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TMI Blog1987 (3) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... nveyance of the properties built on the said land by the firm in favour of the firm or their nominees, singly or jointly. In the meanwhile, about 710 sq. yds., being the difference between 2,310 sq yds. and 1,600 sq. yds., were acquired by the Municipal Corporation of Hyderabad for set back and roads, etc. 2. In accordance with the agreement cited supra, the firm of Umakaran and Tejkaran took possession of the properties governed by the agreement for development and in return allotted two flats bearing Nos. 302 and 304 to the appellant in May 1978. Thereupon, the appellant let out the flats till the date of oral partition (13-10-1980) followed by a memorandum of partition dated 23-10-1984. The flats allotted to the appellant were subject matter of partition along with other immovable properties and an order under section 171 of the IT Act was passed by the Income-tax Officer, B-Ward, Circle-IV, Hyderabad, on 23-3-1984 according recognition to the oral partition. On 23-4-1980, a sale deed was executed by Shri Ramakaran, Shri Mohan Karan, Raj Karan and Shri Dharamvanth Karan--coparceners of the Hindu undivided family--along with Umakaran representing the firm of Umakaran Tejkaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81 relevant to the assessment year 1981-82, the Income-tax Officer brought to tax under the head "Capital gains" a sum of Rs. 60,750 on the strength of the deed of sale executed on 23-4-1980 and registered as document No. 1362 dated 26-5-1980 and with the Sub-Registrar of Secunderabad. The assessee had not reported any capital gains in his return of income. 4. In the first appeal, it was contended before the Appellate Assistant Commissioner that the sale had taken place when the assessee entered into an agreement on 6-8-1975 with the registered firm of M/s Umakaran and Tejkaran under which about 2,310 sq. yds. of land at Sarojinidevi Road, Secunderabad, with property being MCH Nos. 1-2-257 and 1-2-261 (excepting the property bearing MCH Nos. 1-2-261/2 to 6) were given to the said firm in exchange for a promise of allotment of two flats in block No. 1 valued at Rs. 60,000 each to be constructed on the land by the said firm and in addition on payment of Rs. 40,000 in cash. Therefore, if at all there was any capital gain it ought to have been assessed for the assessment year 1976-77 and not for the assessment year 1981-82. It was also contended that where an agreement was entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement dated 6-8-1975 executed between the assessee and the firm. Thus, the sale deed dated 23-4-1980 is totally an independent and separate deed. Inasmuch as the vendors consisted of the erstwhile coparceners of the disrupted Hindu undivided family on the capital gain, if any, arising from the transaction. He further submitted that there was an error in the sale deed dated 23-4-1980 as the consideration was not properly described and such error was sought to be rectified by a rectification deed dated 4-2-1981 and it is only through this deed dated 4-2-1981 that the conveyance of property was effected, so much so that, if at all there was any capital gain, it had to be alternatively considered only for the assessment year 1981-82 and not for the assessment year 1980-81. It was his further submission that as a partition had taken place on 13-10-1980 and such partition having been recognised by the revenue by an order under section 171 of the Act, and inasmuch as the vendors are the erstwhile coparceners of the partitioned Hindu undivided family, if at all there was any capital gain arising out of the transaction, it should be assessed only in the hands of the erstwhile coparcen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which the assessee obtained in exchange for the land that was agreed to be transferred, had been allotted among the coparceners; therefore, it was but natural that all the coparceners jointed together to execute the sale deed on 23-4-1980 and that does not mean that it was not the Hindu undivided family who are parties to the sale deed. In this case, if necessary, the veil must be lifted and the substance of the transaction should be looked at. For the proposition that transfer of immovable property takes place only when the document is executed and registered, he relied on the following decisions: (i) CIT v. Ashaland Corpn. [1982] 133 ITR 55 (Guj.) (ii) Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888 (SC). 7. In his reply, Shri Jameeluddin submitted that though a contract for sale does not valid contract for sale, the property is in equity transferred to the purchaser by the contract as the vendor would then become a trustee for him and cannot be permitted to deal with the property so as to defeat the rights of the prospective vendee. In CIT v. T. N. Aravinda Reddy [1979] 120 ITR 46 (SC), the word 'purchase' in section 54 of the Income-tax Act had been given a comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 100 and upwards...can be made only by a registered document. Under the Registered Act, the sale of tangible immovable property, though of a value less than Rs. 100, must also be effected by a registered instrument unless it is effected by delivery of possession. In this case, the value of the immovable property is more than Rs. 100. Therefore, registration of the sale deed is a sine qua non for the conveyance of title to the property. This had taken place only on 22-5-1980 when the HUF was not partitioned. Therefore, we uphold the contention of the revenue that the transfer tool place only in the previous year relevant to the asst. year 1981-82 and capital gains were rightly included in the income of the HUF. Thus, we reject the contention of the assessee's counsel that the sale had taken place the moment possession of the land was given to M/s. Umakaran and Tejkaran in the year 1975 as per the agreement. In fact, the cases relied on by the assessee would rather support the stand of the revenue. 10. In K. C. Pal Chowdhury v. CIT [1962] 46 ITR 1 (Cal.), it was held that delivery of possession pursuant to the agreement for sale before the actual conveyance did not transfer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration was sought to be more correctly and more fully described in the rectification deed. This will not have the effect of postponing the passing of the title itself. Therefore, we reject the alternative argument of the learned counsel that the transfer had taken place in the year 1981 relevant to the assessment year 1982-83. 13. It is true that the rectification deed was executed by the erstwhile coparceners of the assessee-HUF. That was because by the time the rectification deed was executed, the HUF had been partitioned. Beyond this, it does not have any further implication. Therefore, we are unable to accept the contention of the learned counsel for the assessee that if at all any capital gain arose, it should be consideration in the assessment year 1982-83 and that too in the individual hands of the erstwhile coparceners. 14. Sri Jameeluddin heavily relied on the decision of the Tribunal in the case of Mrs. Shahzada Begum v. ITO [1983] 5 ITD 292 (Hyd.), for the proposition that the purchase would relate back to the date of the agreement. It is our consideration view that the ratio of the decision in this case is not applicable to the facts of the case on hand. The Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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