9911796707
TMI Blog1985 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... as " the said plot"). On May 25, 1963, an agreement was entered into under which the said Topiwala as the vendor agreed to sell and the assessee as the purchaser agreed to purchase the said plot for Rs. 29,448. The said agreement referred to the said Topiwala having received Rs. 20,000 as part of the purchase price and recorded that the balance of the purchase price would be payable on or before the execution of the conveyance. The assessee was given possession of the said plot and under the agreement to purchase the said plot, it was the duty of the assessee to guard the same against trespassers and squatters. On September 24, 1964, the assessee paid the balance amount of Rs. 9,448 under the said agreement and the said plot of land was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on proper interpretation of section 2(42A) of the Income-tax Act, 1961, read with section 2(14) of the said Act, the sum of Rs. 71,670 was properly treated as long-term capital gains ? " Before setting out or considering submissions made by the counsel, it would be proper to take note of the relevant provisions of law. Clause (14) of section 2 of the Income-tax Act, 1961, defines the term " capital asset". The relevant portion of the said definition run thus: " 'Capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include ...... .." Admittedly, the said plot was not property of the type excluded from the purview of the said definition. Clause (42A) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 25, 1963, and pursuant to that agreement was put in possession of the said plot. In view of this, it was submitted by her that the assessee must be regarded as having held the said plot from the date of the agreement to purchase the same and, hence, the assessee had held the said plot for more than twelve months prior to selling the same. It is not possible to accept the submission of Mrs. Jagtiani. On entering into the agreement to purchase the said plot, all that the assessee acquired was an equity to obtain specific performance of the said agreement, if she was able to establish that she was and had always been ready and willing to carry out her part of the agreement. It is well-settled in law that a mere agreement to purchase a land d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re yard. The purchase was to be completed within six months. The assessee paid Rs. 90,000 as earnest money. Later, the vendor wanted to cancel the agreement on the ground that the sub-division of the plot had not been granted by the Municipal. Corporation but this was not accepted by the assessee. Ultimately, under a tripartite agreement, the assessee transferred and assigned in favour of a third party, its right, title and interest under the aforesaid agreement to purchase the said portion of the said plot and received a sum of Rs. 5,90,000 from the said third party. It was held by the Division Bench which decided the aforesaid case that under the tripartite agreement, the assessee was to transfer and assign in favour of the third party, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a Division Bench of the Calcutta High Court in CIT v. All India Tea and Trading Co. Ltd. [1979] 117 ITR 525. This decision, we are afraid, is not at all relevant to the question before us. In that case, the question was whether the gain made by the assessee on transfer of a large area of land in Assam was capital gain and taxable under the Income-tax Act as such. What was held was that the land in question was agricultural land and it never became capital " asset " in the hands of the assessee. Hence, the gain made by the transfer of the same was exempt from capital gains tax. It was further submitted by Mrs. Jagtiani that even if the transaction entered into by the assessee is to be regarded as of the sale of a short-term capital as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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