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TMI Blog2021 (9) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... efer to hon'ble apex court s decision in CIT Vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT ] rejecting the department s pela seeking to invoke a transfer in absence of registered document, thereby squarely covering the issue so far as the facts herein are involved as this assessee had not only appeared before the registration authority claiming therein that he had indeed transferred peaceful and vacant possession of the relevant capital asset but also received the entire corresponding sale consideration. Any prior or subsequent document therein to, oral as well as an unregistered one ought to be taken as superseded by the foregoing registered transfer document in issue. We therefore quote hon'ble apex court s yet another decision CIT Vs. K.Y. Pilliah [ 1966 (10) TMI 35 - SUPREME COURT ] to express our concurrence with the CIT(A) s detailed discussion under challenge. The assessee s strong endeavour to rely on the foregoing litigation (supra) as well as evidence deserves to be declined in light of his registered sale deed dt.20-04-2009. We accordingly uphold the impugned long term capital gain addition in assessee s hands. All the assessee s applications/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee vendor later changed his mind of selling his lone inherited house property for the time being now and instead try for other ways to encash on the same. He Was also under pressure from Vijaya Bhasker Reddy to payoff his monies at the earliest within no time. Mr.Suresh Babu Prop.M/s.Uma Enterprises was engaged as a loan facilitator to try for any possible loan against the assessee vendor's house property. In the course of obtention of loan against the said house property, the broker, after many trials informed the assessee vendor that the maximum loan that he could get by mortgage of property with any Bank would be in the range of ₹ 75.00 lakhs to 100.00 lakhs. The assessee's loan requirements however were otherwise and he wanted something more than ₹ 100.00 lakhs as he was to pay ₹ 90.00 lakhs or so to Mr. Vijaya Bhaskara Reddy alone, amount taken against GPA from him along with interest thereon. Taking advantage of the assessee's delicate predicament situation, the broker Mr. Suresh babu leveraged for a cleverful bargain with the assessee saying that he could get more amount of loan, provided he was, in effect willing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Courrt in the matter of his continued illegal, physical occupation of the said property. Surprisingly she, by taking a curious turn around stand with no other possible alternatives available under the law and so only before the Ld AO, in her sworn statement came out openly with an ulterior intent/motive to put him in a corner/discredit his image in the society. She knows fully well that under any civil laws/criminal laws she could not succeed against the assessee vendor as any such hasty/faulty step would boomerang on her in view of her being privy to other agreements entered with him. The assessee vendor, argues, that in the absence of his clear bona fide intentions/actions expressly made otherwise while entering such sale deed contract especially viz. when Such sale deed is accompanied. With (1) MOU Dt 16.04.2009 and (2) Agreement of reconveyance _ Dt. 18.05.2009. And to prove that, sale deed is false , he has openly asserted before the AO that he is still in physical occupation of the said of his own property unchallenged and unassailed of his rightful titleship rights - lawfully by the vendee of property - Mrs. Manju Devi Taparia. Suprisingly the LdAO has fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent evidence and satisfy the Tribunal that no sale as such took place, the conclusion that there was no capital gain. 'Whereas the vacant possession was not handed over by the assessee to prospecting transferee company, the transaction entered with that company by the assessee for immoveable property could not be termed as transfer within the meaning of section 2(47)(V) r.w.section 53A of TP Act B.K.Jhala Associates Vs. Asst. CIT (2000) 14 DTC 201. (Pune-Trib.). Transfer where Possession not transferred to the transferee. AO given ample documentary evidences . As discussed in preceding paragraphs, the At) was given during the course of proceedings the following documents. 1) Copies of MoU Dt. 16.04.2009 (not registered) 2) Agreement of reconveyance Dt. 18/05/2009 (not registered) entered into as between the assessee vendor and Mrs. Manju Devi Taparia, The above agreements relate to the property that is purported to have been so sold to Mrs. Manju Devi. a) The MoU agreement Dt. 16.04.2009 inter alia provides/says that:- (extract of relevant clauses) . . Clause No. (1) (2) reads:- The 01st party( the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the said 02 agreements viz. MOU for the loan obtained .on execution of sale deed with Mrs. Manju Devi and also Agreement of reconveyance as entered into as between them by the parties thereto, having a bearing on the very subject. matter of property sold, since they being unregistered, and hence should not to be considered, does not have a force in it and so speaks of his perfunctory mind on the subject. Agreements - validity and their enforceability Agreements as between two/more individuals/persons if made as per Law of Land viz. Indian Contract Act are valid contracts enforceable in a court of law. The AO should have realized that all agreements need not be registered so as to be enforceable in law. As per Sec 2(h) of Indian Contract 1872, any agreement enforceable by law is a contract. III other words, all such agreements if entered on valid and appropriate stamp value under Indian stamp Act are very much enforceable in a Court of law provided' they are fulfilling the basic requirements (1) An offer, (2) An acceptance, (3) 'Competence of the parties to contract, (4) Lawful subject matters, (5) Mutuality of Obligations (6) Conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exist with regard to them. Thus, as aforesaid, the above 02 agreement documents viz. MOU Agreement of Reconveyance, if they too had been registered in addition to sale deed document registration the assessee vendor and vendee (parties to the documents) would disentitle themselves from getting any possible loan against the said property from any Bank/Financial Institutions or even from a private financer as lenders suspect that no clear valid sale/title of property as per Law of Land has taken place/exists or that the sale of property in question would be subject to legal wrangling/litigations for years together with no clarity position. In the present case the AO, has neither shown his modicum of patience/willingness to understand the entire issue in its-whole gamut nor has he sought requisite expert legal advice on the same before he came to his prejudiced conclusion of saying that such agreements are not fit for consideration. at all to the present context.. The AO thus, should have realized that the intent of parties is the fulcrum, on which, the other aspects come to stand one over the other. First let us take sale deed which is executed and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dor, which handcuffed up her hands to initiate any 'legal steps worth the name under the law of land against him. In other words she is specifically estopped from proceeding so under the law by an express agreement with the assessee vendor in connection with said property. Thus both the assessee vendor and purchaser of property, did not have clear set of minds on the alleged sale Deed of property from the very beginning . In other words it is nothing but a conditional sale of property as between the parties with other objective/purpose in their minds and hence the alleged sale transaction of property does not qualify itself to be called as transfer/sale of property in view of possession of property has not passed on to purchaser in realistic terms but remaining on paper under the Transfer of Property Act and also Sale of Goods Act . Conditional Sale not a Complete sale of Property Sale as defined under sub clause (i) of clause (47) of Sec.2 of Income Tax Act, 1961. Section of 54 of Transfer of Properties Act 1882, defines sale as under:- a transfer of ownership in exchange for a price paid or promised or part paid or part promise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 8, has strongly stated that - he has not handed over or transferred his property possession to Mrs. Manju Devi . This is because, armed with the 02 said agreements - MOU Agreement and Agreement of reconveyance I\possession of property not vet parted with, by him, he could stop her of any possible enforcement/encroachment of any legal claim/right by the purchaser of property in a court of law, and therefore, neither in terms of Sec 2(47) (V) of Income Tax Act, nor in terms of Sec 53A of TP Act the impugned sale deed transaction could be classified as transfer: of capital asset or could be so considered as a completed sale transaction in view of it being a conditional sale . Assessee vendor in submission of relevant documents to the Ld AO:- The assessee vendor in the present case, as stated earlier is well, in submission of all relevant evidences of documents of agreements viz. MOU and Agreement of Reconveyance in his sworn statement before the ld AO in support of his contention that the sale deed of his property with Mrs. Manju Devi makes it a conditional sale not a completed sale and hence do not come under the definition of transfer U/S 2(47) of Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates, making compulsory registration of documents containing contract to transfer for consideration like agreement to sell etc. Vague/unfounded charges/comments made against the assessee:- The AO has remarked, in Para 34 of his. order that by entering into unregistered MOU just before sale deed registration before the sub registrar and entering into an unregistered Agreement of Reconveyance is nothing but putting a colourable device to avoid capital gain tax but nothing else . The AO also said in Para 31 of the order quote entering into an MOU and giving a statement that the registered sale deed has no legal sanction, but a merely a colourable device or avoidance a tax as held in Mc Dowell Co. Ltd. Vs TO (1985) 154 ITR 148(SC). That the Ld.AO by attempting to apply case laws, as above stated, Suraj Lamp Inds. (P) Ltd. Vs State of Haryana and MC Dowell Co. Ltd. - to the present case of the assessee- just because of (1) sale deed came to be executed and registered and (2) MOU Agreement. of Reconveyance relating to the said property not so registered and so imputing the said agreements as nothing but a colourable devices only to evade capital gains tax by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt allowing the reference application filed by the assessee. Mr. Suresh Babu - a broker in the loan facilitation deal _ his role conspicuously ignored:- It is also surprising that Ld AO has conveniently ignored to interrogate/probe Mr.Suresh Babu Prop. M/s. Uma Enterprises a broker in loan facilitation in the entire deal, arranged by him/using his good offices to arrange loan sum for the 02 parties viz. the assessee vendor and Mr.Manju Devi Tapa ria. Further, this gentlemen also signed on some agreements viz. MOU, on behalf of Mr. Manju Devi Taparia as her representative. The assessee vendor in his sworn statement before the AO in Q.No.6 of the assessment order has unmistakably highlighted the said broker's vital role, which came to be played by him. At his insistence, he had given ₹ 2,00,000/- by cheque 166198/- and ₹ 81,00,000/- by another cheque No.166197 which got transferred to M/s. 'Uma Enterprises' by the broker Ch.Suresh Babu. Why the AO has deliberately failed to further investigate/probe into the affairs is a moot point in this entire episode inspite of the said broker's role being brought to his notice. Ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his property who is still in physical occupation of the said property beyond doubt. In the light of above foregoing, submissions/explanations, before the Hon'ble, it is earnestly prayed by the assessee vendor, in equity and fair justice of law, to kindly consider cancelling the assessment order as bad and void in law. 4. Though the assessee has taken 21 grounds in appeal they all relate 'to one issue i.e. assessment of capital gains on account of transfer of property situated at Road No.4, Banjara Hills, Hyderabad vide document dated 29/04/2009. The basic contention of the assessee is that the registration document cannot be taken as conclusive proof to hold that there is a transfer resulting in capital gains. The contention of the' assessee is that the preceding and subsequent events also should be taken into account to arrive at the true character of the transaction. With the help. of certain documents the assessee 'contended that the transaction in question is only a document to accommodate taking loan mortgaging the property. For this purpose the assessee is relying on the following: i. There was an. earlier transaction in the form of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument was passed on and the transaction duly recorded in her accounts and shown in the return of income filed by her for the AY 2010-11. The above documentation duly confirmed by the ultimate purchaser is of utmost importance to arrive at the true nature of the transaction. As regards of the MOU dated 29/04/2009, it is seen that there is no reference of any such agreement in the registration deed entry into on 29/04/2009. Similarly the agreement of free conveyance allegedly entered into on 18th May, 2009, is unregistered and cannot completely relied upon. Further, the possession of the property and receiving the rent from the tenant would depend on later understanding This cannot be a consideration to decide whether the assessee property was passed on through a regal document conferring enforceable rights to the purchaser. In view of the discussion as above, I hold that there was a 'transfer' within the meaning of Section 2(47) of the Income tax Act, 1961 giving rise to capital gains as evidenced by the document dated 29/04/2009 between the assessee and Smt. K. Manju Devi Taparia. Accordingly, the action of AO in assessing the capital gains is confirmed and the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unable to treat the assessee or his family members pleadings or evidence therein as forming the sole basis so afar as assessment of his impugned capital gains is concerned. We wish to refer to hon'ble apex court s decision in CIT Vs. Balbir Singh Maini (2017) [86 taxmann.com 94](SC) rejecting the department s pela seeking to invoke a transfer in absence of registered document, thereby squarely covering the issue so far as the facts herein are involved as this assessee had not only appeared before the registration authority claiming therein that he had indeed transferred peaceful and vacant possession of the relevant capital asset but also received the entire corresponding sale consideration. Any prior or subsequent document therein to, oral as well as an unregistered one ought to be taken as superseded by the foregoing registered transfer document in issue. We therefore quote hon'ble apex court s yet another decision CIT Vs. K.Y.Pilliah (1967) [63 ITR 411] (SC) to express our concurrence with the CIT(A) s detailed discussion under challenge. The assessee s strong endeavour to rely on the foregoing litigation (supra) as well as evidence deserves to be declined in light of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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