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TMI Blog1996 (1) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had given possession to M/s. Pioneer Engineering Corporation who is a promoter of a multi-storeyed building and Pioneer Engineering Corpn. shall construct a multi-storeyed building on the said land and the assessee shall execute the different sale deeds in favour of different purchasers of flats as nominated by the promoter. The Commissioner of Income-tax accordingly proposed to revise and cancel the order of assessment for the assessment year 1988-89 on the ground that transfer took place during the assessment year 1988-89 under section 2(47)(v) of the Income-tax Act for the purpose of capital gains. The assessee objected to the proposal stating that during the assessment year 1988-89, no transfer took place either in fact or under section 2(47)(v) of the Income-tax Act. Accordingly, no tax under capital gains should be levied on the assessee. However, by the impugned order passed under section 263, the Commissioner set aside the assessment directing the Assessing Officer to assess the capital gains arising out of the transfer of the immovable property. 3. The learned counsel for the assessee has submitted before us that the order passed under section 263 cannot be sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars were furnished along with the paper book. Further it was brought to our notice that in the wealth-tax assessments the entire property is still being assessed in the hands of the assessee. It was further contended on behalf of the assessee that the Commissioner of Income-tax in his order under section 263 has held that " the assessee had handed over the possession of the property to the promoter in 1987-88 or even earlier. But such possession was definitely allowed to be retained in the course of the financial year 1987-88 ". Therefore according to the Commissioner, the assessee is liable to pay tax under the head capital gains, which is not correct. On the other hand, the departmental representative has submitted before us that the order passed by the Commissioner is correct and requires no interference. It was further argued that some other circumstances also were considered by the Commissioner, i.e., one release deed dated 2-1-1987 executed by the mother of Shri Murugesan and a letter dated 5-2-1990 addressed to the Appropriate Authority by the promoter and considering them the Commissioner has come to the conclusion that the transaction should be termed as transfer within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of section 2(47)(v) it was observed by the Commissioner that since the possession of the property was allowed to be retained by the promoter, it comes within the purview of transfer as provided in section 2(47)(v) of the Income-tax Act. Section 2(47) of the Income-tax Act defines transfer in relation to a capital asset. Clause (v) was inserted by the Finance Act, 1987 with effect from 1-4-1988. Therefore the provision of section 2(47)(v) is applicable in respect of the assessment years 1988-89 onwards. In this connection the Circular of the Board (Circular No. 495 dated 22-9-1987) as well as CIT v. Reliance Traders Corpn. (P.) Ltd. [1995] 211 ITR 666 (Delhi). According to sub-clause (v) of section 2(47) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of Transfer of Property Act. Therefore for the purpose of getting the complete meaning of the said section we have to look into section 53A of the Transfer of Property Act, which reads is under : " 53A. Where any person contracts to transfer for consideration any immovable property by writing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A of the Transfer of Property Act and the transaction would be called as a transfer under section 2(47)(v) of the Income-tax Act. To attract the said provision either the transferee has taken possession of the property in part performance of the contract, that is, with reference to the terms of contract he has taken possession, or he has retained or already in possession with reference to the terms of the contract. In both the cases, the possession should be held with reference to the terms of the contract, i.e., in part performance of the contract. Further we have to keep in mind that provision of clause (v) of section 2(47) was inserted only with a view to include certain transactions within the purview of transfer for the purpose of taxing under capital gains. Although there was no legal transfer in such circumstances, but a fiction was created to include those transactions within the purview of transfer. It is a settled law that a fiction shall have its logical consequences but shall not go further than warranted by law. A fiction cannot be overworked to militate against legislative intent. In this connection State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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