ITO 20(3)(3), MUMBAI v. SHEHAB SULTAN BOHRA, MUMBAI

ITA 3692/MUM/2015 | 2010-2011
Pronouncement Date: 08-11-2017 | Result: Dismissed

Appeal Details

RSA Number 369219914 RSA 2015
Assessee PAN OFTHE1882A
Bench Mumbai
Appeal Number ITA 3692/MUM/2015
Duration Of Justice 2 year(s) 4 month(s) 22 day(s)
Appellant ITO 20(3)(3), MUMBAI
Respondent SHEHAB SULTAN BOHRA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 08-11-2017
Date Of Final Hearing 27-03-2017
Next Hearing Date 27-03-2017
First Hearing Date 27-03-2017
Assessment Year 2010-2011
Appeal Filed On 16-06-2015
Judgment Text
ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY JM AND SHRI MANOJ KUMAR AGGARWAL AM ./I.T.A. NO.3171/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) SHEHAB S.BOHRA FLAT NO. 1202 12 TH FLOOR YASH HEIGHT CHSL NESBIT ROAD NEAR UNION BANK OF INDIA MAZGAON MUMBAI-400 010 / VS. INCOME TAX OFFICER 20(3)(3) PIRAMAL CHAMBER PAREL MUMBAI 400 012 ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) & ./I.T.A. NO.3692 /MUM/2015 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER 20(3)(3) PIRAMAL CHAMBER PAREL MUMBAI 400 012 / VS. SHEHAB S.BOHRA FLAT NO. 1202 12 TH FLOOR YASH HEIGHT CHSL NESBIT ROAD NEAR UNION BANK OF INDIA MAZGAON MUMBAI-400 010 &' ./ ./PAN/GIR NO. AADPB-6365-L ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) A SSESSEE BY : CHETAN KARIA LD. AR RE VENUE BY : POOJA SWAROOP LD. DR ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 2 / DATE OF HEARING : 28/09/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEALS BY ASSESSEE AS WELL AS REVENUE FOR ASSESSMENT YEAR [AY] 2010-11 WHICH CONTEST THE ORDE R OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-32 [CIT(A)] M UMBAI APPEAL NO. CIT(A)-32/IT-117/20(3)(3)/2013-14 DATED 23/03/2015. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED U/S 143(3) ON 13/03/2013 BY LD. INCOME TAX OFFICER 17(1)(3) [AO] MUMBAI. FIRST WE TAKE UP ASSESSEES APPEAL ITA NO. 3171/M/2015 WHERE THE ASSESSEE HAS RAISED S IX GROUNDS OF APPEAL. SINCE GROUND NO. 1 CONTEST THE VERY TAXABIL ITY OF THE IMPUGNED TRANSACTION AND GOES TO THE ROOT OF THE MATTER AND THEREFORE WE TAKE UP THE SAME FIRST. THE SAID GROUND READS AS FOLLOWS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THAT CAPITAL GAIN ON ALLEGED TRANSFER OF TWO IMMOVABLE P ROPERTY OWNED BY THE APPELLANT AT DADAR (E) MUMBAI IS ASSESSABLE IN THE IMPUGNED ASSESSMENT YEAR. 2.1 FACTS AS EMANATING FROM THE RECORD ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL DERIVING BUSINESS INCOME HOUSE PROPERTY INCOME AND CAPITAL GAIN WAS ASSESSED U/S 143(3) FOR IMPUGNED AY ON ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 3 13/03/2013 AT RS.2 49 06 890/- AS AGAINST RETURNED INCOME OF RS.1 450/- FILED BY THE ASSESSEE ON 23/11/2010. 2.2 PURSUANT TO RECEIPT OF ANNUAL INFORMATION RETURN [AIR] INFORMATION IT WAS NOTED THAT THE ASSESSEE HAD SOLD 2 PROPERTIE S SITUATED AT DADAR (EAST) TO KAPIL GROUP [DEVELOPER] ON 16/01/2010. THE SALE CONSIDERATION OF THE SAME WAS RS. 65 LACS AND RS. 100 LACS AS AGA INST MARKET VALUE OF RS.102.05 LACS & RS.146.91 LACS. 2.3 THE ASSESSEE EXPLAINED THAT IT INHERITED THE TW O ADJOINING PLOTS WITH STRUCTURES UPON DEMISE OF HIS FATHER. ONE PLOT WITH STRUCTURE WAS SITUATED AT CITY SURVEY NO. 47/26 BEARING PLOT NO. 48C AD-MEASURING ABOUT 382 SQUARE YARDS [FIRST PROPERTY] WITH VARIOU S TENANTS AND SECOND PLOT BEARING CITY SURVEY NO. 48/26 BEARING PLOT NO. 48B AD-MEASURING ABOUT 485 SQUARE YARDS [SECOND PROPERTY] WITH TENAN T KNOWN AS DADAR MOTOR WORKS . THE DEVELOPMENT RIGHTS OF THE FIRST AND SECOND PR OPERTY WERE AGREED TO BE SOLD FOR A CONSIDERATION OF RS.65 LACS AND RS.100 LACS RESPECTIVELY VIDE SEPARATE REGISTERED AGREEMEN T DATED 16/01/2010. 2.4 THE ASSESSEE DREW ATTENTION TO THE FACT THAT TH E DEVELOPMENT RIGHTS OF THE FIRST PROPERTY WERE SOLD TO THE DEVELOPER FO R RS.65 LACS AGAINST SMALL TOKEN AMOUNT OF RS 2.50 LACS AND THE BALANCE AMOUNT WAS PAYABLE IN VARIOUS INSTALLMENTS ONLY AFTER OBTAININ G 100% CONSENT OF THE TENANTS FOR REDEVELOPMENT OF THE PROPERTY. SIMILARL Y THE DEVELOPMENT RIGHT OF THE SECOND PROPERTY WERE SOLD FOR RS.1 CRO RES AGAINST SMALL TOKEN PAYMENT OF RS.3.50 LACS WHEREAS THE BALANCE P AYMENT WAS PAYABLE IN VARIOUS INSTALLMENTS ONLY AFTER OBTAININ G 100% CONSENT OF THE TENANTS OF THE SAID PROPERTY AND AFTER GETTING SANC TION OF THE BUILDING PLANS AND COMMENCEMENT CERTIFICATE FROM THE GOVERNM ENT. THEREFORE ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 4 THE DEVELOPMENT RIGHTS WERE GIVEN ON VARIOUS CONDIT IONS WHICH HAD TO BE FULFILLED BEFORE RECEIPT OF FULL CONSIDERATION. HOW EVER THESE CONDITIONS AS PER ASSESSEES CONTENTIONS REMAIN UNFULFILLED S INCE THE CONSENT OF THE RESPECTIVE TENANTS COULD NOT BE RECEIVED AND CO NSEQUENTLY PERMISSION OF GOVERNMENT AUTHORITY FOR REDEVELOPMEN T OF THE PROPERTIES WAS NOT TAKEN. FURTHER THE ASSESSEE NEVER GAVE THE POSSESSION OR TITLE OF THE SAID PROPERTIES AND RECEIVED MERE ADVANCE AG AINST THE SAME AND THEREFORE THE TRANSACTIONS WERE NOT ASSESSABLE TO CAPITAL GAINS IN THE IMPUGNED AY. HOWEVER NOT CONVINCED LD. AO CONCLUD ED THAT CAPITAL GAINS AROSE TO ASSESSEE IN THE IMPUGNED AY AND SINC E THE MARKET VALUE OF THE PROPERTY ON THE DATE OF AGREEMENT WAS MORE THE PROVISIONS OF SECTION 50C WERE ATTRACTED. THE ASSESSEE WHILE OBJ ECTING TO THE MARKET VALUATION ADOPTED BY THE LD. AO SUBMITTED VALUATIO N AS ON 01/04/1981 AND REITERATED THE STAND THAT THE CONSENT OF THE TE NANTS COULD NOT BE OBTAINED AND THE DEVELOPER HAD FILED EVICTION SUITS AGAINST TENANT BEFORE APPROPRIATE COURT AND THE SAME WERE PENDING. NEVERT HELESS THE ASSESSEE AT PRESENT AS OWNER OF THE BUILDING WAS RECEIVING RENT AND PAYING PROPERTY TAX TO THE GOVERNMENT AND HAD NOT H ANDED OVER THE PHYSICAL POSSESSION OF THE PROPERTY AND THEREFORE THE TRANSACTIONS WERE NOT ASSESSABLE TO CAPITAL GAINS TAX. THE ASSESSEE F URTHER CONTENDED THAT THE PROVISIONS OF SECTION 50C APPLIED ONLY TO TRANS FER OF ANY BUILDING OR LAND AND COULD NOT BE APPLIED TO DEVELOPMENT RIGHTS BEING GRANTED BY THE ASSESSEE. HOWEVER LD. AO OPINED THAT THE ASSES SEE THROUGH REGISTERED AGREEMENT GRANTED ABSOLUTE COMPLETE AN D UNFETTERED DEVELOPMENT RIGHTS TO THE DEVELOPER TO DEVELOP THE SAID PROPERTIES FOR CONSIDERATION AND FURTHER NOTED THAT THE RESPECTIVE AGREEMENTS WERE ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 5 IRREVOCABLE AND HENCE THERE WAS TRANSFER OF CAPITA L ASSETS CHARGEABLE TO TAX IN TERMS OF SECTION 2(47) AND JUDGMENT OF HONB LE BOMBAY HIGH COURT RENDERED IN DWARKADAS KAPADIA [129 TAXMAN 497]. THE LD. AO ALSO OPINED THAT THE PROVISIONS OF SECTION 50C WERE APPLICABLE TO SUCH TRANSACTION. FINALLY THE LD. AO COMPUTED CAPITAL G AINS OF RS.2 48 96 500/- AFTER APPLYING THE PROVISIONS OF S ECTION 50C AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3.1 AGGRIEVED THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 23/03/2 015 WHERE THE ASSESSEE REITERATED THE SAID CONTENTIONS AND DREW A TTENTION TO THE FACT THAT TWIN CONDITIONS OF EXECUTION OF WRITTEN AGREEM ENT AND HANDING OVER THE POSSESSION HAD TO BE CUMULATIVELY SATISFIED SO AS TO BRING THE CASE WITHIN THE AMBIT OF SECTION 2(47) OF THE INCOME TAX ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT. SINCE THE POSSESSION WAS NOT HANDED OVER AND THE PROPERTIES WERE UNDER COMPL ETE CONTROL OF THE ASSESSEE AND THE ASSESSEE RECEIVED MERE ADVANCE PAY MENTS NO TRANSFER TOOK PLACE AND HENCE NO CAPITAL GAINS ARO SE TO THE ASSESSEE. THE ASSESSEE DREW ATTENTION TO VARIOUS CLAUSES OF T HE AGREEMENT TO SUBSTANTIATE HIS STAND. WITHOUT PREJUDICE THE ASSE SSEE ALSO CONTESTED THE VALUATION ADOPTED BY LD. AO IN ADOPTING FAIR MA RKET VALUE OF THE PROPERTY IN TERMS OF SECTION 50C. 3.2 THE LD. CIT(A) AFTER CONSIDERING ASSESSEES SUB MISSION TERMS OF THE AGREEMENT AND CITED ORDER OF HONBLE BOMBAY HI GH COURT REACHED A CONCLUSION THAT THE ASSESSEE PASSED ON COMPLETE C ONTROL OVER THE SAID PROPERTY TO THE DEVELOPER BY WAY OF AN IRREVOCABLE REGISTERED AGREEMENT AND THE PAYMENT OF BALANCE CONSIDERATION OR POSSESS ION WAS NOT ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 6 MATERIAL TO DETERMINE THE TAXABILITY OF THE SAID TR ANSACTIONS AND THEREFORE THE TRANSACTIONS WERE RIGHTLY BROUGHT TO TAX BY LD. AO. 3.3 THE LD.CIT(A) FURTHER CONCLUDED THAT THE PROVIS IONS OF SECTION 50C WERE APPLICABLE TO THESE TRANSACTIONS AND SINCE THE ASSESSEE OBJECTED TO THE FAIR MARKET VALUE ADOPTED BY LD. AO THE PRO VISIONS OF SECTION 50C(2) WERE APPLICABLE. HENCE LD. CIT(A) IN TERMS OF PROVISIONS OF SECTION 50C(2) DIRECTED THE LD. AO TO REFER THE MA TTER OF VALUATION TO DISTRICT VALUATION OFFICER [DVO] AS PER THE OBJECTIONS RAISED BY ASSESSEE DURING ASSESSMENT PROCEEDINGS. AGGRIEVED THE ASSES SEE AS WELL AS REVENUE IS IN FURTHER APPEAL BEFORE US. THE REVENUE BY WAY OF SOLITARY EFFECTIVE GROUND OF APPEAL IS AGGRIEVED BY THE ACT ION OF LD. CIT(A) IN DIRECTING THE LD. AO TO REFER THE MATTER OF VALUATI ON OF COST OF ACQUISITION AS WELL AS FAIR MARKET VALUE OF DEVELOPMENT RIGHTS TO DISTRICT VALUATION OFFICER [DVO] WHEREAS THE ASSESSEE IS AGGRIEVED INTER-ALIA BY ACTION OF LD. CIT(A) IN CONCLUDING THAT THE SAID TRANSACTIONS WERE TAXABLE IN THE IMPUGNED AY. THE ASSESSEE IN OTHER GROUNDS HAS CO NTESTED THE APPLICABILITY OF SECTION 50C TO THE IMPUGNED TRANSA CTION AND ALSO THE VALUATION ADOPTED BY THE LOWER AUTHORITIES. 4.1 THE LD. COUNSEL FOR ASSESSEE [AR] PRIMARILY REI TERATED THE SAID CONTENTIONS BEFORE US AND DREW OUR ATTENTION TO VAR IOUS CLAUSES OF THE DEVELOPMENT AGREEMENT TO CONTEND THAT TRANSFER DID NOT TAKE PLACE IN TERMS OF SECTION 2(47) AND THE ASSESSEE MERELY RECE IVED ADVANCE PAYMENT AGAINST THE TRANSFER OF DEVELOPMENT RIGHTS. IT WAS FURTHER CONTENDED THAT THE POSSESSION WAS NEVER PARTED BY T HE ASSESSEE SINCE CONSENT OF THE RESPECTIVE TENANTS COULD NEVER BE OB TAINED AND SUITS IN THIS REGARD WERE ALREADY PENDING BEFORE APPROPRIATE COURT BY THE ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 7 DEVELOPER. FURTHER THE ASSESSEE WAS CONTINUOUSLY R ECEIVING RENT FROM THE TENANTS AND REFLECTING THE SAME IN HIS TAX RETU RNS AND THEREFORE THE TRANSACTIONS COULD NOT BE ASSESSED TO TAX IN THE IM PUGNED AY SINCE TRANSFER WAS NOT COMPLETE. 4.2 PER CONTRA LD. DR DREW OUR ATTENTION TO THE FACT THAT THE CO NTRACT WAS IRREVOCABLE AND THE SAME COULD NOT BE BACKED PU T BY THE RESPECTIVE PARTIES AND THE ASSESSEE BY WAY OF SAID AGREEMENT HANDED OVER THE COMPLETE CONTROL OVER THE PROPERTY TO THE DEVELOPER AND HENCE THE TRANSACTIONS WAS RIGHTLY BROUGHT TO TAX BY LD. AO. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. A PERUSAL OF DEVELOPMENT AGREEMENT DATED 16/01/2010 WITH RESPECT TO PROPERTY BEARING PLOT NO. 48B AD-MEASURI NG 485 SQUARE YARDS AS PLACED ON RECORD REVEALS THAT THE ASSESSEE HAS ENTERED INTO DEVELOPMENT AGREEMENT WITH THE BUILDER NAMELY KAPIL GROUP . AS PER CLAUSE-3 THE OWNER HAS GRANTED ABSOLUTE COMPLETE AND UNFETTERED DEVELOPMENT RIGHTS TO DEVELOP THE PROPERTY FOR CERT AIN CONSIDERATION. PURSUANT TO CLAUSES 4 TO 7 THE DEVELOPER HAS BEEN GIVEN WIDE POWERS TO DEAL WITH THE PROPERTY IN CERTAIN MANNER. AS PER CLAUSE 9 THE CONSIDERATION FOR THE SAME HAS BEEN FIXED AS RS.1 C RORES OUT OF WHICH AN AGGREGATE AMOUNT OF RS.3 50 001/- WAS PAYABLE ON OR BEFORE THE EXECUTION OF THE AGREEMENT. THE BALANCE AMOUNTS WER E PAYABLE IN INSTALLMENTS OF RS. 8 LACS 30 LACS & RS.58 49 999/ - AFTER RECEIVING CONSENT OF THE TENANTS. PURSUANT TO CLAUSE 10 ALL THE BENEFITS IN THE SAID PROPERTY IN FUTURE BELONGED TO THE DEVELOPER WHEREA S CLAUSES 11 & 12 DEALS WITH CONSENT OF THE TENANTS. VIDE CLAUSE 13 THE OWNER UPON RECEIPT OF INSTALLMENT OF RS 8 LACS GRANTS TO THE DEVELOPER IRREVOCABLE ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 8 LICENSE TO ENTER INTO THE SAID PROPERTY AND REMAIN IN POSSESSION OF THE SAID PROPERTY UNTIL THE DEVELOPMENT OF THE SAID PRO PERTY. FOR READY REFERENCE THE RELEVANT CLAUSES ARE REPRODUCED BELO W:- 3. THE OWNER GRANTS TO DEVELOPERS AND THE DEVELOPE RS AVAIL AND ACQUIRE FROM THE OWNER THE ABSOLUTE COMPLETE AND UNFETTERED DEVELOP MENT RIGHTS TO DEVELOP THE SAID PROPERTY FOR THE CONSIDERATION AND ON THE TERM S SET OUT HEREIN. XXXXXXXXXXXXXXXXX 9. IN CONSIDERATION OF AVAILING AND ACQUIRING ABSOL UTE COMPLETE AND UNFETTERED DEVELOPMENT RIGHTS TO DEVELOP THE SAID PROPERTY THE DEVELOPERS SHALL PAY TO THE OWNERS THE SUM OF RS.1 00 00 000/-(RUPEES ONE CRORES ONLY). THE CONSIDERATION SHALL BE PAID BY THE DEVELOPERS TO THE OWNERS IN TH E FOLLOWING MANNER:- (A) RS.50 001/- (RUPEES FIFTY THOUSAND ONE ONLY) PAID PRIOR TO THE EXECUTION HEREOF THE RECEIPT WHERE OF THE OWNER HER EBY ADMITS & ACKNOWLEDGES AND ACQUITS AND RELEASES THE DEVELOPE RS FROM THE SAME AND FROM EVERY PART THEREOF] (B) RS.3 00 000/-(RUPEES THREE LACS ONLY) PAID ON O R BEFORE THE EXECUTION OF THIS AGREEMENT. (C) RS.8 00 000/-(RUPEES EIGHT LACS ONLY) SHALL BE PAYABLE AFTER OBTAINING THE 100% CONSENT OF THE TENANTS FOR THE REDEVELOPMENT O F THE SAID PROPERTY. (D) RS.30 00 000/-(RUPEES THIRTY LACS ONLY) SHALL B E PAYABLE WITHIN TWO MONTHS FROM THE DATE OF OBTAINING THE CONSENT THERE OF. (E) RS.58 49 999/- (RUPEES FIFTY-EIGHT LACS FORTY N INE THOUSAND NINETY NINE ONLY) BEING THE BALANCE AMOUNT SHALL BE PAYABLE AFT ER SANCTION OF THE PLANS AND OBTAINING THE COMMENCEMENT CERTIFICATE OR WITHI N SIX MONTHS FROM THE DATE OF OBTAINING THE CONSENT OF THE TENANTS. 10. ALL THE BENEFITS AS ARE AVAILABLE IN RESPECT OF THE SAID PROPERTY OR WHICH MAY BE AVAILABLE IN FUTURE SHALL BELONG TO THE DEVELOPERS ALONE AND THE OWNERS SHALL NOT HAVE ANY CLAIM OR DEMAND IN RESPECT THEREOF. 11. WITHOUT PREJUDICE TO THE RESPONSIBILITY OF THE OWNERS TO OBTAIN CONSENT/NO OBJECTION OF THE TENANTS/OCCUPIERS TO THE REDEVELOP MENT OF THE SAID PROPERTY BY THE DEVELOPERS THE OWNERS AGREE AND CONFIRM THAT THE D EVELOPERS ARE ENTITLED TO ENTER INTO NEGOTIATIONS WITH TENANTS/OCCUPIERS WITH A VIE W TO AVAIL VACANT POSSESSION OF SUCH TENEMENTS ON SUCH TERMS COSTS AS THE DEVELOPER S MAY DEEM FIT. 12. THE OWNER COVENANT AND UNDERTAKE THAT THE OWNER S SHALL: (I) AT THE COST OF THE DEVELOPERS OBTAIN CONSENTS O F TENANTS / OCCUPANTS TO REDEVELOPMENT OF THE SAID PROPERTY BY THE DEVELOPER . (II) ENDEAVOUR TO EFFECT DEMOLITION OF THE SAID BUI LDING ON SUCH TERMS AS MAY BE AGREED WITH THE TENANTS / OCCUPANTS AND ARE ACCEPTABLE TO THE DEVELOPERS. ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 9 (III) BEAR AND PAY FEES OF ARCHITECT RCC CONSULTAN T AND ALL OTHER PROFESSIONALS ENGAGED IN VARIOUS ACTIVITIES / AFFAI RS PERTAINING TO THE SAID PROPERTY TILL TE DATE HEREOF AS THEIR COST. (IV) BEAR AND PAY THE MUNICIPAL TAXES RATES AND OU TGOING IN RESPECT OF THE SAID PROPERTY TILL THE DATE HEREOF AS THEIR COST. T HEREAFTER THE SAME SHALL BE BORNE AND PAID BY THE DEVELOPERS. 13. THE OWNER SHALL ON RECEIPT OF THE CONSIDERATION MENTIONED IN CLAUSE 9(C) ABOVE GRANTS TO THE DEVELOPERS IRREVOCABLE LICENSE TO ENT ER INTO THE SAID PROPERTY AND REMAIN IN POSSESSION OF THE SAID PROPERTY UNTIL THE DEVELOPMENT OF THE SAID PROPERTY IS COMPLETE IN ALL RESPECTS AND UNTIL THE DEVELOPER S SHALL HAVE SOLD AND TRANSFERRED UNITS/SHOPS/PREMISES/PARKING SPACES/ANY OTHER RIGH TS IN THE NEW BUILDING/S TO BE CONSTRUCTED ON THE SAID PROPERTY AND SHALL HAVE REA LIZED ALL THE AMOUNTS RECEIVABLE IN RESPECT THEREOF AND UNTIL THE NEW BUILDING/S TOG ETHER WITH THE SAID PROPERTY IS TRANSFERRED TO THE ORGANIZATION OF PURCHASER/S OF U NIT/S AND SHOP/S. THE TERMS OF DEVELOPMENT AGREEMENT OF THE OTHER PRO PERTY IS QUITE IDENTICAL TO ABOVE EXCEPT FOR MINOR VARIATIONS. 6. PROCEEDING FURTHER WE FIND THAT IN TERMS OF CH ARGING SECTION 45 ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD CAPITAL GAINS AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE . THE ASSESSEE BY WAY OF DEVELOPMENT AGREEMENTS GRANTED DEVELOPMENT RIGHTS UNDER THE SAID PROPERTIES TO THE DEVELOPER. UNDISPUTEDLY THESE RI GHTS CONSTITUTED CAPITAL ASSETS IN THE HANDS OF THE ASSESSEE. THE ON LY QUESTION TO BE DECIDED BY US IS WHETHER THE TRANSFER HAS BEEN EFFECTED IN TERMS OF SECTION 2(47) OR NOT. FOR THE SAKE OF CONVENIENCE THE MEANING OF TRANSFER AS ENUMERATED IN SECTION 2(47) IS REPRODUCED BELOW: - SECTION 2(47):- AS PER SECTION. 2(47) OF INCOME TAX ACT 1961 UNL ESS THE CONTEXT OTHERWISE REQUIRES THE TERM TRANSFER IN RELATIO N TO A CAPITAL ASSET INCLUDES- (I) THE SALE EXCHANGE OR RELINQUISHMENT OF THE AS SET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; OR ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 10 (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 CAR RIED ON BY HIM SUCH CONVERSION OR TREATMENT; OR (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSE SSION 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; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF OR ACQUIRING SHARES IN A CO-OPERATIVE SOCIETY COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY. (EMPHASIS BEING SUPPLIED BY US) UPON PERUSAL OF THE SAME WE FIND THAT CASE OF THE ASSESSEE AT THE MOST COULD FALL UNDER SUB-CLAUSE-(V) I.E. ANY TRAN SACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERT Y TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882. 7. THE PRIME CONTENTION OF THE LD. AR IS THAT THE A SSESSEE HAS RECEIVED MERE ADVANCE AGAINST THE DEVELOPMENT AGREE MENT WHEREAS NO POSSESSION HAS BEEN HANDED OVER BY HIM SINCE CONSEN T OF THE RESPECTIVE OWNERS COULD NOT BE OBTAINED TILL DATE A ND SUITS IN THIS REGARD AND PENDING BEFORE APPROPRIATE COURTS WHEREAS THE R EVENUES STAND IS THAT THE TRANSACTION IS COMPLETE SINCE THE ASSESSEE HAS ALREADY PARTED WITH THE EFFECTIVE CONTROL OVER THE PROPERTY AND RE CEIPT OF BALANCE CONSIDERATION OR POSSESSION WAS NOT AT ALL RELEVANT FACTOR TO DETERMINE THE TAXABILITY OF THE TRANSACTION. HOWEVER WE HAVE ALREADY OBSERVED THAT THE ASSESSEES CASE FALL UNDER SUB-CLAUSE-V TO SECT ION 2(47) AND ACCORDING TO THE SAME THE PARTING WITH POSSESSION O F THE CAPITAL ASSETS IS THE PRIME REQUIREMENT SO AS TO CONSTITUTE TRANSFER. ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 11 8. AT THIS JUNCTURE WE FIND THAT THE APEX COURT I N RECENT JUDGMENT TITLED AS CIT VS. BALBIR SINGH MAINI [2017 86 TAXMANN.COM 94 DATED 04/10/2017] HAD OCCASION TO DEAL WITH THE IDENTICAL SITUATION. WE FIND THE SAME TO VERY RELEVANT AND APPLICABLE TO THE FACTS O F THE ISSUE IN HAND. HENCE WE EXTRACT THE OPERATIVE PORTION OF THE SAID JUDGMENT AS FOLLOWS:- 16. A READING OF THE JDA SHOWS THAT IT IS ESSENTIA LLY AN AGREEMENT TO FACILITATE DEVELOPMENT OF 21.2 ACRES SO THAT THE DEVELOPERS BU ILD AT THEIR OWN COST AFTER OBTAINING NECESSARY APPROVALS FLATS OF A GIVEN SIZ E SOME OF WHICH WERE THEN TO BE HANDED OVER TO THE MEMBERS OF THE SOCIETY. PA YMENTS WERE ALSO TO BE MADE BY THE DEVELOPER TO EACH MEMBER IN ADDITION TO GIVING EACH MEMBER A CERTAIN NUMBER OF FLATS DEPENDING UPON THE SIZE OF THE MEMBERS PLOT THAT WAS HANDED OVER. WHAT IS IMPORTANT TO BEAR IN MIND IS T HAT PAYMENTS UNDER THE THIRD INSTALLMENT WERE ONLY TO BE MADE AFTER THE GR ANT OF APPROVALS AND NOT OTHERWISE AND THAT IT IS AN ADMITTED POSITION THAT THIS WAS NEVER DONE BECAUSE NO APPROVALS COULD BE OBTAINED AS THE HIGH COURT ULTIMATELY INTERDICTED THE PROJECT. ALSO THE TERMINATION CLAU SE IS OF GREAT SIGNIFICANCE BECAUSE IT SHOWS THAT IN THE EVENT OF THE JDA BEING TERMINATED WHATEVER PARCELS OF LAND HAVE ALREADY BEEN CONVEYED WILL ST AND CONVEYED BUT THAT NO OTHER CONVEYANCES OF THE REMAINING LAND WOULD TAKE PLACE. 17. THE RELEVANT SECTIONS THAT ARE NECESSARY FOR US TO DECIDE THE PRESENT MATTER ARE AS UNDER: TRANSFER OF PROPERTY ACT 53A. PART PERFORMANCE. - WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITING SI GNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTI TUTE 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 THEREOF OR THE TRANSFEREE BEING ALREADY IN POSSESSION CONTINUES IN POSSESSION IN P ART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE O F THE CONTRACT AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO P ERFORM HIS PART OF THE CONTRACT THEN NOTWITHSTANDING THAT WHERE THERE IS AN INSTRU MENT OF TRANSFER THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER P RESCRIBED THEREFORE BY THE LAW FOR THE TIME BEING IN FORCE THE TRANSFE ROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 12 PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTI NUED IN POSSESSION OTHER THAN A RIGHT EXPRESSLY PROVIDED BY 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 T HE CONTRACT OR OF THE PART PERFORMANCE THEREOF.] INCOME TAX ACT SECTION 2 - DEFINITIONS IN THIS ACT UNLESS THE CONTEXT OTHERWISE REQUIRES (47) 'TRANSFER' IN RELATION TO A CAPITAL ASSET IN CLUDES - (I) TO (IV) XXX XXX XXX (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F 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 CO-OPERATIVE SOCIETY COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EF FECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERT Y. 45. CAPITAL GAINS - (1) ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL SAVE AS OTHERWISE PROVIDED IN SECTIONS 54 54B 54D 54E 54EA 54EB 54F 54G AND 54H BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD CA PITAL GAINS AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YE AR IN WHICH THE TRANSFER TOOK PLACE. 48. MODE OF COMPUTATION - THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' SHALL BE COMPUTED BY DEDUCTING FRO M THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS NAMELY: (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE C OST OF ANY IMPROVEMENT THERETO: 18. SECTION 53A AS IS WELL KNOWN WAS INSERTED BY THE TRANSFER OF PROPERTY AMENDMENT ACT 1929 TO IMPORT INTO INDIA THE EQUITA BLE DOCTRINE OF PART PERFORMANCE. THIS COURT HAS IN SHRIMANT SHAMRAO SURYAVANSHI & ANR. V. PRALHAD BHAIROBA SURYAVANSHI (D) BY LRS. & ORS. (2002) 3 SCC 676 AT 682 STATED AS FOLLOWS: ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 13 16. BUT THERE ARE CERTAIN CONDITIONS WHICH ARE REQ UIRED TO BE FULFILLED IF A TRANSFEREE WANTS TO DEFEND OR PROTECT HIS POSSESS ION UNDER SECTION 53- A OF THE ACT. THE NECESSARY CONDITIONS ARE: (1) THERE MUST BE A CONTRACT TO TRANSFER FOR CONSID ERATION OF ANY IMMOVABLE PROPERTY; (2) THE CONTRACT MUST BE IN WRITING SIGNED BY THE TRANSFEROR OR BY SOMEONE ON HIS BEHALF; (3) THE WRITING MUST BE IN SUCH WORDS FROM WHICH TH E TERMS NECESSARY TO CONSTRUE THE TRANSFER CAN BE ASCERTAINED; (4) THE TRANSFEREE MUST IN PART-PERFORMANCE OF THE CONTRACT TAKE POSSESSION OF THE PROPERTY OR OF ANY PART THEREOF; (5) THE TRANSFEREE MUST HAVE DONE SOME ACT IN FURTH ERANCE OF THE CONTRACT; AND (6) THE TRANSFEREE MUST HAVE PERFORMED OR BE WILLIN G TO PERFORM HIS PART OF THE CONTRACT. 19. IT IS ALSO WELL-SETTLED BY THIS COURT THAT THE PROTECTION PROVIDED UNDER SECTION 53A IS ONLY A SHIELD AND CAN ONLY BE RESOR TED TO AS A RIGHT OF DEFENCE. SEE RAMBHAU NAMDEO GAJRE V. NARAYAN BAPUJI DHGOTRA (DEA D) THROUGH LRS. (2004) 8 SCC 614 AT 619 PARA 10. AN AGREEMENT OF S ALE WHICH FULFILLED THE INGREDIENTS OF SECTION 53A WAS NOT RE QUIRED TO BE EXECUTED THROUGH A REGISTERED INSTRUMENT. THIS POSITION WAS CHANGED BY THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT 2001. AMENDMENTS WERE MADE SIMULTANEOUSLY IN SECTION 53A OF THE TRAN SFER OF PROPERTY ACT AND SECTIONS 17 AND 49 OF THE INDIAN REGISTRATION ACT. BY THE AFORESAID AMENDMENT THE WORDS THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED OR IN S ECTION 53A OF THE 1882 ACT HAVE BEEN OMITTED. SIMULTANEOUSLY SECTIONS 17 AND 49 OF THE 1908 ACT HAVE BEEN AMENDED CLARIFYING THAT UNLESS THE DOCUMENT C ONTAINING THE CONTRACT TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY ( FOR THE PURPOSE OF SECTION 53A OF 1882 ACT) IS REGISTERED IT SHALL NOT HAVE A NY EFFECT IN LAW OTHER THAN BEING RECEIVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFORMANCE OR AS EVIDENCE OF ANY COLLATERAL TRANSACTION NOT REQUI RED TO BE EFFECTED BY A REGISTERED INSTRUMENT. SECTION 17(1A) AND SECTION 4 9 OF THE REGISTRATION ACT 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 SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 (4 OF 1882) S HALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMEN T 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. ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 14 49. EFFECT OF NON-REGISTRATION OF DOCUMENTS REQUIR ED TO BE REGISTERED. NO DOCUMENT REQUIRED BY SECTION 17 OR BY ANY PROVIS ION 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 BEEN REGIST ERED: PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IM MOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER OF PROPERT Y ACT 1882 (4 OF 1882) TO BE REGISTERED MAY BE RECEIVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFORMANCE UNDER CHAPTER II OF T HE SPECIFIC RELIEF ACT 1887 (1 OF 1877) OR AS EVIDENCE OF ANY COLLATERAL T RANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT. 20. THE EFFECT OF THE AFORESAID AMENDMENT IS THAT ON AND AFTER THE COMMENCEMENT OF THE AMENDMENT ACT OF 2001 IF AN AG REEMENT LIKE THE JDA IN THE PRESENT CASE IS NOT REGISTERED THEN IT SHA LL HAVE NO EFFECT IN LAW FOR THE PURPOSES OF SECTION 53A. IN SHORT THERE IS NO AGRE EMENT IN THE EYES OF LAW WHICH CAN BE ENFORCED UNDER SECTION 53A OF THE TRAN SFER OF PROPERTY ACT. THIS BEING THE CASE WE ARE OF THE VIEW THAT THE HI GH COURT WAS RIGHT IN STATING THAT IN ORDER TO QUALIFY AS A TRANSFER OF A CAPITAL ASSET UNDER SECTION 2(47)(V) OF THE ACT THERE MUST BE A CONTRACT WHI CH CAN BE ENFORCED IN LAW UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. A READING OF SECTION 17(1A) AND SECTION 49 OF THE REGISTRATION ACT SHOWS THAT IN THE EYES OF LAW THERE IS NO CONTRACT WHICH CAN BE TAKEN COGNIZANCE OF FOR THE PURPOSE SPECIFIED IN SECTION 53A. THE ITAT WAS NOT CORRECT IN REFERRING TO THE EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53 A IN SECTION 2(47)(V) IN ORDER TO ARRIVE AT THE OPPOSITE CONCLUSION. THIS EX PRESSION WAS USED BY THE LEGISLATURE EVER SINCE SUB-SECTION (V) WAS INSERTED BY THE FINANCE ACT OF 1987 W.E.F. 01.04.1988. ALL THAT IS MEANT BY THIS EXPRES SION IS TO REFER TO THE INGREDIENTS OF APPLICABILITY OF SECTION 53A TO THE CONTRACTS MENTIONED THEREIN. IT IS ONLY WHERE THE CONTRACT CONTAINS ALL THE SIX FEATURES MENTIONED IN SHRIMANT SHAMRAO SURYAVANSHI (SUPRA) THAT THE SECTION APPLIES AND THIS IS WHAT IS MEANT BY THE EXPRESSION OF THE NATURE R EFERRED TO IN SECTION 53A. THIS EXPRESSION CANNOT BE STRETCHED TO REFER TO AN AMENDMENT THAT WAS MADE YEARS LATER IN 2001 SO AS TO THEN SAY THAT THOUGH REGISTRATION OF A CONTRACT IS REQUIRED BY THE AMENDMENT ACT OF 2001 YET THE AFOR ESAID EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A WOULD SOMEHOW RE FER ONLY TO THE NATURE OF CONTRACT MENTIONED IN SECTION 53A WHICH WOULD THEN IN TURN NOT REQUIRE REGISTRATION. AS HAS BEEN STATED ABOVE THERE IS NO CONTRACT IN THE EYE OF LAW IN FORCE UNDER SECTION 53A AFTER 2001 UNLESS THE SA ID CONTRACT IS REGISTERED. THIS BEING THE CASE AND IT BEING CLEAR THAT THE SA ID JDA WAS NEVER REGISTERED SINCE THE JDA HAS NO EFFICACY IN THE EY E OF LAW OBVIOUSLY NO TRANSFER CAN BE SAID TO HAVE TAKEN PLACE UNDER TH E AFORESAID DOCUMENT. ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 15 SINCE WE ARE DECIDING THIS CASE ON THIS LEGAL GROUN D IT IS UNNECESSARY FOR US TO GO INTO THE OTHER QUESTIONS DECIDED BY THE HIGH COURT NAMELY WHETHER UNDER THE JDA POSSESSION WAS OR WAS NOT TAKEN; WHET HER ONLY A LICENCE WAS GRANTED TO DEVELOP THE PROPERTY; AND WHETHER THE DE VELOPERS WERE OR WERE NOT READY AND WILLING TO CARRY OUT THEIR PART OF TH E BARGAIN. SINCE WE ARE OF THE VIEW THAT SUB-CLAUSE (V) OF SECTION 2(47) OF THE AC T IS NOT ATTRACTED ON THE FACTS OF THIS CASE WE NEED NOT GO INTO ANY OTHER F ACTUAL QUESTION. 21. HOWEVER THE HIGH COURT HAS HELD THAT SECTION 2 (47)(VI) WILL NOT APPLY FOR THE REASON THAT THERE WAS NO CHANGE IN MEMBERSHIP O F THE SOCIETY AS CONTEMPLATED. WE ARE AFRAID THAT WE CANNOT AGREE WI TH THE HIGH COURT ON THIS SCORE. UNDER SECTION 2(47)(VI) ANY TRANSACTION WHI CH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOV ABLE PROPERTY WOULD COME WITHIN ITS PURVIEW. THE HIGH COURT HAS NOT ADV ERTED TO THE EXPRESSION OR IN ANY OTHER MANNER WHATSOEVER IN SUB-CLAUSE ( VI) WHICH WOULD SHOW THAT IT IS NOT NECESSARY THAT THE TRANSACTION REFER S TO THE MEMBERSHIP OF A COOPERATIVE SOCIETY. WE HAVE THEREFORE TO SEE WHE THER THE IMPUGNED TRANSACTION CAN FALL WITHIN THIS PROVISION. 22. THE OBJECT OF SECTION 2(47)(VI) APPEARS TO BE T O BRING WITHIN THE TAX NET A DE FACTO TRANSFER OF ANY IMMOVABLE PROPERTY. THE EX PRESSION ENABLING THE ENJOYMENT OF TAKES COLOR FROM THE EARLIER EXPRESSI ON TRANSFERRING SO THAT IT IS CLEAR THAT ANY TRANSACTION WHICH ENABLES THE ENJ OYMENT OF IMMOVABLE PROPERTY MUST BE ENJOYMENT AS A PURPORTED OWNER THE REOF.1 THE IDEA IS TO BRING WITHIN THE TAX NET TRANSACTIONS WHERE THOU GH TITLE MAY NOT BE TRANSFERRED IN LAW THERE IS IN SUBSTANCE A TRANS FER OF TITLE IN FACT. 23. A READING OF THE JDA IN THE PRESENT CASE WOULD SHOW THAT THE OWNER CONTINUES TO BE THE OWNER THROUGHOUT THE AGREEMENT AND HAS AT NO STAGE PURPORTED TO TRANSFER RIGHTS AKIN TO OWNERSHIP TO T HE DEVELOPER. AT THE HIGHEST POSSESSION ALONE IS GIVEN UNDER THE AGREEMENT AND THAT TOO FOR A SPECIFIC PURPOSE -THE PURPOSE BEING TO DEVELOP THE PROPERTY AS ENVISAGED BY ALL THE PARTIES. WE ARE THEREFORE OF THE VIEW THAT THIS C LAUSE WILL ALSO NOT ROPE IN THE PRESENT TRANSACTION. 24. THE MATTER CAN ALSO BE VIEWED FROM A SLIGHTLY D IFFERENT ANGLE. SHRI VOHRA IS RIGHT WHEN HE HAS REFERRED TO SECTIONS 45 AND 48 OF THE INCOME TAX ACT AND HAS THEN ARGUED THAT SOME REAL INCOME MUST ARI SE ON THE ASSUMPTION THAT THERE IS TRANSFER OF A CAPITAL ASSET. THIS INC OME MUST HAVE BEEN RECEIVED OR HAVE ACCRUED UNDER SECTION 48 AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET. 25. THIS COURT IN E.D. SASSOON & CO. LTD. V. CIT (1955) 1 SCR 313 AT 343 HELD: IT IS CLEAR THEREFORE THAT INCOME MAY ACCRUE TO AN ASSESSEE WITHOUT THE ACTUAL RECEIPT OF THE SAME. IF THE ASSESSEE ACQUIRE S A RIGHT TO RECEIVE THE INCOME THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THOUGH IT MAY BE RECEIVED LATER ON ITS BEING ASCERTAINED. THE BASIC CONCEPTION IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE I NCOME. THERE MUST ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 16 BE A DEBT OWED TO HIM BY SOMEBODY. THERE MUST BE AS IS OTHERWISE EXPRESSED DEBITUM IN PRESENTI SOLVENDUM IN FUTURO; SEE W.S. TRY LTD. V. JOHNSON (INSPECTOR OF TAXES) [(1946) 1 AER 532 A T P. 539] AND WEBB V. STENTON GARNISHEES [11 QBD 518 AT P. 522 A ND 527]. UNLESS AND UNTIL THERE IS CREATED IN FAVOUR OF THE ASSESSE E A DEBT DUE BY SOMEBODY IT CANNOT BE SAID THAT HE HAS ACQUIRED A R IGHT TO RECEIVE THE INCOME OR THAT INCOME HAS ACCRUED TO HIM. 26. THIS COURT IN COMMISSIONER OF INCOME TAX V. EXCEL INDUSTRIES (2014) 13 SCC 459 AT 463-464 REFERRED TO VARIOUS JUDGMENTS ON THE EXPRESSION ACCRUES AND THEN HELD: 14. FIRST OF ALL IT IS NOW WELL SETTLED THAT INCO ME TAX CANNOT BE LEVIED ON HYPOTHETICAL INCOME. IN CIT V. SHOORJI VALLABHDAS A ND CO. [CIT V. SHOORJI VALLABHDAS AND CO. (1962) 46 ITR 144 (SC)] IT WAS HELD AS FOLLOWS: (ITR P. 148) INCOME TAX IS A LEVY ON INCOME. NO DOUBT THE IN COME TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED VIZ. THE ACCRUAL OF THE INCOME O R ITS RECEIPT; BUT THE SUBSTANCE OF THE MATTER IS THE INCOME. IF INCOM E DOES NOT RESULT AT ALL THERE CANNOT BE A TAX EVEN THOUGH I N BOOKKEEPING AN ENTRY IS MADE ABOUT A HYPOTHETICAL INCOME WHI CH DOES NOT MATERIALISE. WHERE INCOME HAS IN FACT BEEN RECEIV ED AND IS SUBSEQUENTLY GIVEN UP IN SUCH CIRCUMSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT EVEN THOUGH GIVEN UP THE TAX MAY BE PAYABLE. WHERE HOWEVER THE INCOME CAN BE SAID NOT TO HAVE RESULTED AT ALL THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT IN CERTAIN CIRCUMSTANCES HAVE BEEN MADE IN THE BOOKS OF ACCOU NT. 15. THE ABOVE PASSAGE WAS CITED WITH APPROVAL IN MO RVI INDUSTRIES LTD. V. CIT [MORVI INDUSTRIES LTD. V. CIT (1972) 4 SCC 451 : 1974 SCC (TAX) 140 : (1971) 82 ITR 835] IN WHICH THIS COURT ALSO CONSIDERED THE DICTIONARY MEANING OF THE WORD ACCRUE AND HELD TH AT INCOME CAN BE SAID TO ACCRUE WHEN IT BECOMES DUE. IT WAS THEN OBS ERVED THAT: (SCC P. 454 PARA 11) 11. THE DATE OF PAYMENT DOES NOT AFFECT THE AC CRUAL OF INCOME. THE MOMENT THE INCOME ACCRUES THE ASSESSEE GETS VESTED WITH THE RIGHT TO CLAIM THAT AMOUNT EVEN THO UGH IT MAY NOT BE IMMEDIATELY. 16. THIS COURT FURTHER HELD AND IN OUR OPINION MOR E IMPORTANTLY THAT INCOME ACCRUES WHEN THERE ARISES A CORRESPONDING L IABILITY OF THE OTHER PARTY FROM WHOM THE INCOME BECOMES DUE TO PAY THAT AMOUNT. 17. IT FOLLOW S FROM THESE DECISIONS THAT INCOME AC CRUES WHEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY A CO RRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT. ONL Y THEN CAN IT BE SAID ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 17 THAT FOR THE PURPOSES OF TAXABILITY THAT THE INCOME IS NOT HYPOTHETICAL AND IT HAS REALLY ACCRUED TO THE ASSESSEE. 18. INSOFAR AS THE PRESENT CASE IS CONCERNED EVEN IF IT IS ASSUMED THAT THE ASSESSEE WAS ENTITLED TO THE BENEFITS UNDER THE ADVANCE LICENCES AS WELL AS UNDER THE DUTY ENTITLEMENT PASSBOOK THE RE WAS NO CORRESPONDING LIABILITY ON THE CUSTOMS AUTHORITIES TO PASS ON THE BENEFIT OF DUTY-FREE IMPORTS TO THE ASSESSEE UNTIL THE GOOD S ARE ACTUALLY IMPORTED AND MADE AVAILABLE FOR CLEARANCE. THE BENE FITS REPRESENT AT BEST A HYPOTHETICAL INCOME WHICH MAY OR MAY NOT MA TERIALISE AND ITS MONEY VALUE IS THEREFORE NOT THE INCOME OF THE AS SESSEE. 27. IN THE FACTS OF THE PRESENT CASE IT IS CLEAR T HAT THE INCOME FROM CAPITAL GAIN ON A TRANSACTION WHICH NEVER MATERIALIZED IS AT BEST A HYPOTHETICAL INCOME. IT IS ADMITTED THAT FOR WANT OF PERMISSION S THE ENTIRE TRANSACTION OF DEVELOPMENT ENVISAGED IN THE JDA FELL THROUGH. IN P OINT OF FACT INCOME DID NOT RESULT AT ALL FOR THE AFORESAID REASON. THIS BE ING THE CASE IT IS CLEAR THAT THERE IS NO PROFIT OR GAIN WHICH ARISES FROM THE TR ANSFER OF A CAPITAL ASSET WHICH COULD BE BROUGHT TO TAX UNDER SECTION 45 READ WITH SECTION 48 OF THE INCOME TAX ACT. 28. IN THE PRESENT CASE THE ASSESSEE DID NOT ACQUI RE ANY RIGHT TO RECEIVE INCOME INASMUCH AS SUCH ALLEGED RIGHT WAS DEPENDEN T UPON THE NECESSARY PERMISSIONS BEING OBTAINED. THIS BEING THE CASE IN THE CIRCUMSTANCES THERE WAS NO DEBT OWED TO THE ASSESSEES BY THE DEVELOPERS AND THEREFORE THE ASSESSEES HAVE NOT ACQUIRED ANY RIGHT TO RECEIVE IN COME UNDER THE JDA. THIS BEING SO NO PROFITS OR GAINS AROSE FROM THE TRAN SFER OF A CAPITAL ASSET SO AS TO ATTRACT SECTIONS 45 AND 48 OF THE INCOME TAX ACT. 29. WE ARE THEREFORE OF THE VIEW THAT THE HIGH CO URT WAS CORRECT IN ITS CONCLUSION BUT FOR THE REASONS STATED BY US HEREIN ABOVE. THE APPEALS ARE DISMISSED WITH NO ORDER AS TO COSTS. 9. UPON PERUSAL OF THE ABOVE JUDGMENT WE CAN CULL OUT THE ESSENTIAL INGREDIENTS OF SECTION 53A OF THE TRANSFER OF PROPE RTY ACT IN THE FOLLOWING MANNER:- (1) THERE MUST BE A CONTRACT TO TRANSFER FOR CONSID ERATION OF ANY IMMOVABLE PROPERTY; (2) THE CONTRACT MUST BE IN WRITING SIGNED BY THE TRANSFEROR OR BY SOMEONE ON HIS BEHALF; (3) THE WRITING MUST BE IN SUCH WORDS FROM WHICH TH E TERMS NECESSARY TO CONSTRUE THE TRANSFER CAN BE ASCERTAINED; (4) THE TRANSFEREE MUST IN PART-PERFORMANCE OF THE CONTRACT TAKE POSSESSION OF THE PROPERTY OR OF ANY PART THEREOF; ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 18 (5) THE TRANSFEREE MUST HAVE DONE SOME ACT IN FURTH ERANCE OF THE CONTRACT; AND (6) THE TRANSFEREE MUST HAVE PERFORMED OR BE WILLIN G TO PERFORM HIS PART OF THE CONTRACT. HENCE TRANSFER OF POSSESSION IS ONE OF THE PRIMARY CONDITION SO AS TO ATTRACT THE PROVISIONS OF SECTION 53A AND CONSEQUEN TLY BEING COVERED U/S 2(47)(V). THE ASSESSEE HAS ALL ALONG CONTENDED THAT THE POSSESSION OF THE PROPERTIES WAS NEVER HANDED OVER TO THE DEVE LOPER WHICH HAS BEEN REITERATED BEFORE US ALSO. THE LD. AR HAS PLAC ED CERTAIN ADDITIONAL EVIDENCES IN THE FORM OF LETTER FROM THE DEVELOPER AND COPIES OF SUITS FILED BY THE DEVELOPER BEFORE APPROPRIATE COURT. WE FIND THAT THE FACT THAT WHETHER THE ASSESSEE HAS HANDED OVER THE POSSESSION TO THE DEVELOPER OR NOT HAS NOWHERE BEEN EXAMINED BY ANY OF THE LOWE R AUTHORITIES. HENCE ON THE FACT OF THE CASE WE REMIT THE MATTER BACK TO THE FILE OF LD. AO FOR ADJUDICATION DE NOVO AS PER LAW AND IN TERMS OF THE CITED ORDER OF THE HONBLE SUPREME COURT. IF THE TRANSACTION IS FO UND CHARGEABLE TO TAX THE COMPUTATION THEREOF SHALL BE COMPUTED IN TERMS OF SECTION 48 AND OTHER PROVISIONS AS APPLICABLE. NEEDLESS TO SAY A DEQUATE OPPORTUNITY OF BEING HEARD SHALL BE GRANTED TO THE ASSESSEE WHO I N TURN IS DIRECTED TO SUBSTANTIATE HIS STAND IN THIS REGARD. RESULTANTLY ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. SIN CE THE REVENUE IS AGGRIEVED BY THE DIRECTIONS OF LD. CIT(A) QUA DIRECTION TO LD. AO TOWARDS VALUATION OF THE PROPERTY AND WE HAVE ALREA DY SET ASIDE THE PROCEEDINGS FOR FRESH ADJUDICATION THE SAME BECOME S INFRUCTUOUS. ITA NOS. 3171/M/2015 & 3692/M/2015 SHEHAB S.BOHRA ASSESSMENT YEAR-2010-11 19 10. IN NUTSHELL ASSESSEES APPEAL STANDS PARTLY AL LOWED FOR STATISTICAL PURPOSES WHEREAS REVENUES APPEAL IS DISMISSED IN T ERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11. 2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $/ / / DR ITAT MUMBAI 6. 01 / GUARD FILE / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI