ACIT 17(3), Mumbai v. Jawaharlal L. Agicha
[Citation -2016-LL-0928-139]

Citation 2016-LL-0928-139
Appellant Name ACIT 17(3), Mumbai
Respondent Name Jawaharlal L. Agicha
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 28/09/2016
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags computation of capital gain • indexed cost of acquisition • applicability of provision • transfer of capital asset • no objection certificate • unabsorbed depreciation • advance money received • transfer of ownership • cost of construction • transfer of property • rights of ownership • immovable property • development rights • legal requirement • state government • transfer of land • capital gain tax • conveyance deed • speaking order • use of land • actual date • real estate • land owner • sale deed
Bot Summary: 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 provisions of section 2(47)(v) since it only talks about contract of the nature as referred to in section 53A of the Transfer of property Act, and therefore it is not mandatory that whole of the section 53A needs to be complied with while applying the provisions of section 2(47)(v). Simultaneously, Sections 17 and 49 of the 1908 Act have been amended clarifying that unless the document containing contract to transfer for consideration any immovable property for the purpose of Section 53A of 1882 Act is registered, it shall not have effect for purposes of Section 53A of 1882 Act. The documents containing contracts to transfer for consideration, any immovable property for the purpose of 28 Jawaharlal L. Agicha section 53A of the Transfer of Property Act, 1882 shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws Act, 2001 and if such documents are not registered on or after such commencement they shall have no effect for the purposes of the said section 53A. 49. Section 17(1A) of the 1908 Act introduced by the 2001 Act provides that no benefit would be admissible on the basis of unregistered contract for the purposes of Section 53A of 1882 Act. Equally, deletion of the words or as evidence of part 29 Jawaharlal L. Agicha performance of a contract for the purposes of Section 53A of the Transfer of Property Act from Proviso to Section 49 of 1908 Act clarifies the effect of non-registration of a contract executed in terms of Section 53A of 1882 Act. Having elaborated the scope and legislative intent of Section 2(ii), and of the Act and also the mandatory ingredients for applicability of Section 53A of 1882 Act, it would be essential to notice that the provisions of section 53A of 1882 Act have been introduced in Section 2(v) of the Act by incorporation. Explanation clause 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 of the first proviso to sub section of Section 205 of the Companies Act, 1956 are applicable.


IN 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) Shri Jawaharlal L. Agicha R.No.614, 6th Floor, 99, Ray Road, Piramal Chambers, Mumbai-400033 Vs. Parel, Mumbai-400012 (Revenue) (Respondent ) P.A. No.ADJPA2926K Revenue by Shri Sanjay Singh (CIT-DR) Respondent by Shri Hiro Rai (AR) Date of 07/09/2016 Hearing : Date of Order: 28/09/2016 O R D E R Per Ashwani Taneja (Accountant Member): This appeal has been filed by Revenue against order of Ld. order of Ld. Commissioner of Income Tax(Appeals) -29 Mumbai, {(in short CIT }, dated 26.12.2011 passed against assessment order of AO u/s 143(3) dated 24.12.2010 for A.Y. 2008-09 on following grounds: On facts and in circumstances of case and in law, Ld. CIT(A) has erred in directing 2 Jawaharlal L. Agicha AO to delete addition of Rs.25,81,38,515/- made under head Capital Gain. On facts and in circumstances of case and in law, ld. C IT (A) h as erred in decid ing th at f or ar isin g cap ital g ain registration of document is necessary u/s.2(47)(i) & (v) of I.T. Act r.w.s.53A of transfer of property Act. On facts and in circumstances of case and in law, ld. CIT(A) has erred in relying on decision of apex court in case of Ramchandra Mahadev Jagpat & other in SLP(civil) No. 10281/2006. On facts and in circumstances of case and in law, ld. CIT(A) not appreciated facts that AO has rightly worked out Capital Gain under Income Tax Act. appellant prays that order of CIT(A) being erroneous in facts and in law be reversed and that of Assessing officer be restored. 2. During course of hearing, arguments were made by Shri Hiro Rai, Authorised Representative (AR) on behalf of Assessee and by Shri Sanjay Singh, Departmental Representative (CIT-DR) on behalf of Revenue. 3. During course of hearing, exhaustive arguments have been made by both parties drawing our attention on various evidences enclosed in paper book, orders of lower authorities and judgments of various courts on this issue as were placed before us. central issue involved in this appeal is with regard to determination taxability of long term capital gain of Rs.25,81,38,515/- arising on account of development agreement entered into by assessee with M/s. Shivalik Ventures, partnership firm with respect to pieces and parcels of land located at Bandra (E) owned by assessee. As per AO, said development agreement gave 3 Jawaharlal L. Agicha rise to transfer of land in view of section 2(47)(v) of Act, and therefore, as per terms of agreement amount of total consideration stipulated therein constituted sale consideration for transfer of impugned land and accordingly resultant gain was held by AO as taxable in year under consideration as long term capital gain subject to benefit of indexation of cost of acquisition of land. Whereas, as per assessee, said development agreement did not give rise to any kind of transfer even in terms of section 2(47)(v) of Act, and therefore, no amount of gain should have been brought to tax in year under consideration. 3.1. brief facts and background of issues brought before us are that assessee had purchased land at Bandra by way of two sale deeds executed on 05.09.1994 and 08.01.1994. said land was occupied by various slum dwellers and no portion was available for practical use by assessee. said land was declared by Deputy Collector of city as slum area u/s 4(1) of Maharashtra Slum Area (Improvement Clearance and Redevelopment Act) 1971. land acquired by assessee was held as slum area and thus use of such land could be made by assessee only as provided under said Act and various other regulations prescribed in allied legislation that too after obtaining requisite permission from competent authority. assessee found that it was not possible for him to comply with exhaustive conditions to relocate slum dwellers and other numerous legal and social compliances and therefore, during year under consideration it entered into 4 Jawaharlal L. Agicha arrangement with M/s Shivalik Ventures for all procedural and substantive compliances and for making agreement with slum dwellers for their re-location for and on behalf of assessee and for making effective use of land after carrying out requisite development. As per terms of agreement, assessee was entitled to receive 130000 sq. ft. of FSI out of total FSI and M/s. Shivalik Ventures was free to use remaining land for its own purpose in lieu of services to be rendered for relocating slum developers after obtaining permission from Competent Authorities and making other legal compliances. land could be used by any person including assessee only after all formalities are done and statutory permission is issued by competent authorities with respect to development of land and its free use. 3.2. It was stated 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 was determined at Rs 26 crores. aforesaid cost of construction was to be incurred by Shivalik Ventures or money was to be provided to assessee for construction. Only part of this sum being Rs.10 crores was received by assessee during year under consideration, which was shown by assessee under head advances as part of its liabilities in its Balance Sheet. During course of assessment proceedings, AO gave show cause notice that said development agreement gave rise to transfer of impugned land, and being not satisfied with reply of assessee, he treated sum of Rs. 26 crores as sales consideration and after reducing index cost of 5 Jawaharlal L. Agicha acquisition of Rs.18,61,485/-, he computed long term capital gain of Rs.25,81,38,515/- and held same as taxable in year under consideration. 3.3. Being aggrieved, assessee filed appeal before Ld. CIT(A) wherein exhaustive submissions were made and various documentary evidences were also submitted to demonstrate that impugned development agreement does not give effect to transfer of impugned land for various legal and factual reasons. Ld. CIT(A) agreed with arguments of assessee and after passing detailed order, he took view that impugned development agreement did not give rise to transfer of impugned land and therefore, it was held that no amount of capital gain accrued to assessee during year under consideration and thus amount of advance received by assessee was held to be not taxable. 3.4. Being aggrieved, Revenue has filed appeal before Tribunal. During course of hearing, both parties made their respective arguments. Ld. CIT-DR took us through various clauses of development agreement dated 07.11.2007. It was submitted that assessee had received sum of Rs.10 crores during year under consideration. It was also submitted that this agreement gives various rights to developers to approach authorities and to make development of land. Thus, for all practical purposes, land came into control and domain of developers. owner of land also executed power of attorney in favour of developer to enable it to obtain Letter of Intent (LOI) in respect of said land in name of developer. It was 6 Jawaharlal L. Agicha also submitted that all ingredients of section 2(47)(v) were applicable and accordingly even if there was part performance, it amounted to transfer of asset and therefore, full value of sale consideration was taxable in year before us under head of capital gains subject to deduction of indexed cost of acquisition as has been rightly done by AO. 3.5. Before concluding his arguments, Ld. CIT-DR submitted that development agreement is to be read as whole and if we do so, we can easily make out intention of granting of possession, from bare perusal of agreement. He submitted that transfer of exclusive physical position is not necessary. It was also submitted that full development rights were transferred and developer was free to execute same in whatever manner without seeking any approval of assessee. It was also submitted that amendment in Registration Act, 1908, will not have effect, on 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 Act, and therefore, AO had rightly held that long term capital gain was taxable during 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/PN/10 dated 29.03.2012 6. V. Ramchandra Const. P. Ltd. 11 taxmann.com415(Agra) 7 Jawaharlal L. Agicha 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 (Cochin) 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 assessee vehemently opposed argument of Ld. CIT-DR. He began his arguments by reading detailed finding of Ld. CIT(A) on this issue and vehemently relied upon these findings. It was submitted that Ld. CIT(A) has correctly analysed facts and aptly applied legal position while deciding this issue and rightly held that said development agreement did not give rise to transfer of impugned land, even if we apply provisions of section 2(47)(v) of Act. 3.7. Further, it was submitted by him that AO had made serious error by presuming that impugned development agreement was registered document and on that erroneous premise he held that impugned development agreement gave rise to transfer of impugned land in view of provisions of section 2(47)(v) of Act. He submitted that amendment has been made in Registration Act, wherein newly inserted section 17(1A) of Registration Act 1908, clearly provided that documents contemplating to transfer for consideration, any immovable property for propose of section 53A of Transfer of Property Act, 1882, shall be registered and if these documents are not registered, they shall have no effect for 8 Jawaharlal L. Agicha purpose of section 53A. He, thus, submitted that in absence of registration of documents, provisions of section 53A cannot give rise to valid transfer and consequently provisions of section 2(47)(v) also cannot be pressed into service to hold that asset had been transferred for purpose of computing taxable amount of capital gains. In this regard, he placed reliance on recent judgment of Hon ble Punjab and Haryana High Court in case of C.S. Atwal v. CIT 378 ITR 244 which is directly on this issue. Further reliance was placed on judgment of Mumbai Bench of Tribunal in case of Dr. Devendra H. Dave Udgith v. ITO 49 ITR (Trib) 561 (Mumbai) wherein aforesaid judgment of Hon ble Punjab and Haryana High Court has been followed and identical view has been taken that in absence of registration of document, provisions of section 2(47)(v) could not have been 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, whole action of Ld. AO becomes illegal especially in view of these decisions. It was further submitted by him that various clauses of agreement clearly suggest that no possession whatsoever has been given by assessee to developer. land still remains under domain and control of assessee. It was further submitted that factually speaking physical possession is not retained by assessee, and therefore, no question arises of handing over its physical possession to developer. Since, no physical possession has been given by assessee to developer, this transaction cannot be tested under provisions of section 2(47)(v) of 9 Jawaharlal L. Agicha Act. Thus, impugned transaction could give rise to taxable capital gains only in accordance with main provisions of section 45, wherein, admittedly, no transfer of impugned land can be said to have taken place during year under consideration. 3.8. It was further submitted that situation of impugned land as well as impugned development agreement under consideration are not comparable to other normal cases, since, in this case, various strings were attached and there were various fetters on legal rights of assessee as well as developer for making free use of land, in view of admitted fact that said land was occupied by slum dwellers and therefore, it was subjected to various regulations imposed by slum development authorities and land could 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 development agreement wherein this fact was clearly mentioned. It was shown that Developer would be in position to make use of land only after issuance of requisite permissions from Slum Rehabilitation Authority. 3.9. He placed reliance on various judgments to argue that impugned development agreement did not give rise to any transfer in eyes of law. He placed reliance on judgment of Hon ble Supreme Court in case of Ajay Kumar Shah Jagati vs. CIT 168 taxman 53 wherein provisions of section 2(47)(v) of Income Tax Act 1961, as well as section 53A of Transfer of Property Act, were considered and it was held that 10 Jawaharlal L. Agicha possession was essential element to be considered for ascertaining transfer of property. It was emphasized that judgment of Hon ble Supreme Court was dated 24th January 2008 which was later in time as compared to judgment of Hon ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia v. CIT (supra) which was dated 13th February 2003. It was thus submitted that view expressed in more recent judgment should be followed. Reliance was also placed on judgment of CIT v. Geetadevi Pasari 17 DTR 280 (Bom) dated 10th July 2008 wherein it was held that relevant year for purpose of computation of capital gain will be assessment year in which purchaser was actually and physically put in possession. It was emphasized that in this judgment, earlier judgment of Hon ble Bombay High Court, in case of Chaturbhuj Dwarkadas Kapadia v. CIT (supra) has also been considered. It was stated that similar view has been taken by Hon ble Karnataka High Court in case of CIT v. Dr. T. K. Dayalu 202 taxman 531, wherein similar view has been taken after considering aforesaid judgment of Hon ble Bombay High Court. 3.10. Ld. Counsel concluded his argument by submitting that peculiar facts of case before us are that there were various legal fetters upon rights of assessee for making use of impugned land for his own purpose and therefore, when assessee himself did not have absolute legal rights, these could not have been transferred to developer and therefore, no transfer of impugned land could be said to have taken place by impugned development agreement which was not 11 Jawaharlal L. Agicha more than understanding in regard to proposed transfer which was to come into effect only when proper scheme was sanctioned by Slum Rehabilitation Authority and other requisite legal compliance in this regard were made. 3.11. We have gone through orders of lower authorities and documentary evidences, copies of judgment placed and also arguments made by both parties before us. only issue which we have been called upon to decide is whether impugned development agreement dated 07.11.2007 entered into by assessee with M/s. Shivalik Venture gives rise to transfer of impugned land owned by assessee in terms of provisions of section 2(47)(v) or any other provision of Income Tax Act, so as to bring to tax amount of long term capital gain as has been computed by Ld. AO or not, as was claimed by assessee in its return of income. Before thrashing out facts and applicable legal position, it is noted by us that Ld. CIT(A) has recorded detailed and well reasoned findings while deciding this issue, therefore, we find it appropriate to first reproduce these findings to make our task simple and easy: 3.2. I have carefully considered facts of case, arguments of Assessing Officer and written submissions of Authorised Representative of appellant have perused evidence on record. brief facts in case may he recapitulated. assessee was owner of land which was acquired in year 1994 by obtaining two Sale Deeds on 05/09/1994 and 18/01/1994. aforesaid lands were fully occupied by various slum dwellers. In respect to such lands appellant has entered into arrangement with M/s Shivalik Ventures who has undertaken responsibilities for making all statutory compliance as well as 12 Jawaharlal L. Agicha agreement with Slum dwellers for development of aforesaid lands in accordance with scheme to be sanctioned by slum Rehabilitation Authority. aforesaid arrangement has been formalized into agreement dated 7/11/2007 copy of which is placed on record. Perusal of various clauses of agreement submitted indicates that basically it is arrangement with Shivalik Ventures whereby aforesaid party was to make various compliances for availability of aforesaid land for development under scheme formulated by State Government for redevelopment of slum dwellers area. action of Assessing Officer in holding that there is complete transfer of land and determination of capital gain amounting to Rs 25,81,38,515/- cannot be sustained for following reasons. 3.2.1. T he land o wned by assessee is f ully occup ied by slum d wellers. T he 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 eviction of such slum dwellers has to be only after previous permission in writing from competent authorities slum rehabilitation authorities has been constituted to take care of various slum dwellers in respect of protection provided under statute. land owned by assessee cannot be used for development unless there is prior permission from SRA for development of land. It is undisputed fact on record that no permission has been accorded by slum rehabilitation authorities for development of land in favour of assessee or developer during year under consideration. 3.2.2. Perusal of map placed in paper book indicates that various portions which are marked in red colour are area of land belonging to assessee. various areas in between two portions of land of assessee does not belong to assessee but belongs to developer and other persons from whom developer has agreed to purchase. land owned by assessee is thus evidently fragmented and not contiguous. terms and conditions of MOU would indicate that 13 Jawaharlal L. Agicha developer has to provide contiguous portion of land wherein FSI 1,30,000 Sq, ft, can be built (clause 8) total area of land may be used for development of slum building or free use for public amenities or free sale building to be taken by developer after providing land to assessee. On date of execution of agreement, no such conclusion can be drawn and it is only after requisite permissions are granted to developer for project as whole and land owned by assessee and other land owned by developer project can be implemented. M/s Shivalik Ventures has agreed to make compliances and also incur expenses to obtain sanction from Slum Rehabilitation 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. first being obtaining sanctioned scheme from Slum Rehabilitation Authorities so that land can be available for development and construction. second aspect is that aforesaid land be given to M/s Shivalik Ventures after clearance from SRA for development of land. assessee was eligible for 1,30,000 sq. ft. FSI of constructed area in aforesaid land owned by assessee as consideration towards granting of development rights to M/s. Shivalik Ventures. It is seen that right of development of land commences only after development scheme is sanctioned by Slum Rehabilitation Authorities and clearance of land from slum dwellers and prior to that 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 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. aforesaid cost of construction was to be incurred by Shivalik Ventures or money was to be provided to assessee for construction. Only part of this 14 Jawaharlal L. Agicha sum being Rs.10 crores is received by assessee during year under consideration. 3.2.4. various clauses which are relevant for purpose of adjudicating issue in appeal are reproduced hereunder for ready reference. Clause 3: (Para4) owner hereby grant development rights to developers and developers hereby accepts development rights in respect of said property in accordance with scheme to be sanctioned by Slum Rehabilitation Authority and by implementing said scheme by construction of separate building or buildings for rehabilitating slum dwellers (for short Rehabilitation buildings) and other separate and independent residential or commercial buildings which are permitted to be sold in open market to any third party (for short free sale components) by consuming FSI as may be granted by Competent Authority as also by loading outside TDR available in market however subject to Development Control Registrations and rules and regulations of Municipal Corporation. Clause 6 (Para 6) On issuance of letter of intent and on issuance of Annexure-II, developer sh all be en ti tled to en ter upon th e s aid proper ty f or purpo se of implementation of scheme of SRA'. Clause- 14 (Page 9) "Notwithstanding anything stated in this agreement owner shall always be deemed to be in physical and exclusive possession of said property until issue of Annexure-II by S.R.A." 3.2.5. perusal of aforesaid clauses as well as reading of agreement as whole clearly indicates that there is no possession given by assessee to M/s Shivalik Ventures during previous year under consideration It is undisputed fact on record that land was no t av ailable f or developmen t during previous ye ar under consideration in as much as there was no sanction available from Slum 15 Jawaharlal L. Agicha Rehabilitation Authorities during year under consideration or even on date of assessment as is evident from assessment order. land is not clear from slums and available for development under Slum Development Scheme as no permissions are available with assessee or developer as is evident from evidence on record. As per clause 14 of development agreement, appellant will be in physical and exclusive possession of property till such permission from SRA is obtained. 3.2.6. T he Asse ssing Of f icer at p age 9 h as ob served th at agre e men t wi th Shivalik Ventures is registered conveyance deed. Assessing Officer based on above finding held that since conveyance deed of immovable property in question has been executed and registered in year under scrutiny and therefore capital gain arises in Asstt. Year 2008- 09. agreement /arrangement with M/s Shivalik Ventures is not registered document but is on Stamp Paper of Rs 100/- as is evident from bare perusal of agreement/arrangement placed in paper book. facts and evidence on record clearly depict that agreement is no registered conveyance deed as observed by Assessing Officer. observation of Assessing Officer that agreement with M/s Shivalik Ventures is registered conveyance deed is factually incorrect. As basic factual premise of Assessing Officer is incorrect conclusion of Assessing Officer that capital gain arises in Asstt. Year 2008-09 is unjustified. assessment records have been requisitioned during appeal proceedings and it is found that so called deed is not registered one. 3.2.7. 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 head capital gain in respect of surplus arising on sale of land. Assessing Officer has referred to provisions of section 2(47)(i) & (v) of IT 16 Jawaharlal L. Agicha Act 1961 at page 7 of assessment order. provisions of sec 2(47)(i) & (v) are reproduced hereunder for ready reference: Sec. 2(47) transfer", in relation to capital asset, includes, (i) sale, exchange, or relinquishment of asset: or (v) any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of contract of nature referred to in section 53A of Transfer of Property Act 1882 (4 of 1882), or 3.2.8 . In facts of present case there is no transfer under clause (i) of sec. 2(47) in as much as no registered conveyance deed is executed by assessee. capital asset in question is land and is immovable property. provisions of sec 54 of Transfer of Property Act 1882 are reproduced hereunder; "54. "Sale" defined -- 'Sale" is transfer of ownership in exchange for price paid or promised or part - paid and part - promised. Sale how made -- Such transfer, in case of tangible immovable property of value of one hundred rupees and upward, or in case of reversion or other intangible thing, can be made only by registered instrument. In case of tangible immovable property, of value less than one hundred rupees, such transfer may be made either by registered instrument or by delivery of property. Delivery of tangible immovable property takes place when seller places buyer, or such person as he directs, in possession of property. Contract for sale -- contract for sale of immovable property is contract that sale of such property shall take place on terms settled between parties. 17 Jawaharlal L. Agicha It does not, of itself, create any interest in, or charge on, such property." 3.2.9. Considering provisions of sec 54 of Transf er of Property Ac t, transfer of capital asset cannot be said to have taken place in absence of registered conveyance deed. document of sale, exchange or relinquishment in respect to immovable property has necessarily to be registered document. This view finds support in decision of Apex Court in case of Alapati Venkataramiah vs. CIT reported at 57 ITR 185 (SC). As regard to applicability of provision of sub clause (v) of sec 2(47) of I T Act 1961, it can be seen from arrangement executed by assessee with M/s. Shivalik Ventures that no possession is given by assessee to said party. Bare perusal of sec 2(47) (v) would indicate that to invoke provisions to hold that assessee has transferred land, possession of property should be given to purchaser in part performance of contract of nature referred to in sec 53A of Transfer of Property Act, 1882. 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 terms necessary to constitute transfer can be ascertained with reasonable certainty and transferee has, in part performance of contract taken possession of property or any part thereof, or transferee, being already in possession, continues in possession in part performance of contract and has done some act in furtherance of contract, and transferee has performed or is willing to perform his part of contract, then notwithstanding that where there is instrument of transfer, that transfer has not been completed in manner prescribed therefore by law for time being in force, transferor or any person claiming under him shall be debarred from enforcing against transferee and persons claiming 18 Jawaharlal L. Agicha under him any right in respect of properly of which transferee has taken or continued in possession, other than right expressly provided by terms of contract: Provided that nothing in this section shall affect rights of transferee for consideration who has no notice of contract or of part performance thereof." 3.2.10. Bef ore invok ing provision, it h as to be es tab lished th at per son contracts to transfer for consideration any immovable property and transferee in part performance has taken possession of property and has performed or is willing to perform his part of contract. Thus, unless above ingredients of transactions are present, provision of sec. 2(47)(v) cannot be pressed into service. In facts of present case, no possession of property is given by assessee to M/s Shvalik Ventures. On contrary evidence on record being agreement on basis of which AO has assessed long term capital gain indicates that possession is with assessee and has not been parted with. Assessing Officer has not brought any evidence on record to demonstrate that possession of land has been given to Shivalik Ventures during year under consideration perusal of various clauses of agreement corroborates submission of assessee that possession of land is with assessee and has not been transferred to Shivalik Ventures during previous year under consideration. arrangement is only to make compliance with Slum Rehabilitation Authorities for sanction of scheme for and on behalf of assessee. It is only after such sanction scheme is obtained in name of assessee from Slum Rehabilitation Authorities question as to giving of possession by assessee to Shivalik Ventures would arise, above 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 19 Jawaharlal L. Agicha Rehabilitation Authorities during previous year under consideration. AO has brought no evidence on record to show that assessee has received sanction for development of Slum area from Slum rehabilitation Authorities during previous year, under consideration. conclusion to AO to assess capital gain is solely based on agreement entered into by assessee with M/s Shivalik Ventures and nothing else. evidence on record clearly indicates that legal possession of property is with assessee only. On above undisputed factual position provision of section 2(47)(i)&(v) of I.T. Act 1961 cannot be invoked to hold that there is transfer of land by assessee to assess long term capital gain in case of assessee. observation of A.O. that provisions of section 2(47)(i)&(v) are attr ac ted in th e 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, question of making assessment of any long term capital gain at hands of appellant does not arise. 3.2.11 reliance placed on various decisions and as recorded hereinabove and submission before me, substantially support submission of appellant. In decision of Apex Court in case of Ramchandra Mahadev Jagpat & others in SLP (Civil) No. 10281/2006, scheme of development of slums at Mumbai has been considered in detail and it has been held that SRA has to make various verifications before issuing letter of intent to developers. relevant portion of judgment is reproduced herein below: 'At time of hearing, our attention was also drawn to guidelines and several conditions to be fulfilled by slum dwellers/the society/ as well as developers and remarks required to be obtained on proposal from concerned authorities before issuing letter of Intent. SRA has also to verify 20 Jawaharlal L. Agicha resolution as passed by general body of slum dwellers proposed society by majority f or appointing or replacing developers f or development of scheme, It is also necessary for SRA to verify and to see whether plot under development is not affected by any reservation such as playground or recreation ground in view of stay granted by High Court in writ petition No. 1152 and also to verify whether proposed appointed developer has financial capacity to undertake and complete scheme. "The SRA is also directed to consider as to whether guidelines and other conditions are fulfilled by slum dwellers/ society/as well by developers and issue notice to society also and hear them pass appropriate speaking order within 3 months from today. above direction is issued in larger interest of slum dwellers and in order to rehabilitate poor slum dwellers and needy slum dwellers at earliest." perusal of aforesaid portion of judgment indicates that for development of land occupied by slum dwellers there are various essential steps to be taken which are conditions precedent for making any development of such land. In facts of present case as no letter of intent has been issued by SRA question of transfer of land for purpose of development by assessee does not arise. On above admitted factual position assessment of capital gain in case of assessee is not justified and cannot be sustained. 3.2.12. T he Hon'ble IT AT Mumb ai Bench, Mumb ai in c ase of AC IT Vs. Mrs Geetadevi Pasari reported at 104 TTJ (Mum) 375. Hon'ble ITAT has held as under: 'In any event, in terms of clause 9 of development agreement, possession was to he delivered only after complete payment was made. Admittedly, this condition was not complied with till end of relevant previous year. In these circumstances, when only small portion of sale consideration was received as earnest/deposit money and when developer could not have, therefore, exercised his rights under contract which were to 21 Jawaharlal L. Agicha crystalise on making payments after receipt of no objection certificate from authorities, it cannot be said that there is anything to indicate, leave aside establish, "passing of or transferring of complete control over property in favour of developer which is sine qua non for taking date of contract as relevant for purpose of deciding year of chargeability of capital gains. Therefore, on facts of present case, date of development agreement would not really be relevant to decide year of chargeability." perusal of judgment would indicate that it was held that date of development agreement would not be relevant to decide chargeability of capital gains as condition as to making of payment was not fulfilled till end of previous year in facts of present case Assessing Officer has assessed tax on capital gains on basis of date of development agreement although various basic conditions for execution of 'arrangement took place at much later date. In facts in case of assessee various conditions were not complied by developer before end of previous year and in fact has not been complied even before date of assessment. On above admitted factual position, assessment of capital gain during year taking date of agreement in absence of fulfilling of various conditions in arrangement is not justified and unsustainable. 3.2.13. In view of above and considering 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 case of appellant in year 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 land in substantial fulfillment of contract as per provisions of section 2(47) of Act. As I have concluded on facts that no transfer has taken place u/s. 2(47) during year under consideration no capital gain is chargeable in) Asstt Year 2008-09. 3.2.14. Considering facts and evidence on record it is concluded that there no transfer as envisaged u/s 2(47) of I T. Act 1961 during previous year and 22 Jawaharlal L. Agicha consequently there is no liability to capital gain tax during year under consideration action of Assessing Officer in assessing long term capital gain on transfer of and c anno t be sus tained. T he addition made b y Assessing Off icer amoun ting to Rs 25.81.38.515/- is hereby deleted. (emphasis supplied in bold). 3.12. It is noted by us that Ld. CIT(A) has analysed facts threadbare and factual findings recorded by him are based upon evidences held on record. Therefore, in absence of any contradictions or doubts in facts recorded by Ld. CIT(A) having been brought before us, we are inclined to endorse and uphold same. However, since exhaustive arguments were made by both sides before us, therefore we find it our duty also to give our detailed analysis and views supplementing reasoning given by Ld. CIT(A) hereunder: 3.13. first issue that was raised before us for our consideration is whether possession has been given by assessee to developer or not. In this regard, it is noted by us that as has been rightly noted by Ld. CIT(A) also that clause 3, clause 6 and clause 14 of Development Agreement clearly laid down that possession shall be given to developer only upon fulfillment of certain conditions i.e. sanctioning of scheme by Slum Rehabilitation Authority and obtaining letter of intent and other requisite permissions from Competent Authorities. It has also been clarified in clause 14 that owner (assessee) shall always be deemed to be in physical and exclusive possession of said property until issuance of Annexure -II by SRA. It is admitted fact on record that even till date no permission or scheme has been granted by SRA in respect in impugned land. Thus, 23 Jawaharlal L. Agicha there could not have been any question of parting with physical possession by assessee with developer. Even otherwise, no material has been brought on record by AO or by Ld. CIT-DR before us indicating any contradiction in factually findings recorded by Ld. CIT(A). In other words, nothing has been brought on record to show that physical possession was given by assessee to developer. 3.14. Without prejudice to above, even otherwise, physical possession is held by slum dwellers. Under these circumstances, apparently there was nothing to show that assessee could have given physical possession to developer. Under these circumstances, even very applicability of provisions of section 2(47)(v) becomes doubtful on such type of transaction having such peculiar features. Thus, taking support from judgment of Hon ble Supreme Court in 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 impugned land had taken place during year under consideration, even under provisions of section 2(47)(v). 3.15. other important aspect that cannot be ignored here is that AO had held this transaction to be case of transfer by erroneously presuming that development agreement was registered with concerned authorities. correct fact has been noted by Ld CIT(A) that impugned document was not registered with registrar under Registration Act, 1908. This factual finding has not been negated or controverted by Ld. CIT-DR before us. Thus, 24 Jawaharlal L. Agicha decision taken by AO was under mistaken belief of fact which did not actually exist. Thus, on this very ground, whole action of Ld. AO in treating impugned transaction as 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 document for invoking provisions of section 2(47)(v) since it only talks about contract of nature as referred to in section 53A of Transfer of property Act, and therefore it is not mandatory that whole of section 53A needs to be complied with while applying provisions of section 2(47)(v). It was further submitted that if we analyse object of bringing on statute provisions of section 2(47)(v), it would be noted that purpose was to tax capital gains arising in those cases where properties were actually transferred by way of agreement to sale but these were not registered and therefore few assessees even after transferring their properties were not paying taxes and thus for purpose of stopping revenue leakage in such cases, clause (v) was introduced in section 2(47). It was further submitted that applying Haydon s mischief rule of interpretation, interpretation of sections 2(47)(v) was to be done only by reading to extent as was necessary so as to achieve object of legislation. Reliance has been placed by Ld. CIT- DR for this proposition on judgment of Mumbai Bench of Tribunal in case of Suresh Chandra Agarwal v. ITO 15 taxman 115 (Mum). 25 Jawaharlal L. Agicha 3.17. On other hand, Ld. Counsel of assessee also analysed before us position of law in detail on this issue and relying upon recent judgment of Hon ble Punjab and Haryana High Court in case of C.S. Atwal v. CIT (supra) as well as judgment of Mumbai Bench of Tribunal in case of Dr. Devendra H. Dave Udgith (supra), it was submitted that provision of Act cannot be broken into pieces and interpretation cannot be done in such manner which allows choosing some pieces and leaving other. It was submitted that Doctrine of Legislation by Incorporation suggest that provisions of section 17(1A) of Registration Act, 1908, 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 Income Tax Act, 1961 so as to make complete reading of law. It was stressed that by reading law in this manner only correct position of law shall emerge. 3.18. We have considered these facts very carefully. Ld. CIT- DR has suggested us to follow Haydon s mischief rule whereas Ld. Counsel of assessee emphasised upon applicability of Doctrine of Legislation by Incorporation, on given facts of this case. We did some thinking on this tricky situation. In our view, both rules of interpretation are well accepted rules of interpretation and none of them can be discarded. Therefore, in our view, both rules should be applied in their respective chronology and relevance. Thus, for sake of completeness, first we should apply Doctrine of Legislation by Incorporation and after applying same, once law 26 Jawaharlal L. Agicha before us becomes complete, then we should interpret provisions so combined by applying Haydon s mischief rule. In other words, we should first read provisions of section 17(1A) of Registration Act into provisions of section 53A of Transfer of Property Act, and provisions so combined together, should be read into section 2(47)(v) of Act. In our view, provisions of section 2(47)(v) should be read in toto. When section 2(47)(v) talks about contract of nature referred to in section 53A of Transfer of Property Act, then we should also read conditions attached in section 53A and one of main requirements is for registration of document as per provisions of section 17(1A) of Registration Act 1908. Thus, registration of document becomes one of essential ingredients to invoke provisions of section 2(47)(v). It is noteworthy that subsequent to insertion of clause (v) to section 2(47) of Act, amendments have been made in section 53A of Transfer of Property Act as well as section 17(1A) of Registration Act for mandating requirement of registration of documents. Clause (v) of section 2(47) was drafted by legislature in light of pre- amended provisions of section 53A and 17(1A). Thus, in our view, when there is drastic change in source legislation [i.e. sections 53A and 17(1A)], it would be unwise, unsafe and contrary to cardinal principles of jurisprudence, to ignore said change while reading dependent legislation [i.e. clause (v) to section 2(47)]. As reader of law, we cannot afford to make adventures by reading interplay between various sections of different legislations in manner which 27 Jawaharlal L. Agicha results into choosing some part of interplay while leaving other, that too as per our discretion. Otherwise, at times, such approach (where two inter-dependent provisions are not read in complete manner but in bits and pieces as per requirement) may prove to be 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 Hon ble Punjab & Haryana High Court in case of C.S. Atwal v. CIT 378 ITR 244 has decided this issue in similar fashion by observing as under: 21. Registration and Other Related Laws (Amendment) Act, 2001 (in short, "the 2001 Act") has brought about radical change in rights flowing on basis of agreements executed in part performance of contract under Section 53A of 1882 Act. amendments have been made in Section 53A of 1882 Act and Sections 17 and 49 of 1908 Act. amendment vide 2001 Act which stood enforced with effect from 24.9.2001, words "the contract, though required to be registered, has not been registered, or" in Section 53A of 1882 Act have been omitted. Simultaneously, Sections 17 and 49 of 1908 Act have been amended clarifying that unless document containing contract to transfer for consideration any immovable property for purpose of Section 53A of 1882 Act is registered, it shall not have effect for purposes of Section 53A of 1882 Act. Section 17(1A) as incorporated and Section 49 of 1908 Act as amended read thus:- "17(1A). documents containing contracts to transfer for consideration, any immovable property for purpose of 28 Jawaharlal L. Agicha section 53A of Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after commencement of 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 purposes of said section 53A." "49. Effect of non-registration of documents required to be registered.--No document required by section 17 or by any provision of 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 affecting such property or conferring such power, unless it has been registered: Provided that unregistered document affecting immovable property and required by this Act or Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of contract in suit for specific performance under Chapter II of Specific Relief Act, 1877 (1 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument." words "or as evidence of part performance of contract for purposes of Section 53A of Transfer of Property Act, 1882" have been omitted from Proviso to Section 49. 22. Section 17(1A) of 1908 Act introduced by 2001 Act provides that no benefit would be admissible on basis of unregistered contract for purposes of Section 53A of 1882 Act. Equally, deletion of words "or as evidence of part 29 Jawaharlal L. Agicha performance of contract for purposes of Section 53A of Transfer of Property Act" from Proviso to Section 49 of 1908 Act clarifies effect of non-registration of contract executed in terms of Section 53A of 1882 Act. 23. Having elaborated scope and legislative intent of Section 2 (47)(ii), (v) and (vi) of Act and also mandatory ingredients for applicability of Section 53A of 1882 Act, it would be essential to notice that provisions of section 53A of 1882 Act have been introduced in Section 2 (47)(v) of Act by incorporation. concept of inclusion of provision of another statute by incorporation has been dealt with by Apex Court in detail in Surana Steels Pvt. Limited vs. DCIT, (1999) 237 ITR 777. issue before Apex Court in Surana Steels Pvt. Limited's case (supra) was relating to computation of book profit under Section 115J of Income Tax Act, 1961. Section 205 of Companies Act, 1956 provided that past losses or unabsorbed depreciation, whichever is less shall be allowed as set off against book profits of current year for determining profits for purpose of declaring dividend. Explanation clause (iv) to Section 115J of Act incorporated that book profits shall be reduced by amount of loss or amount of depreciation which would be required to be set off against profit of relevant previous year as if provisions of clause (6) of first proviso to sub section (1) of Section 205 of Companies Act, 1956 are applicable. It was pronounced that there is no reason to assign to term "loss" as occurring in Section 205, Proviso clause (b) of Companies 30 Jawaharlal L. Agicha Act, meaning different from one in which it is understood therein solely because it is being read alongwith Section 115J of Act. While dealing with principles relating to interpretation of taxing statute where there was inclusion of provision of another statute, it was held that provision must be construed in sense it bore in statute from which it is taken. It was recorded as under:- "Section 115J, Explanation clause (iv), is piece of legislation by incorporation. Dealing with subject, Justice G.P. Singh states in Principles of Statutory Interpretation (7th edition-1999): "Incorporation of earlier Act into later Act is legislative device adopted for sake of convenience in order to avoid verbatim reproduction of provisions of earlier Act into later. When earlier Act or certain of its provisions are incorporated by reference into later Act, provisions so incorporated become part and parcel of later Act as if they had been "bodily transposed into it". effect of incorporation is admirably stated by LORD ESHER, M.R. "If subsequent Act brings into itself by reference some of clauses of former Act, legal effect of that, as has often been held, is to write those sections into new Act as if they had been actually written in it with pen, or printed in it. " (p.233) "Even though only particular sections of earlier Act are incorporated into later, in construing incorporated sections it may be at times necessary and permissible to refer to other parts of earlier statute which are not incorporated. As was stated by LORD BLACKBURN: "When single section of Act of Parliament is introduced into another Act, I think it must be read in sense 31 Jawaharlal L. Agicha it bore in original Act from which it was taken, and that consequently it is perfectly legitimate to refer to all rest of that Act in order to ascertain what sections meant, though those other sections are not incorporated in new Act". . Thus, it would mean that Section 53A of 1882 Act has been bodily transposed into Section 2(47)(v) of Act and effect of it would be that Section 53A of 1882 Act shall be taken to be integral part of Section 2 (47)(v) of Act. In other words, legal requirements of Section 53A of 1882 Act are required to be fulfilled so as to attract provisions of Section 2(47)(v) of Act. 3.19. Thus, as per mandate of law, as explained by Hon ble High Court in above said judgment, we must make conjoint reading of all three aforesaid sections to understand and give effect to its full meaning. Having done so, we can now apply Haydon s mischief rule to interpret law so as to achieve objective of legislation, in light of facts of case before us. Undoubtedly, purpose of legislation [i.e. section 2(47)(v)] was to bring to tax those transactions where though properties were actually transferred, but in certain cases assessees were avoiding payment of capital gain taxes on ground of non-execution of sale deed. With view to plug revenue leakage under such cases, clause (v) to section 2(47) was brought on statute. Thus, in our opinion also section 2(47) (v) can for sure be pressed into service where transfer of property has been completed in substance and 32 Jawaharlal L. Agicha assessee is trying to camaflouge transaction by not executing sale deed and/or by creating false impression of no transfer. But, before invoking these provisions, burden is upon Revenue to demonstrate with help of cogent material that transfer has been completed in substance. 3.20. Further, we have analysed development agreement independently also to find out whether impugned property has actually been transferred by virtue of this agreement. It is generally seen that there may be several stages or events arising in joint development arrangement made between owner of land and developer. For purpose of determining actual date of transfer of land by land owner, all these stages / events needs to be collectively analsysed and after evaluating overall effect of same we can determine actual date of transfer. These stages / events may be described as date of entering into JDA, date of executing power of attorney authorising developer for taking various approvals / permissions etc., handing over possession of land to developer for various purposes, receipt of part / full sale consideration from developer, date of execution of power of attorney in favour of developer authorising him for sale of developed units to customers at his absolute discretion; and transfer of developed units to customers etc. There may be few more stages / events to complete transaction. Though, one single event may trigger process of transfer but may not necessarily complete it also. Whether transfer has, in substance, taken place, can be determined by analysing inter-play 33 Jawaharlal L. Agicha and effect of all these stages / events combined and put together. For example, possession may be given for various purposes, viz. possession given to contractor, or to tenant also, but such event in itself cannot be regarded as transfer of land. Possession of land may also be handed over as licensee only for purpose of development of real estate on land. Here again, it shall not give rise to transfer . Thus, when possession is given along with other legal rights to developer resulting into entitlement of developer for full use and enjoyment of property as well as its further sale after converting it into developed units at its full, own and sole discretion, then it may result into transfer provided other conditions also suggest so. Thus, handing over of possession has to be necessarily coupled with intention of transferring rights of ownership and enjoyment of property to developer. Handing over of possession for limited purpose of developing land while still retaining ownership and control of various legal rights upon property by land owner would not fall in clause (v) of section 2(47). 3.21. Now, in this legal background, if we analyse undisputed facts of case before us, we find that in situation given before us, by no stretch of imagination, we are able to reach upon conclusion that impugned land has actually been transferred. In fact, land is attached with so many fetters and ifs and buts that it cannot to be held as transferred unless various conditions attached to it are duly complied with. Detailed findings have been recorded in this 34 Jawaharlal L. Agicha regard by Ld. CIT(A) after analyzing various clauses of development agreement and other relevant facts of this case and also discussed briefly by us in earlier part of our order. It is noteworthy that admitted fact on record is that requisite permissions from Slum Rehabilitation Authority have not been received even till date. developer was not authorised to enjoy/sell his share of property unless he hands over to owner its share of developed portion of FSI, which in turn was not possible unless all formalities pertaining to SRA were completed. In fact, developer, as per terms of agreement, was to get proper permission for receiving rightful possession of land only after obtaining all requisite permissions from SRA. Thus, under such peculiar facts and circumstances and applying any provision of law and interpreting same in any manner, one cannot conclude by any stretch of imagination that impugned property has indeed been transferred. Thus, viewed from any angle, we have no option but to affirm detailed finding of Ld. CIT(A) on this issue. 3.22. Ld. CIT-DR had also heavily relied upon judgment of Hon ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia v. CIT, (supra) for upholding action of AO on ground that as per said judgment amount of capital gain shall be charged to tax in year of entering of Joint Development Agreement, and moment possession is handed over irrespective of fact that whether any conveyance deed was entered or not and whether registration is done or not. We have carefully gone through 35 Jawaharlal L. Agicha judgment of Hon ble Bombay High Court as well as order of AO. In fact, in given facts of case before us, aforesaid judgment of Hon ble Bombay High Court helps assessee. Our reading of said judgment suggest that ratio coming out from same is that in case of development agreement, if contract, read as whole, indicates passing or transferring of complete control over property in favour of developer, then date of contract would be relevant to decide year of chargeability of capital gains and substantial performance of contract would be irrelevant. Now, if we look into facts of case as has already been discussed and analysed by us in above paras that when agreement was read as whole, and compared with conditions attached thereto as well as real facts and circumstances of case, it does not transpire that there was clear intendment of assessee to make transfer of said land by virtue of this agreement itself, in view of detailed reasoning and analyses given by us in earlier part of our order. Further, distinguishing features and facts of above said case were that in said case, admitted case of said assessee was that transfer had taken place, and only dispute in said case was confined to year of chargeability. Further, fact of possession having been handed over by assessee to developer was also admittedly on record and same was not denied. Whereas, on other hand, in case before us neither possession has been handed over nor it is admitted case of assessee that transfer has taken place even till date. 36 Jawaharlal L. Agicha Further,Hon ble Bombay High Court got occasion to analyse aforesaid judgment in case of CIT v. Geeta Devi Pasari Supra) dated 10th July 2008 wherein it was clearly held that unless purchaser was actually physically put in possession, even though agreement was entered, it cannot be said that transfer had taken place in view of section 2(47)(v) and therefore capital gain could not be charged to tax. Similar view was taken by Hon ble Supreme Court in its order dated 24.1.2008, in case of Ajay Kumar Shah Jagati, wherein their lordships clearly held that possession is essential element to be considered for deciding whether transfer had taken place in view of extended meaning of transfer in section 2(47)(v) read with section 53A of Transfer of Property Act. It is to be further noted here that judgment of Hon ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia (supra),was delivered on 13.2.2003. Subsequently,an amendment has been made under Registration Act,1908 in 2001 by which section 17(1A) was inserted which provided that registration of agreement shall be mandatory to give effect to provisions of section 53A of Transfer of Propter Act. Thus, said judgment was delivered, keeping in view pre-amended law.The development agreement under consideration before us is admittedly not registered.The effect of non-registration after said amendment has been analysed by Hon ble Punjab and Haryana High Court in case of C.S. Atwal which has been already discussed by us in earlier part of our order. Thus, taking into account, totality of facts and circumstances of case, it can be said 37 Jawaharlal L. Agicha that no transfer of impugned land had taken place during year before us. 3.23. Before parting with, we shall like to deal with alternative issue raised by Ld. CIT-DR that impugned amount of Rs.10 crores received by assessee should be brought to tax as income from other sources. We shall deal with argument of Ld. CIT-DR on this aspect also. impugned amount of Rs.10 crores is stated to be in nature of advance money received by assessee for proposed contracts of land and to deal with such situation specific section i.e. section 51 exists on statute. Section 51 provides that under such circumstances, amount of advance received shall be deducted from cost for which impugned asset was acquired. Thus, we direct AO to treat this amount of Rs.10 crores as per provisions of section 51 of Act and consequences as per law should follow. AO is directed to re-compute income accordingly after giving opportunity of hearing to assessee. Thus, subject to aforesaid directions, grounds raised by Revenue are dismissed. 4. In result, appeal filed by Revenue is dismissed. Order pronounced in open court on 28th September, 2016. Sd/- Sd/- (C.N. Prasad) (Ashwani Taneja) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 28/09/2016 P.S/. . . 38 Jawaharlal L. Agicha Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT, Mumbai. 4. CIT(A)- Mumbai 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai ACIT 17(3), Mumbai v. Jawaharlal L. Agicha
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