMENT SCHEME IS SANCTIONED BY SLUM REHABILITATION AUTHORITIES AND CLEARANCE OF LAND FROM SLUM DWELLERS AND PRIOR TO T HAT AN AGREEMENT/ARRANGEMENT ONLY GIVES AUTHORITY TO SHIVALIK VENTURES FOR MAKING COMPLIANCES ON BEHALF OF ASSESSEE TO SEEK PERMISSION SO AS TO MAKE LAND AVAILABLE FOR THE PURPOSE OF DEVELOPMENT UNDER SLUM DEVELOPMENT SCHEME. IT IS SEEN THAT COST OF CONSTRUCTION IN RESPECT TO 130000 SQ FT FSI TO BE GIVEN TO ASSESSEE IN PURSUANCE TO DEVELOPMENT OF LAND BY SHIVALIK VENTURE HAS BEEN DETERMINED AT RS 26 CRORES. THE AFORESAID COST OF CONSTRUCTION WAS T O BE INCURRED BY SHIVALIK VENTURES OR MONEY WAS TO BE PROVIDED TO ASSESSEE FOR CONSTRUCTION. ONLY PART OF THIS JAWAHARLAL L. AGICHA 14 SUM BEING RS.10 CRORES IS RECEIVED BY ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 3.2.4. THE VARIOUS CLAUSES WHICH ARE RELEVANT FOR T HE PURPOSE OF ADJUDICATING THE ISSUE IN APPEAL ARE REP RODUCED HEREUNDER FOR READY REFERENCE. CLA USE 3: (PARA4) THE OWNER HEREBY GRANT DEVELOPMENT RIGHTS TO THE DEVELOPERS AND THE DEVELOPERS HEREBY ACCEPTS THE DEVELOPMENT RIGHTS IN RESPECT OF THE SAID PROPERTY IN ACCORDANCE WITH THE SCHEME TO BE SANCTIONED BY THE SLUM REHABILITATION AUTHORITY AND BY IMPLEMENTING T HE SAID SCHEME BY CONSTRUCTION OF SEPARATE BUILDING OR BUILDINGS FOR REHABILITATING THE SLUM DWELLERS (FOR SHORT REHABILITATION BUILDINGS) AND OTHER SEPARATE AND INDEPENDENT RESIDENTIAL OR COMMERCIAL BUILDINGS WHICH ARE PERMITTED TO BE SOLD IN THE OPEN MARKET T O ANY THIRD PARTY (FOR SHORT FREE SALE COMPONENTS) BY CONSUMING THE FSI AS MAY BE GRANTED BY THE COMPETENT AUTHORITY AS ALSO BY LOADING OUTSIDE TDR AVAILABLE IN THE MARKET HOWEVER SUBJECT TO THE DEVELOPMENT CONTROL REGISTRATIONS AND THE RULES AND REGULATIONS OF MUNICIPAL CORPORATION. CLAUSE 6 (PARA 6) ON THE ISSUANCE OF LETTER OF INTENT AND ON ISSUANCE OF ANNEXURE-II THE DEVELOPER SHALL BE ENTITLED TO ENT ER UPON THE SAID PROPERTY FOR THE PURPOSE OF IMPLEMENTATION OF SCHEME OF SRA'. CLAUSE- 14 (PAGE 9) 'NOTWITHSTANDING ANYTHING STATED IN THIS AGREEMENT THE OWNER SHALL ALWAYS BE DEEMED TO BE IN PHYSICAL AND EXCLUSIVE POSSESSION OF THE SAID PROPERTY UNTIL ISSUE OF ANNEXURE-II BY S.R.A.' 3.2.5. THE PERUSAL OF AFORESAID CLAUSES AS WELL AS READING OF AGREEMENT AS WHOLE CLEARLY INDICATES THA T THERE IS NO POSSESSION GIVEN BY ASSESSEE TO M/S SHIVALIK VENTURES DURING THE PREVIOUS YEAR UNDER CONSIDERATION IT IS UNDISPUTED FACT ON RECORD THAT LAND WAS NOT AVAILABLE FOR DEVELOPMENT DURING THE PREVIOUS YEAR UNDER CONSIDERATION IN AS MUCH AS THERE WAS NO SANCTION AVAILABLE FROM SLUM JAWAHARLAL L. AGICHA 15 REHABILITATION AUTHORITIES DURING THE YEAR UNDER CONSIDERATION OR EVEN ON THE DATE OF ASSESSMENT AS IS EVIDENT FROM ASSESSMENT ORDER. THE LAND IS NOT CLEA R FROM SLUMS AND AVAILABLE FOR DEVELOPMENT UNDER THE SLUM DEVELOPMENT SCHEME AS NO PERMISSIONS ARE AVAILABLE WITH ASSESSEE OR DEVELOPER AS IS EVIDENT FROM EVIDENCE ON RECORD. AS PER CLAUSE 14 OF THE DEVELOP MENT AGREEMENT APPELLANT WILL BE IN PHYSICAL AND EXCLUS IVE POSSESSION OF THE PROPERTY TILL SUCH PERMISSION FRO M SRA IS OBTAINED. 3.2.6. THE ASSESSING OFFICER AT PAGE 9 HAS OBSERVED THAT AGREEMENT WITH SHIVALIK VENTURES IS A REGISTERED CONVEYANCE DEED. THE ASSESSING OFFICER BASED ON ABOVE FINDING HELD THAT SINCE CONVEYANCE DEED OF IMMOVABLE PROPERTY IN QUESTION HAS BEEN EXECUTED AND REGISTERED IN THE YEAR UNDER SCRUTINY AND THEREFORE CAPITAL GAIN ARISES IN ASSTT. YEAR 20 08- 09. THE AGREEMENT /ARRANGEMENT WITH M/S SHIVALIK VENTURES IS NOT A REGISTERED DOCUMENT BUT IS ON STAMP PAPER OF RS 100/- AS IS EVIDENT FROM BARE PERUSAL OF AGREEMENT/ARRANGEMENT PLACED IN PAPER BOOK. THE FACTS AND EVIDENCE ON RECORD CLEARLY DEPICT THAT AGREEMENT IS NO REGISTERED CONVEYANCE DEED AS OBSERVED BY ASSESSING OFFICER . THE OBSERVATION OF ASSESSING OFFICER THAT AGREEMENT WITH M/S SHIVALIK VENTURES IS A REGISTERED CONVEYANCE DEED IS FACTUALLY INCORRECT. AS THE BASIC FACTUAL PREMISE OF ASSESSING OFFICER IS INCORRECT THE CONCLUSION OF ASSESSING OFFICER THAT CAPITAL GAIN ARISES IN ASSTT. YEAR 2008-09 IS UNJUSTIFIED. THE ASSESSMENT RECORDS HAVE BEEN REQUISITIONED DURING THE APPEAL PROCEEDINGS AND IT IS FOUND THAT THE SO CALLED DEED IS NOT A REGISTERE D ONE. 3.2.7. THE ASSESSING OFFICER HAS HELD THAT LAND OF ASSESSEE IS TRANSFERRED AS PER PROVISIONS OF SEC 2( 47) OF I. T. ACT 1961 AND THUS ASSESSEE IS LIABLE TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN IN RESPECT OF SURPLUS ARISING ON SALE OF LAND. THE ASSESSING OFFI CER HAS REFERRED TO PROVISIONS OF SECTION 2(47)(I) & (V ) OF IT JAWAHARLAL L. AGICHA 16 ACT 1961 AT PAGE 7 OF ASSESSMENT ORDER. THE PROVISIONS OF SEC 2(47)(I) & (V) ARE REPRODUCED HEREUNDER FOR READY REFERENCE: SEC. 2(47) TRANSFER' IN RELATION TO CAPITAL ASSET INCLUDES (I) THE SALE EXCHANGE OR RELINQUISHMENT OF THE AS SET: 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 N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT 1882 (4 OF 1882) OR 3.2.8 . IN THE FACTS OF PRESENT CASE THERE IS NO TR ANSFER UNDER CLAUSE (I) OF SEC. 2(47) IN AS MUCH AS NO REG ISTERED CONVEYANCE DEED IS EXECUTED BY ASSESSEE. THE CAPITA L ASSET IN QUESTION IS LAND AND IS IMMOVABLE PROPERTY . THE PROVISIONS OF SEC 54 OF TRANSFER OF PROPERTY AC T 1882 ARE REPRODUCED HEREUNDER; '54. 'SALE' DEFINED -- 'SALE' IS A TRANSFER OF OWNE RSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART - PAID AND PART - PROMISED. SALE HOW MADE -- SUCH TRANSFER IN THE CASE OF TANGIBLE IMMOVABLE PROPERTY OF THE VALUE OF ONE HUNDRED RUPEES AND UPWARD OR IN THE CASE OF A REVERSION OR OTHER INTANGIBLE THING CAN BE MADE ON LY BY A REGISTERED INSTRUMENT. IN THE CASE OF TANGIBLE IMMOVABLE PROPERTY OF A VA LUE LESS THAN ONE HUNDRED RUPEES SUCH TRANSFER MAY BE MADE EITHER BY A REGISTERED INSTRUMENT OR BY DELIVE RY OF THE PROPERTY. DELIVERY OF TANGIBLE IMMOVABLE PROPERTY TAKES PLACE WHEN THE SELLER PLACES THE BUYER OR SUCH PERSON AS HE DIRECTS IN POSSESSION OF THE PROPERTY. CONTRACT FOR SALE -- A CONTRACT FOR THE SALE OF IMMOVABLE PROPERTY IS A CONTRACT THAT A SALE OF SUC H PROPERTY SHALL TAKE PLACE ON TERMS SETTLED BETWEEN THE PARTIES. JAWAHARLAL L. AGICHA 17 IT DOES NOT OF ITSELF CREATE ANY INTEREST IN OR CHARGE ON SUCH PROPERTY.' 3.2.9. CONSIDERING THE PROVISIONS OF SEC 54 OF TRANSFER OF PROPERTY ACT THE TRANSFER OF CAPITAL ASSET CANNOT BE SAID TO HAVE TAKEN PLACE IN THE ABSENCE OF A REGISTERED CONVEYANCE DEED. A DOCUMENT OF SALE EXCHANGE OR RELINQUISHMENT IN RESPECT TO IMMOVABLE PROPERTY HAS NECESSARILY TO BE A REGISTERED DOCUMENT. THIS VIEW FINDS SUPPORT IN THE DECISION OF APEX COURT IN THE CASE OF ALAPATI VENKATARAMIAH VS. CIT REPORTED AT 57 ITR 185 (SC). AS REGARD TO APPLICABILITY OF PROVISION OF SUB CLAU SE (V) OF SEC 2(47) OF I T ACT 1961 IT CAN BE SEEN FROM T HE ARRANGEMENT EXECUTED BY ASSESSEE WITH M/S. SHIVALIK VENTURES THAT NO POSSESSION IS GIVEN BY ASSESSEE TO THE SAID PARTY. BARE PERUSAL OF SEC 2(47) (V) WOULD INDICATE THAT TO INVOKE THE PROVISIONS TO HOLD THAT ASSESSEE HAS TRANSFERRED LAND POSSESSION OF PROPERTY SHOULD BE GIVEN TO PURCHASER IN PART PERFORMANCE OF CONTRACT OF THE NATURE REFERRED TO I N SEC 53A OF TRANSFER OF PROPERTY ACT 1882. THE PROVISIONS OF SEC 53A OF TRANSFER OF PROPERTY ACT 1882 ARE REPRODUCED HEREUNDER: 'WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY AND THE TRANSFEREE HAS IN PART PERFORMANCE OF THE CONTRACT TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREO F OR THE TRANSFEREE BEING ALREADY IN POSSESSION CONTIN UES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT A ND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT A ND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM H IS PART OF THE CONTRACT THEN NOTWITHSTANDING THAT WHERE TH ERE IS AN INSTRUMENT OF TRANSFER THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFORE B Y THE LAW FOR THE TIME BEING IN FORCE THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FRO M ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMI NG JAWAHARLAL L. AGICHA 18 UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERLY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION OTHER THAN A RIGHT EXPRESSLY PROVIDED B Y THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF.' 3.2.10. BEFORE INVOKING THE PROVISION IT HAS TO BE ESTABLISHED THAT PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY AND TRANSFEREE IN PART PERFORMANCE HAS TAKEN POSSESSION OF PROPERT Y AND HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF CONTRACT. THUS UNLESS THE ABOVE INGREDIENTS OF TRANSACTIONS ARE PRESENT PROVISION OF SEC. 2(47)(V ) CANNOT BE PRESSED INTO SERVICE. IN THE FACTS OF PRESENT CASE NO POSSESSION OF PROPERTY IS GIVEN BY ASSESSEE TO M/S SHVALIK VENTURES. ON THE CONTRARY EVIDENCE ON RECORD BEING AGREEMENT ON THE BASIS OF WHICH AO HAS ASSESSED LONG TERM CAPITAL GAIN INDICATES THAT POSSESSION IS WITH ASSESSEE AND HAS NOT BEEN PARTED WITH. THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO DEMONSTRATE THAT POSSESSION OF LAND HAS BEEN GIVEN TO SHIVALIK VENTURES DURING THE YEAR UNDER CONSIDERATION THE PERUSAL OF VARIOUS CLAUSES OF AGREEMENT CORROBORATE S THE SUBMISSION OF ASSESSEE THAT POSSESSION OF LAND IS WITH ASSESSEE AND HAS NOT BEEN TRANSFERRED TO SHIVALIK VENTURES DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THE ARRANGEMENT IS ONLY TO MAKE COMPLIANCE WITH SLUM REHABILITATION AUTHORITIES FOR SANCTION OF SCHEME FOR AND ON BEHALF OF ASSESSEE. I T IS ONLY AFTER SUCH SANCTION SCHEME IS OBTAINED IN THE NAME OF ASSESSEE FROM SLUM REHABILITATION AUTHORITIES THE QUESTION AS TO GIVING OF POSSESSION BY ASSESSEE TO SHIVALIK VENTURES WOULD ARISE THE ABOV E FACTS ARE SUBSTANTIATED FROM AGREEMENT/ARRANGEMENT CONSIDERED BY AO IN ASSESSMENT ORDER. IT IS UNDISPUTED FACT ON RECORD THAT NO SANCTION SCHEME HAS BEEN RECEIVED FROM SLUM JAWAHARLAL L. AGICHA 19 REHABILITATION AUTHORITIES DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THE AO HAS BROUGHT NO EVIDENCE ON RECORD TO SHOW THAT ASSESSEE HAS RECEIVED SANCTION FOR DEVELOPMENT OF SLUM AREA FROM SLUM REHABILITATION AUTHORITIES DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THE CONCLUSION TO AO TO ASSES S CAPITAL GAIN IS SOLELY BASED ON AGREEMENT ENTERED I NTO BY ASSESSEE WITH M/S SHIVALIK VENTURES AND NOTHING ELSE. THE EVIDENCE ON RECORD CLEARLY INDICATES THAT LEGAL POSSESSION OF PROPERTY IS WITH ASSESSEE ONLY. ON ABOVE UNDISPUTED FACTUAL POSITION PROVISION OF SECT ION 2(47)(I)&(V) OF I.T. ACT 1961 CANNOT BE INVOKED TO HOLD THAT THERE IS TRANSFER OF LAND BY ASSESSEE TO ASSES S THE LONG TERM CAPITAL GAIN IN THE CASE OF ASSESSEE. THE OBSERVATION OF A.O. THAT PROVISIONS OF SECTION 2(47)(I)&(V) ARE ATTRACTED IN THE CASE OF ASSESSEE HAS NO MERIT IN AS MUCH AS THERE IS NO REGISTERED CONVEYANCE DEED EXECUTED BY ASSESSEE NOR ANY POSSESSION OF IMPUGNED PROPERTY WHICH IS HELD TO HAVE BEEN TRANSFERRED BY A.O. IS PARTED WITH BY ASSESSEE TO M/S SHIVALIK VENTURES. IN VIEW OF FACTS THAT THERE BEING NO TRANSFER IN TERMS OF PROVISIONS OF 2(47) OF IT ACT 1961 THE QUESTION OF MAKING ASSESSMENT OF ANY LONG TERM CAPITAL GAIN AT THE HAN DS OF APPELLANT DOES NOT ARISE. 3.2.11 THE RELIANCE PLACED ON VARIOUS DECISIONS AND AS RECORDED HEREINABOVE AND SUBMISSION BEFORE ME SUBSTANTIALLY SUPPORT THE SUBMISSION OF THE APPELLANT. IN THE DECISION OF APEX COURT IN THE CASE OF RAMCHANDRA MAHADEV JAGPAT & OTHERS IN SLP (CIVIL) NO. 10281/2006 THE SCHEME OF DEVELOPMENT OF SLUMS AT MUMBAI HAS BEEN CONSIDERED IN DETAIL AN D IT HAS BEEN HELD THAT SRA HAS TO MAKE VARIOUS VERIFICATIONS BEFORE ISSUING THE LETTER OF INTENT T O THE DEVELOPERS. THE RELEVANT PORTION OF JUDGMENT IS REPRODUCED HEREIN BELOW: 'AT THE TIME OF HEARING OUR ATTENTION WAS ALSO DRA WN TO THE GUIDELINES AND THE SEVERAL CONDITIONS TO BE FUL FILLED BY THE SLUM DWELLERS/THE SOCIETY/ AS WELL AS THE DEVELOPERS AND THE REMARKS REQUIRED TO BE OBTAINED ON THE PROPOSAL FROM THE CONCERNED AUTHORITIES BEFORE ISSUING LETTER OF INTENT. THE SRA HAS ALSO TO VERIF Y THE JAWAHARLAL L. AGICHA 20 RESOLUTION AS PASSED BY THE GENERAL BODY OF THE SLU M DWELLERS PROPOSED SOCIETY BY MAJORITY FOR APPOINTING OR REPLACING THE DEVELOPERS FOR THE DEVELOPMENT OF THE SCHEME IT IS ALSO NECESSARY FOR SRA TO VERIFY AND TO SEE WHETHER THE PLOT UNDER THE DEVELOPMENT IS NOT AFFECTED BY ANY RESERVATION SUCH AS PLAYGROUND OR RECREATION GROUND IN VIEW OF THE STAY GRANTED BY THE HIGH COURT IN WRIT PETITION NO. 1152 AND ALSO TO VERIFY WHETHER THE PROPOSED APPOINTED DEVELOPER HAS THE FINANCIAL CAPACITY TO UNDERTAKE A ND COMPLETE THE SCHEME. 'THE SRA IS ALSO DIRECTED TO CONSIDER AS TO WHETHER THE GUIDELINES AND OTHER CONDITIONS ARE FULFILLED BY TH E SLUM DWELLERS/ THE SOCIETY/AS WELL BY THE DEVELOPERS AND ISSUE NOTICE TO THE SOCIETY ALSO AND HEAR THEM PASS APPRO PRIATE SPEAKING ORDER WITHIN 3 MONTHS FROM TODAY. THE ABOV E DIRECTION IS ISSUED IN THE LARGER INTEREST OF THE S LUM DWELLERS AND IN ORDER TO REHABILITATE THE POOR SLUM DWELLERS AND NEEDY SLUM DWELLERS AT THE EARLIEST.' THE PERUSAL OF AFORESAID PORTION OF JUDGMENT INDICA TES THAT FOR DEVELOPMENT OF LAND OCCUPIED BY SLUM DWELL ERS THERE ARE VARIOUS ESSENTIAL STEPS TO BE TAKEN WHICH ARE CONDITIONS PRECEDENT FOR MAKING ANY DEVELOPMENT OF SUCH LAND. IN THE FACTS OF THE PRESENT CASE AS NO L ETTER OF INTENT HAS BEEN ISSUED BY SRA THE QUESTION OF TRANSFER OF LAND FOR THE PURPOSE OF DEVELOPMENT BY ASSESSEE DOES NOT ARISE. ON ABOVE ADMITTED FACTUAL POSITION ASSESSMENT OF CAPITAL GAIN IN THE CASE OF ASSESSEE IS NOT JUSTIFIED AND CANNOT BE SUSTAINED. 3.2.12. THE HON'BLE ITAT MUMBAI BENCH MUMBAI IN THE CASE OF ACIT VS. MRS GEETADEVI PASARI REPORTED AT 104 TTJ (MUM) 375. THE HON'BLE ITAT HAS HELD AS UNDER: 'IN ANY EVENT IN TERMS OF CLAUSE 9 OF THE DEVELOPMENT AGREEMENT THE POSSESSION WAS TO HE DELIVERED ONLY AFTER THE COMPLETE PAYMENT WAS MADE. ADMITTEDLY THIS CONDITION WAS NOT COMPLIED WITH TI LL THE END OF THE RELEVANT PREVIOUS YEAR. IN THESE CIRCUMSTANCES WHEN ONLY A SMALL PORTION OF SALE CONSIDERATION WAS RECEIVED AS EARNEST/DEPOSIT MONEY AND WHEN THE DEVELOPER COULD NOT HAVE THEREFORE EXERCISED HIS RIGHTS UNDER THE CONTRACT WHICH WERE TO JAWAHARLAL L. AGICHA 21 CRYSTALISE ON MAKING THE PAYMENTS AFTER THE RECEIPT OF NO OBJECTION CERTIFICATE FROM THE AUTHORITIES IT CANN OT BE SAID THAT THERE IS ANYTHING TO INDICATE LEAVE ASIDE EST ABLISH 'PASSING OF OR TRANSFERRING OF COMPLETE CONTROL OVE R THE PROPERTY IN FAVOUR OF THE DEVELOPER WHICH IS SINE Q UA NON FOR TAKING THE DATE OF CONTRACT AS RELEVANT FOR THE PURPOSE OF DECIDING THE YEAR OF CHARGEABILITY OF CA PITAL GAINS. THEREFORE ON THE FACTS OF THE PRESENT CASE THE DATE OF DEVELOPMENT AGREEMENT WOULD NOT REALLY BE RELEVANT TO DECIDE THE YEAR OF CHARGEABILITY.' THE PERUSAL OF JUDGMENT WOULD INDICATE THAT IT WAS HELD THAT DATE OF DEVELOPMENT AGREEMENT WOULD NOT BE REL EVANT TO DECIDE CHARGEABILITY OF CAPITAL GAINS AS CONDITI ON AS TO MAKING OF PAYMENT WAS NOT FULFILLED TILL THE END OF PREVIOUS YEAR IN THE FACTS OF THE PRESENT CASE ASSESSING OFFICER HAS ASSESSED THE TAX ON CAPITAL GAINS ON TH E BASIS OF DATE OF DEVELOPMENT AGREEMENT ALTHOUGH THE VARIOUS BASIC CONDITIONS FOR EXECUTION OF 'ARRANGEM ENT TOOK PLACE AT MUCH LATER DATE. IN THE FACTS IN THE CASE OF ASSESSEE VARIOUS CONDITIONS WERE NOT COMPLIED BY DEVELOPER BEFORE THE END OF PREVIOUS YEAR AND IN FA CT HAS NOT BEEN COMPLIED EVEN BEFORE THE DATE OF ASSESSMEN T. ON ABOVE ADMITTED FACTUAL POSITION ASSESSMENT OF CAPITAL GAIN DURING THE YEAR TAKING THE DATE OF AGR EEMENT IN THE ABSENCE OF FULFILLING OF VARIOUS CONDITIONS IN ARRANGEMENT IS NOT JUSTIFIED AND UNSUSTAINABLE. 3.2.13. IN VIEW OF ABOVE AND CONSIDERING THE FACTS ON RECORD IT IS CONCLUDED THAT THERE IS NO POSSESSION OF LAND GIVEN BY ASSESSEE TO M/S SHIVALIK VENTURES IT IS NEEDLESS TO OBSERVE THAT CAPITAL GAIN SHALL BE CHARGEABLE TO TAX IN THE CASE OF APPELLANT IN THE Y EAR IN WHICH TRANSFER OF LAND TAKES PLACE IN TERMS OF PROVISIONS OF SEC. 2(47) OF I.T. ACT 1961. IT WILL BE CHARGED TO TAX WHEN APPELLANT HANDS OVER POSSESSION OF THE LAND IN SUBSTANTIAL FULFILLMENT OF CONTRACT AS PER THE PROVISIONS OF SECTION 2(47) OF THE ACT. AS I HA VE CONCLUDED ON FACTS THAT NO TRANSFER HAS TAKEN PLACE U/S. 2(47) DURING THE YEAR UNDER CONSIDERATION NO CAPITAL GAIN IS CHARGEABLE IN) ASSTT YEAR 2008-09. 3.2.14. CONSIDERING THE FACTS AND EVIDENCE ON RECOR D IT IS CONCLUDED THAT THERE NO TRANSFER AS ENVISAGED U/S 2(47) OF I T. ACT 1961 DURING THE PREVIOUS YEAR AND JAWAHARLAL L. AGICHA 22 CONSEQUENTLY THERE IS NO LIABILITY TO CAPITAL GAIN TAX DURING THE YEAR UNDER CONSIDERATION THE ACTION OF ASSESSING OFFICER IN ASSESSING LONG TERM CAPITAL GA IN ON TRANSFER OF AND CANNOT BE SUSTAINED. THE ADDITION MADE BY ASSESSING OFFICER AMOUNTING TO RS 25.81.38.515/- IS HEREBY DELETED. (EMPHASIS SUPPLI ED IN BOLD). 3.12. IT IS NOTED BY US THAT LD. CIT(A) HAS ANALYSED THE FACTS THREADBARE AND THE FACTUAL FINDINGS RECORDED BY HIM ARE BASED UPON THE EVIDENCES HELD ON RECORD. THEREFORE IN AB SENCE OF ANY CONTRADICTIONS OR DOUBTS IN THE FACTS RECORDED BY THE LD. CIT(A) HAVING BEEN BROUGHT BEFORE US WE ARE INCLIN ED TO ENDORSE AND UPHOLD THE SAME. HOWEVER SINCE EXHAUST IVE ARGUMENTS WERE MADE BY BOTH THE SIDES BEFORE US TH EREFORE WE FIND IT OUR DUTY ALSO TO GIVE OUR DETAILED ANALY SIS AND VIEWS SUPPLEMENTING THE REASONING GIVEN BY LD. CIT(A) HER EUNDER: 3.13. THE FIRST ISSUE THAT WAS RAISED BEFORE US FOR OUR CONSIDERATION IS WHETHER POSSESSION HAS BEEN GIVEN BY THE ASSESSEE TO THE DEVELOPER OR NOT. IN THIS REGARD I T IS NOTED BY US THAT AS HAS BEEN RIGHTLY NOTED BY LD. CIT(A) ALS O THAT CLAUSE 3 CLAUSE 6 AND CLAUSE 14 OF THE DEVELOPMENT AGREEM ENT CLEARLY LAID DOWN THAT THE POSSESSION SHALL BE GIVE N TO THE DEVELOPER ONLY UPON FULFILLMENT OF CERTAIN CONDITIO NS I.E. SANCTIONING OF SCHEME BY SLUM REHABILITATION AUTHOR ITY AND OBTAINING THE LETTER OF INTENT AND OTHER REQUISIT E PERMISSIONS FROM THE COMPETENT AUTHORITIES. IT HAS ALSO BEEN CL ARIFIED IN CLAUSE 14 THAT OWNER (ASSESSEE) SHALL ALWAYS BE DEE MED TO BE IN PHYSICAL AND EXCLUSIVE POSSESSION OF THE SAID PR OPERTY UNTIL THE ISSUANCE OF ANNEXURE -II BY SRA. IT IS AN ADMIT TED FACT ON RECORD THAT EVEN TILL DATE NO PERMISSION OR SCHEME HAS BEEN GRANTED BY THE SRA IN RESPECT IN THE IMPUGNED LAND. THUS JAWAHARLAL L. AGICHA 23 THERE COULD NOT HAVE BEEN ANY QUESTION OF PARTING W ITH THE PHYSICAL POSSESSION BY THE ASSESSEE WITH THE DEVELO PER. EVEN OTHERWISE NO MATERIAL HAS BEEN BROUGHT ON RECORD B Y THE AO OR BY LD. CIT-DR BEFORE US INDICATING ANY CONTRADIC TION IN THE FACTUALLY FINDINGS RECORDED BY LD. CIT(A). IN OTHER WORDS NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT PHY SICAL POSSESSION WAS GIVEN BY THE ASSESSEE TO THE DEVELOP ER. 3.14. WITHOUT PREJUDICE TO THE ABOVE EVEN OTHERWISE PHY SICAL POSSESSION IS HELD BY THE SLUM DWELLERS. UNDER THES E CIRCUMSTANCES APPARENTLY THERE WAS NOTHING TO SHOW THAT ASSESSEE COULD HAVE GIVEN PHYSICAL POSSESSION TO TH E DEVELOPER. UNDER THESE CIRCUMSTANCES EVEN THE VERY APPLICABILITY OF PROVISIONS OF SECTION 2(47)(V) BEC OMES DOUBTFUL ON SUCH TYPE OF TRANSACTION HAVING SUCH A PECULIAR FEATURES. THUS TAKING SUPPORT FROM THE JUDGMENT OF HONBLE S UPREME COURT IN THE CASE OF AJAY KUMAR SHAH JAGATI V. CIT (SC) (SUPRA) CIT VS. GEETADEVI PASARI (BOM) (SUPRA) AND CIT VS. DR. T.K. DAYALU (KARNATKA) (SUPRA) WE FIND THAT NO TRANSFER OF THE IMPUGNED LAND HAD TAKEN PLACE DURING THE YEA R UNDER CONSIDERATION EVEN UNDER THE PROVISIONS OF SECTION 2(47)(V). 3.15. THE OTHER IMPORTANT ASPECT THAT CANNOT BE IGNORED HERE IS THAT THE AO HAD HELD THIS TRANSACTION TO BE A CA SE OF TRANSFER BY ERRONEOUSLY PRESUMING THAT DEVELOPMENT AGREEMENT WAS REGISTERED WITH THE CONCERNED AUTHO RITIES. THE CORRECT FACT HAS BEEN NOTED BY LD CIT(A) THAT IMPUG NED DOCUMENT WAS NOT REGISTERED WITH THE REGISTRAR UN DER THE REGISTRATION ACT 1908. THIS FACTUAL FINDING HAS NO T BEEN NEGATED OR CONTROVERTED BY LD. CIT-DR BEFORE US. TH US JAWAHARLAL L. AGICHA 24 DECISION TAKEN BY THE AO WAS UNDER A MISTAKEN BELIE F OF A FACT WHICH DID NOT ACTUALLY EXIST. THUS ON THIS VERY GR OUND THE WHOLE ACTION OF LD. AO IN TREATING IMPUGNED TRANSAC TION AS A CASE OF TRANSFER BECOMES SERIOUSLY DOUBTFUL. 3.16. BUT ANOTHER LEGAL ISSUE HAS BEEN RAISED BEFORE US BY LD CIT-DR I.E. WHETHER THERE IS ANY LEGAL REQUIREMENT OF REGISTRATION OF THE DOCUMENT FOR INVOKING THE PROVI SIONS OF SECTION 2(47)(V) SINCE IT ONLY TALKS ABOUT CONTRACT OF THE NATURE AS REFERRED TO IN SECTION 53A OF THE TRANSFER OF PR OPERTY ACT AND THEREFORE IT IS NOT MANDATORY THAT WHOLE OF THE SECTION 53A NEEDS TO BE COMPLIED WITH WHILE APPLYING THE PROVIS IONS OF SECTION 2(47)(V). IT WAS FURTHER SUBMITTED THAT IF WE ANALYSE THE OBJECT OF BRINGING ON THE STATUTE THE PROVISIONS OF SECTION 2(47)(V) IT WOULD BE NOTED THAT THE PURPOSE WAS TO TAX CAPITAL GAINS ARISING IN THOSE CASES WHERE THE PROPERTIES W ERE ACTUALLY TRANSFERRED BY WAY OF AGREEMENT TO SALE BUT THESE W ERE NOT REGISTERED AND THEREFORE FEW ASSESSEES EVEN AFTER T RANSFERRING THEIR PROPERTIES WERE NOT PAYING THE TAXES AND THUS FOR THE PURPOSE OF STOPPING REVENUE LEAKAGE IN SUCH CASES CLAUSE (V) WAS INTRODUCED IN SECTION 2(47). IT WAS FURTHER SUB MITTED THAT APPLYING HAYDONS MISCHIEF RULE OF INTERPRETATION THE INTERPRETATION OF SECTIONS 2(47)(V) WAS TO BE DONE ONLY BY READING TO THE EXTENT AS WAS NECESSARY SO AS TO ACH IEVE THE OBJECT OF THE LEGISLATION. RELIANCE HAS BEEN PLACED BY LD. CIT- DR FOR THIS PROPOSITION ON THE JUDGMENT OF MUMBAI B ENCH OF THE TRIBUNAL IN THE CASE OF SURESH CHANDRA AGARWAL V. ITO 15 TAXMAN 115 (MUM). JAWAHARLAL L. AGICHA 25 3.17. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE ALS O ANALYSED BEFORE US THE POSITION OF LAW IN DETAIL ON THIS ISSUE AND RELYING UPON THE RECENT JUDGMENT OF HONBLE PUN JAB AND HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL V. CIT (SUPRA) AS WELL AS JUDGMENT OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DR. DEVENDRA H. DAVE UDGITH (SUPRA) IT WAS SUBM ITTED THAT A PROVISION OF THE ACT CANNOT BE BROKEN INTO PIECES AND INTERPRETATION CANNOT BE DONE IN SUCH A MANNER WHIC H ALLOWS CHOOSING SOME PIECES AND LEAVING THE OTHER. IT WAS SUBMITTED THAT THE DOCTRINE OF LEGISLATION BY INCORPORATION SUGGEST THAT PROVISIONS OF SECTION 17(1A) OF REGISTRATION ACT 1 908 HAVE TO BE NECESSARILY READ INTO SECTION 53A OF TRANSFER OF PROPERTY ACT AND THEREAFTER THESE PROVISIONS SHOULD THEN BE READ INTO SECTION 2(47)(V) OF THE INCOME TAX ACT 1961 SO AS TO MAKE COMPLETE READING OF THE LAW. IT WAS STRESSED THAT B Y READING THE LAW IN THIS MANNER ONLY THE CORRECT POSITION OF LAW SHALL EMERGE. 3.18. WE HAVE CONSIDERED THESE FACTS VERY CAREFULLY. LD. CIT- DR HAS SUGGESTED US TO FOLLOW HAYDONS MISCHIEF RUL E WHEREAS LD. COUNSEL OF THE ASSESSEE EMPHASISED UPON APPLICA BILITY OF DOCTRINE OF LEGISLATION BY INCORPORATION ON THE GI VEN FACTS OF THIS CASE. WE DID SOME THINKING ON THIS TRICKY SITU ATION. IN OUR VIEW BOTH THE RULES OF INTERPRETATION ARE WELL ACC EPTED RULES OF INTERPRETATION AND NONE OF THEM CAN BE DISCARDED. T HEREFORE IN OUR VIEW BOTH THE RULES SHOULD BE APPLIED IN TH EIR RESPECTIVE CHRONOLOGY AND RELEVANCE. THUS FOR THE SAKE OF COMPLETENESS FIRST WE SHOULD APPLY THE DOCTRINE OF LEGISLATION BY INCORPORATION AND AFTER APPLYING THE SAME ONCE THE LAW JAWAHARLAL L. AGICHA 26 BEFORE US BECOMES COMPLETE THEN WE SHOULD INTERPRE T THE PROVISIONS SO COMBINED BY APPLYING HAYDONS MISCHIE F RULE. IN OTHER WORDS WE SHOULD FIRST READ THE PROVISIONS OF SECTION 17(1A) OF THE REGISTRATION ACT INTO PROVISIONS OF S ECTION 53A OF THE TRANSFER OF PROPERTY ACT AND THE PROVISIONS SO COMBINED TOGETHER SHOULD BE READ INTO SECTION 2(47)(V) OF T HE ACT. IN OUR VIEW THE PROVISIONS OF SECTION 2(47)(V) SHOULD BE READ IN TOTO . WHEN SECTION 2(47)(V) TALKS ABOUT CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT THEN WE SHOULD ALSO READ THE CONDITIONS ATTACHED IN SECT ION 53A AND ONE OF THE MAIN REQUIREMENTS IS FOR REGISTRATIO N OF THE DOCUMENT AS PER THE PROVISIONS OF SECTION 17(1A) OF THE REGISTRATION ACT 1908. THUS REGISTRATION OF THE DO CUMENT BECOMES ONE OF THE ESSENTIAL INGREDIENTS TO INVOKE PROVISIONS OF SECTION 2(47)(V). IT IS NOTEWORTHY THAT SUBSEQUE NT TO INSERTION OF CLAUSE (V) TO SECTION 2(47) OF THE ACT AMENDMENTS HAVE BEEN MADE IN SECTION 53A OF TRANSFER OF PROPER TY ACT AS WELL AS SECTION 17(1A) OF REGISTRATION ACT FOR MAND ATING THE REQUIREMENT OF REGISTRATION OF THE DOCUMENTS. CLAUS E (V) OF SECTION 2(47) WAS DRAFTED BY THE LEGISLATURE IN THE LIGHT OF PRE- AMENDED PROVISIONS OF SECTION 53A AND 17(1A). THUS IN OUR VIEW WHEN THERE IS A DRASTIC CHANGE IN THE SOURC E LEGISLATION [I.E. SECTIONS 53A AND 17(1A)] IT WOULD BE UNWISE UNSAFE AND CONTRARY TO CARDINAL PRINCIPLES OF JURISPRUDENCE T O IGNORE THE SAID CHANGE WHILE READING THE DEPENDENT LEGISLATI ON [I.E. CLAUSE (V) TO SECTION 2(47)]. AS A READER OF LAW WE CANNOT AFFORD TO MAKE ADVENTURES BY READING THE INTERPLAY BETWEEN VARIOUS SECTIONS OF DIFFERENT LEGISLATIONS IN A MAN NER WHICH JAWAHARLAL L. AGICHA 27 RESULTS INTO CHOOSING SOME PART OF THE INTERPLAY WH ILE LEAVING THE OTHER THAT TOO AS PER OUR DISCRETION. OTHERWIS E AT TIMES SUCH AN APPROACH (WHERE TWO INTER-DEPENDENT PROVISI ONS ARE NOT READ IN COMPLETE MANNER BUT IN BITS AND PIECES AS PER THE REQUIREMENT) MAY PROVE TO BE A RISKY AND MAY NOT BE FOUND TO BE UNIVERSALLY ACCEPTABLE IN LEGAL PARLANCE. IT IS FURTHER NOTED BY US THAT THIS ISSUE IS NO MORE RES-INTEGRA SINCE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL V. CIT 378 ITR 244 HAS DECIDED THIS ISSUE IN THE SIMILAR FASHION BY OBSERVING AS UNDER: 21. THE REGISTRATION AND OTHER RELATED LAWS (AMEND MENT) ACT 2001 (IN SHORT 'THE 2001 ACT') HAS BROUGHT AB OUT A RADICAL CHANGE IN THE RIGHTS FLOWING ON THE BASIS OF AGREEM ENTS EXECUTED IN PART PERFORMANCE OF THE CONTRACT UNDER SECTION 53A OF THE 1882 ACT. THE AMENDMENTS HAVE BEEN MADE IN S ECTION 53A OF 1882 ACT AND SECTIONS 17 AND 49 OF THE 1908 ACT. THE AMENDMENT VIDE 2001 ACT WHICH STOOD ENFORCED WITH E FFECT 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 SECTION S 17 AND 49 OF THE 1908 ACT HAVE BEEN AMENDED CLARIFYING THA T UNLESS THE DOCUMENT CONTAINING CONTRACT TO TRANSFER FOR CO NSIDERATION ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 5 3A OF 1882 ACT IS REGISTERED IT SHALL NOT HAVE EFFECT FOR PUR POSES OF SECTION 53A OF 1882 ACT. SECTION 17(1A) AS INCORPORATED AND SECTION 49 OF THE 1908 ACT AS AMENDED READ THUS:- '17(1A). THE DOCUMENTS CONTAINING CONTRACTS TO TRAN SFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY FOR THE PURPO SE OF JAWAHARLAL L. AGICHA 28 SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 ( 4 OF 1882) SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON O R 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 THE Y SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A.' '49. EFFECT OF NON-REGISTRATION OF DOCUMENTS REQUIR ED TO BE REGISTERED.--NO DOCUMENT REQUIRED BY SECTION 17 OR BY ANY PROVISION OF THE TRANSFER OF PROPERTY ACT 1882 (4 OF 1882)] TO BE REGISTERED SHALL-- (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN OR (B) CONFER ANY POWER TO ADOPT OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFE CTING SUCH PROPERTY OR CONFERRING SUCH POWER UNLESS IT HAS BE EN REGISTERED: PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IM MOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER O F PROPERTY ACT 1882 (4 OF 1882) TO BE REGISTERED MAY BE RECE IVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFO RMANCE UNDER CHAPTER II OF THE SPECIFIC RELIEF ACT 1877 (1 OF 1 877) OR AS EVIDENCE OF ANY COLLATERAL TRANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT.' THE WORDS 'OR AS EVIDENCE OF PART PERFORMANCE OF A CONTRACT FOR THE PURPOSES OF SECTION 53A OF THE TRANSFER OF PROP ERTY ACT 1882' HAVE BEEN OMITTED FROM THE PROVISO TO SECTION 49. 22. SECTION 17(1A) OF THE 1908 ACT INTRODUCED BY TH E 2001 ACT PROVIDES THAT NO BENEFIT WOULD BE ADMISSIBLE ON THE BASIS OF UNREGISTERED CONTRACT FOR THE PURPOSES OF SECTION 5 3A OF 1882 ACT. EQUALLY DELETION OF THE WORDS 'OR AS EVIDENCE OF PART JAWAHARLAL L. AGICHA 29 PERFORMANCE OF A CONTRACT FOR THE PURPOSES OF SECTI ON 53A OF THE TRANSFER OF PROPERTY ACT' FROM PROVISO TO SECTION 4 9 OF 1908 ACT CLARIFIES THE EFFECT OF NON-REGISTRATION OF A CONTR ACT EXECUTED IN TERMS OF SECTION 53A OF 1882 ACT. 23. HAVING ELABORATED THE SCOPE AND LEGISLATIVE IN TENT OF SECTION 2 (47)(II) (V) AND (VI) OF THE ACT AND ALS O THE MANDATORY INGREDIENTS FOR APPLICABILITY OF SECTION 53A OF 188 2 ACT IT WOULD BE ESSENTIAL TO NOTICE THAT THE PROVISIONS OF SECTI ON 53A OF 1882 ACT HAVE BEEN INTRODUCED IN SECTION 2 (47)(V) OF TH E ACT BY INCORPORATION. THE CONCEPT OF INCLUSION OF A PROVIS ION OF ANOTHER STATUTE BY INCORPORATION HAS BEEN DEALT WITH BY THE APEX COURT IN DETAIL IN SURANA STEELS PVT. LIMITED VS. DCIT ( 1999) 237 ITR 777. THE ISSUE BEFORE THE APEX COURT IN SURANA STEE LS PVT. LIMITED'S CASE (SUPRA) WAS RELATING TO COMPUTATION OF BOOK PROFIT UNDER SECTION 115J OF THE INCOME TAX ACT 1961. SEC TION 205 OF THE COMPANIES ACT 1956 PROVIDED THAT PAST LOSSES O R UNABSORBED DEPRECIATION WHICHEVER IS LESS SHALL BE ALLOWED AS SET OFF AGAINST THE BOOK PROFITS OF THE CURRENT YEA R FOR DETERMINING PROFITS FOR THE PURPOSE OF DECLARING DI VIDEND. EXPLANATION CLAUSE (IV) TO SECTION 115J OF THE ACT INCORPORATED THAT BOOK PROFITS SHALL BE REDUCED BY THE AMOUNT OF THE LOSS OR THE AMOUNT OF DEPRECIATION WHICH WOULD BE REQUIRED TO BE SET OFF AGAINST THE PROFIT OF THE RELEVANT PREVIOUS YEAR AS IF THE PROVISIONS OF CLAUSE (6) OF THE FIRST PROVISO TO SU B SECTION (1) OF SECTION 205 OF THE COMPANIES ACT 1956 ARE APPLICAB LE. IT WAS PRONOUNCED THAT THERE IS NO REASON TO ASSIGN TO THE TERM 'LOSS' AS OCCURRING IN SECTION 205 PROVISO CLAUSE (B) OF THE COMPANIES JAWAHARLAL L. AGICHA 30 ACT A MEANING DIFFERENT FROM THE ONE IN WHICH IT I S UNDERSTOOD THEREIN SOLELY BECAUSE IT IS BEING READ ALONGWITH S ECTION 115J OF THE ACT. WHILE DEALING WITH THE PRINCIPLES RELATING TO INTERPRETATION OF TAXING STATUTE WHERE THERE WAS IN CLUSION OF A PROVISION OF ANOTHER STATUTE IT WAS HELD THAT PROV ISION MUST BE CONSTRUED IN THE SENSE IT BORE IN STATUTE FROM WHIC H IT IS TAKEN. IT WAS RECORDED AS UNDER:- 'SECTION 115J EXPLANATION CLAUSE (IV) IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE SUBJECT JUSTICE G. P. SINGH STATES IN PRINCIPLES OF STATUTORY INTERPRETATION (7TH EDIT ION-1999): 'INCORPORATION OF AN EARLIER ACT INTO A LATER ACT I S A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIENCE IN ORDER TO AVOID VERBATIM REPRODUCTION OF THE PROVISIONS OF THE EARL IER ACT INTO THE LATER. WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVIS IONS ARE INCORPORATED BY REFERENCE INTO A LATER ACT THE PRO VISIONS SO INCORPORATED BECOME PART AND PARCEL OF THE LATER AC T AS IF THEY HAD BEEN 'BODILY TRANSPOSED INTO IT'. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER M.R. 'IF A SUBSE QUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT THE LEGAL EFFECT OF THAT AS HAS OFTEN BEEN HE LD IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF THEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN OR PRINTED IN IT. ' (P. 233) 'EVEN THOUGH ONLY PARTICULAR SECTIONS OF AN EARLIER ACT ARE INCO RPORATED INTO LATER IN CONSTRUING THE INCORPORATED SECTIONS IT M AY BE AT TIMES NECESSARY AND PERMISSIBLE TO REFER TO OTHER PARTS O F THE EARLIER STATUTE WHICH ARE NOT INCORPORATED. AS WAS STATED B Y LORD BLACKBURN: 'WHEN A SINGLE SECTION OF AN ACT OF PARL IAMENT IS INTRODUCED INTO ANOTHER ACT I THINK IT MUST BE REA D IN THE SENSE JAWAHARLAL L. AGICHA 31 IT BORE IN THE ORIGINAL ACT FROM WHICH IT WAS TAKEN AND THAT CONSEQUENTLY IT IS PERFECTLY LEGITIMATE TO REFER TO ALL THE REST OF THAT ACT IN ORDER TO ASCERTAIN WHAT THE SECTIONS ME ANT THOUGH THOSE OTHER SECTIONS ARE NOT INCORPORATED IN THE NE W ACT'. . THUS IT WOULD MEAN THAT SECTION 53A OF 1882 ACT HA S BEEN BODILY TRANSPOSED INTO SECTION 2(47)(V) OF THE ACT 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) OF THE ACT. IN OTHER WORDS THE LEGAL REQUIREMENTS OF SECTION 53A OF 1882 ACT ARE REQUIRED TO BE FULFILLED SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(47)(V) OF THE A CT. 3.19. THUS AS PER MANDATE OF LAW AS EXPLAINED BY HONB LE HIGH COURT IN ABOVE SAID JUDGMENT WE MUST MAKE CON JOINT READING OF ALL THREE AFORESAID SECTIONS TO UNDERSTA ND AND GIVE EFFECT TO ITS FULL MEANING. HAVING DONE SO WE CAN NOW APPLY HAYDONS MISCHIEF RULE TO INTERPRET THE LAW SO AS T O ACHIEVE THE OBJECTIVE OF THE LEGISLATION IN THE LIGHT OF THE F ACTS OF THE CASE BEFORE US. UNDOUBTEDLY THE PURPOSE OF THE LEGISLAT ION [I.E. SECTION 2(47)(V)] WAS TO BRING TO TAX THOSE TRANSAC TIONS WHERE THOUGH THE PROPERTIES WERE ACTUALLY TRANSFERRED BU T IN CERTAIN CASES ASSESSEES WERE AVOIDING PAYMENT OF CAPITAL GA IN TAXES ON THE GROUND OF NON-EXECUTION OF SALE DEED. WITH A VIEW TO PLUG REVENUE LEAKAGE UNDER SUCH CASES CLAUSE (V) T O SECTION 2(47) WAS BROUGHT ON THE STATUTE. THUS IN OUR OPIN ION ALSO SECTION 2(47) (V) CAN FOR SURE BE PRESSED INTO SERV ICE WHERE TRANSFER OF THE PROPERTY HAS BEEN COMPLETED IN SUBS TANCE AND JAWAHARLAL L. AGICHA 32 ASSESSEE IS TRYING TO CAMAFLOUGE THE TRANSACTION BY NOT EXECUTING A SALE DEED AND/OR BY CREATING FALSE IMP RESSION OF NO TRANSFER. BUT BEFORE INVOKING THESE PROVISIONS THE BURDEN IS UPON THE REVENUE TO DEMONSTRATE WITH THE HELP OF COGENT MATERIAL THAT TRANSFER HAS BEEN COMPLETED IN SUBSTA NCE. 3.20. FURTHER WE HAVE ANALYSED THE DEVELOPMENT AGREEMENT INDEPENDENTLY ALSO TO FIND OUT WHETHER THE IMPUGNED PROPERTY HAS ACTUALLY BEEN TRANSFERRED BY VIRTUE OF THIS AGR EEMENT. IT IS GENERALLY SEEN THAT THERE MAY BE SEVERAL STAGES OR EVENTS ARISING IN A JOINT DEVELOPMENT ARRANGEMENT MADE BET WEEN OWNER OF THE LAND AND THE DEVELOPER. FOR THE PURPO SE OF DETERMINING THE ACTUAL DATE OF TRANSFER OF THE LAND BY THE LAND OWNER ALL THESE STAGES / EVENTS NEEDS TO BE COLLEC TIVELY ANALSYSED AND AFTER EVALUATING OVERALL EFFECT OF TH E SAME WE CAN DETERMINE THE ACTUAL DATE OF TRANSFER. THESE S TAGES / EVENTS MAY BE DESCRIBED AS DATE OF ENTERING INTO JD A DATE OF EXECUTING POWER OF ATTORNEY AUTHORISING THE DEVELOP ER FOR TAKING VARIOUS APPROVALS / PERMISSIONS ETC. HANDIN G OVER THE POSSESSION OF THE LAND TO THE DEVELOPER FOR VARIOUS PURPOSES RECEIPT OF PART / FULL SALE CONSIDERATION FROM THE DEVELOPER DATE OF EXECUTION OF POWER OF ATTORNEY IN FAVOUR OF DEVELOPER AUTHORISING HIM FOR THE SALE OF DEVELOPED UNITS TO THE CUSTOMERS AT HIS ABSOLUTE DISCRETION; AND TRANSFER OF DEVELOPED UNITS TO THE CUSTOMERS ETC. THERE MAY BE FEW MORE STAGES / EVENTS TO COMPLETE THE TRANSACTION. THOUGH ONE SI NGLE EVENT MAY TRIGGER THE PROCESS OF TRANSFER BUT MAY NOT NEC ESSARILY COMPLETE IT ALSO. WHETHER THE TRANSFER HAS IN SUB STANCE TAKEN PLACE CAN BE DETERMINED BY ANALYSING THE INT ER-PLAY JAWAHARLAL L. AGICHA 33 AND EFFECT OF ALL THESE STAGES / EVENTS COMBINED AN D PUT TOGETHER. FOR EXAMPLE POSSESSION MAY BE GIVEN FOR VARIOUS PURPOSES VIZ. POSSESSION GIVEN TO A CONTRACTOR OR TO A TENANT ALSO BUT SUCH AN EVENT IN ITSELF CANNOT BE REGARDE D AS TRANSFER OF LAND. POSSESSION OF LAND MAY ALSO BE HANDED OVER AS LICENSEE ONLY FOR THE PURPOSE OF DEVELOPMENT OF REAL ESTATE ON LAND. HERE AGAIN IT SHALL NOT GIVE RISE TO TR ANSFER. THUS WHEN THE POSSESSION IS GIVEN ALONG WITH OTHER LEGAL RIGHTS TO THE DEVELOPER RESULTING INTO ENTITLEMENT OF THE DEV ELOPER FOR FULL USE AND ENJOYMENT OF THE PROPERTY AS WELL AS ITS FU RTHER SALE AFTER CONVERTING IT INTO DEVELOPED UNITS AT ITS FUL L OWN AND SOLE DISCRETION THEN IT MAY RESULT INTO TRANSFER PROV IDED OTHER CONDITIONS ALSO SUGGEST SO. THUS HANDING OVER OF THE POSSESSION HAS TO BE NECESSARILY COUPLED WITH THE I NTENTION OF TRANSFERRING THE RIGHTS OF OWNERSHIP AND ENJOYMENT OF THE PROPERTY TO THE DEVELOPER. HANDING OVER OF THE POS SESSION FOR THE LIMITED PURPOSE OF DEVELOPING THE LAND WHILE ST ILL RETAINING THE OWNERSHIP AND CONTROL OF VARIOUS LEGAL RIGHTS U PON THE PROPERTY BY THE LAND OWNER WOULD NOT FALL IN CLAUSE (V) OF SECTION 2(47). 3.21. NOW IN THIS LEGAL BACKGROUND IF WE ANALYSE THE UNDISPUTED FACTS OF THE CASE BEFORE US WE FIND THA T IN THE SITUATION GIVEN BEFORE US BY NO STRETCH OF IMAGINA TION WE ARE ABLE TO REACH UPON THE CONCLUSION THAT THE IMPUGNED LAND HAS ACTUALLY BEEN TRANSFERRED. IN FACT THE LAND IS ATT ACHED WITH SO MANY FETTERS AND IFS AND BUTS THAT IT CANNOT TO BE HELD AS TRANSFERRED UNLESS VARIOUS CONDITIONS ATTACHED TO I T ARE DULY COMPLIED WITH. DETAILED FINDINGS HAVE BEEN RECORDED IN THIS JAWAHARLAL L. AGICHA 34 REGARD BY LD. CIT(A) AFTER ANALYZING VARIOUS CLAUSE S OF THE DEVELOPMENT AGREEMENT AND OTHER RELEVANT FACTS OF T HIS CASE AND ALSO DISCUSSED BRIEFLY BY US IN EARLIER PART OF OUR ORDER. IT IS NOTEWORTHY THAT THE ADMITTED FACT ON RECORD IS T HAT REQUISITE PERMISSIONS FROM SLUM REHABILITATION AUTHORITY HAVE NOT BEEN RECEIVED EVEN TILL DATE. THE DEVELOPER WAS NOT AUTH ORISED TO ENJOY/SELL HIS SHARE OF PROPERTY UNLESS HE HANDS OV ER TO THE OWNER ITS SHARE OF DEVELOPED PORTION OF FSI WHICH IN TURN WAS NOT POSSIBLE UNLESS ALL THE FORMALITIES PERTAINING TO SRA WERE COMPLETED. IN FACT THE DEVELOPER AS PER TERMS OF THE AGREEMENT WAS TO GET PROPER PERMISSION FOR RECEIVI NG RIGHTFUL POSSESSION OF THE LAND ONLY AFTER OBTAINING ALL REQ UISITE PERMISSIONS FROM SRA. THUS UNDER SUCH PECULIAR FAC TS AND CIRCUMSTANCES AND APPLYING ANY PROVISION OF LAW AND INTERPRETING THE SAME IN ANY MANNER ONE CANNOT CON CLUDE BY ANY STRETCH OF IMAGINATION THAT THE IMPUGNED PROPER TY HAS INDEED BEEN TRANSFERRED. THUS VIEWED FROM ANY ANGL E WE HAVE NO OPTION BUT TO AFFIRM THE DETAILED FINDING OF LD. CIT(A) ON THIS ISSUE. 3.22. LD. CIT-DR HAD ALSO HEAVILY RELIED UPON THE JUDGME NT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V. CIT (SUPRA) FOR UPHOLDING THE ACTION OF THE AO ON THE GROUND THAT AS PER THE SAID JUDGMENT THE AMOUNT OF CAPITAL GAIN SHALL BE CHARGED TO TAX IN T HE YEAR OF ENTERING OF JOINT DEVELOPMENT AGREEMENT AND THE MO MENT THE POSSESSION IS HANDED OVER IRRESPECTIVE OF THE FACT THAT WHETHER ANY CONVEYANCE DEED WAS ENTERED OR NOT AND WHETHER THE REGISTRATION IS DONE OR NOT. WE HAVE CAREFULLY GONE THROUGH THE JAWAHARLAL L. AGICHA 35 JUDGMENT OF HONBLE BOMBAY HIGH COURT AS WELL AS OR DER OF THE AO. IN FACT IN THE GIVEN FACTS OF THE CASE BEF ORE US THE AFORESAID JUDGMENT OF HONBLE BOMBAY HIGH COURT HEL PS THE ASSESSEE. OUR READING OF THE SAID JUDGMENT SUGGEST THAT RATIO COMING OUT FROM THE SAME IS THAT IN THE CASE OF A D EVELOPMENT AGREEMENT IF THE CONTRACT READ AS A WHOLE INDICA TES PASSING OR TRANSFERRING OF COMPLETE CONTROL OVER THE PROPER TY IN FAVOUR OF THE DEVELOPER THEN THE DATE OF CONTRACT WOULD B E RELEVANT TO DECIDE THE YEAR OF CHARGEABILITY OF CAPITAL GAINS A ND SUBSTANTIAL PERFORMANCE OF THE CONTRACT WOULD BE IR RELEVANT. NOW IF WE LOOK INTO THE FACTS OF THE CASE AS HAS A LREADY BEEN DISCUSSED AND ANALYSED BY US IN ABOVE PARAS THAT WH EN THE AGREEMENT WAS READ AS A WHOLE AND COMPARED WITH TH E CONDITIONS ATTACHED THERETO AS WELL AS REAL FACTS A ND CIRCUMSTANCES OF THE CASE IT DOES NOT TRANSPIRE TH AT THERE WAS CLEAR INTENDMENT OF THE ASSESSEE TO MAKE TRANSFER O F THE SAID LAND BY VIRTUE OF THIS AGREEMENT ITSELF IN VIEW OF THE DETAILED REASONING AND ANALYSES GIVEN BY US IN EARLIER PART OF OUR ORDER. FURTHER THE DISTINGUISHING FEATURES AND FACTS OF T HE ABOVE SAID CASE WERE THAT IN THE SAID CASE THE ADMITTED CASE OF THE SAID ASSESSEE WAS THAT TRANSFER HAD TAKEN PLACE AN D THE ONLY DISPUTE IN THE SAID CASE WAS CONFINED TO THE YEAR O F CHARGEABILITY. FURTHER THE FACT OF POSSESSION HAVI NG BEEN HANDED OVER BY THE ASSESSEE TO THE DEVELOPER WAS AL SO ADMITTEDLY ON RECORD AND THE SAME WAS NOT DENIED. W HEREAS ON THE OTHER HAND IN THE CASE BEFORE US NEITHER TH E POSSESSION HAS BEEN HANDED OVER NOR IT IS AN ADMITT ED CASE OF THE ASSESSEE THAT TRANSFER HAS TAKEN PLACE EVEN TIL L DATE. JAWAHARLAL L. AGICHA 36 FURTHER HONBLE BOMBAY HIGH COURT GOT AN OCCASION T O ANALYSE THE AFORESAID JUDGMENT IN THE CASE OF CIT V . GEETA DEVI PASARI SUPRA) DATED 10 TH JULY 2008 WHEREIN IT WAS CLEARLY HELD THAT UNLESS THE PURCHASER WAS ACTUALLY PHYSICALLY P UT IN POSSESSION EVEN THOUGH THE AGREEMENT WAS ENTERED IT CANNOT BE SAID THAT TRANSFER HAD TAKEN PLACE IN VIEW OF SE CTION 2(47)(V) AND THEREFORE CAPITAL GAIN COULD NOT BE CHARGED TO TAX. SIMILAR VIEW WAS TAKEN BY HONBLE SUPREME COURT IN ITS ORDE R DATED 24.1.2008 IN THE CASE OF AJAY KUMAR SHAH JAGATI W HEREIN THEIR LORDSHIPS CLEARLY HELD THAT POSSESSION IS ESS ENTIAL ELEMENT TO BE CONSIDERED FOR DECIDING WHETHER TRANS FER HAD TAKEN PLACE IN VIEW OF EXTENDED MEANING OF TRANSFE R IN SECTION 2(47)(V) READ WITH SECTION 53A OF THE TRANS FER OF PROPERTY ACT. IT IS TO BE FURTHER NOTED HERE THAT J UDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) WAS DELIVERED ON 13.2.200 3. SUBSEQUENTLY AN AMENDMENT HAS BEEN MADE UNDER REGISTRATION ACT 1908 IN 2001 BY WHICH SECTION 17(1 A) WAS INSERTED WHICH PROVIDED THAT REGISTRATION OF THE AG REEMENT SHALL BE MANDATORY TO GIVE EFFECT TO THE PROVISIONS OF SECTION 53A OF TRANSFER OF PROPTER ACT. THUS THE SAID JUDG MENT WAS DELIVERED KEEPING IN VIEW THE PRE-AMENDED LAW.THE DEVELOPMENT AGREEMENT UNDER CONSIDERATION BEFORE US IS ADMITTEDLY NOT REGISTERED.THE EFFECT OF NON-REGISTR ATION AFTER THE SAID AMENDMENT HAS BEEN ANALYSED BY HONBLE PUN JAB AND HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL WHICH HAS BEEN ALREADY DISCUSSED BY US IN EARLIER PART OF OUR ORDE R. THUS TAKING INTO ACCOUNT TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE IT CAN BE SAID JAWAHARLAL L. AGICHA 37 THAT NO TRANSFER OF THE IMPUGNED LAND HAD TAKEN PLA CE DURING THE YEAR BEFORE US. 3.23. BEFORE PARTING WITH WE SHALL LIKE TO DEAL WITH AN ALTERNATIVE ISSUE RAISED BY THE LD. CIT-DR THAT THE IMPUGNED AMOUNT OF RS.10 CRORES RECEIVED BY THE ASSESSEE SHO ULD BE BROUGHT TO TAX AS INCOME FROM OTHER SOURCES. WE SHA LL DEAL WITH THE ARGUMENT OF LD. CIT-DR ON THIS ASPECT ALSO . THE IMPUGNED AMOUNT OF RS.10 CRORES IS STATED TO BE IN THE NATURE OF ADVANCE MONEY RECEIVED BY THE ASSESSEE FOR THE P ROPOSED CONTRACTS OF THE LAND AND TO DEAL WITH SUCH A SITUA TION A SPECIFIC SECTION I.E. SECTION 51 EXISTS ON THE STAT UTE. SECTION 51 PROVIDES THAT UNDER SUCH CIRCUMSTANCES AMOUNT OF A DVANCE RECEIVED SHALL BE DEDUCTED FROM THE COST FOR WHICH IMPUGNED ASSET WAS ACQUIRED. THUS WE DIRECT THE AO TO TREAT THIS AMOUNT OF RS.10 CRORES AS PER PROVISIONS OF SECTION 51 OF THE ACT AND THE CONSEQUENCES AS PER LAW SHOULD FOLLOW. THE AO IS DIRECTED TO RE-COMPUTE THE INCOME ACCORDINGLY AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS SUBJE CT TO THE AFORESAID DIRECTIONS GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016. SD/- (C.N. PRASAD) SD/- (ASHWANI TANEJA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED: 28/09/2016 CTX? P.S/. .. JAWAHARLAL L. AGICHA 38 !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT MUMBAI. 4. / CIT(A)- MUMBAI 5. #$% &' &' ) / DR ITAT MUMBAI 6. %*+ / GUARD FILE. / BY ORDER # //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI