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TMI Blog2022 (3) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... en held that where for want of permission in that transaction of development of land envisaged in Joint Development Agreement (JDA) failed through, there were no profit or gain which arose from transfer of capital asset which could be brought to tax under Section 45 r.w.s 48 of the Act. Thus we hold that since the property was actually transferred in A.Y. 2013-14 the computation of short-term capital gain holding the transfer took place in the A.Y. 2012-13 is not sustainable. In the present facts and circumstance of the case the deed since not registered in A.Y. 2012-13 it has no effect in law for the purpose of invocation of the provision of Section 53A of the Act. There is no profit or gain arose as there was no transfer in the year under consideration. Hence, the impugned order of addition passed by the authorities below is not sustainable in law and, thus, hereby quashed. Addition of interest income on mercantile basis - amount received during the year accounted on cash basis without allowing the expenditure as claimed by the appellant - HELD THAT:- Having heard the Ld. Counsel appearing for the parties, having regard to the facts and circumstances of the case we remit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of appeal hereinabove contained. 2. Ground No. 1:- The Ld. Counsel appearing for the assessee submitted before us that he is not proceeding with the ground as per instruction. In that view of the matter, the ground is dismissed as not pressed. 3. We have heard the respective parties and we have also considered the relevant materials available on record. 4. Ground No. 2 3 are interlinked. The brief facts leading to the case is this that the appellant company obtained an order from the Hon ble Jurisdictional High Court in winding up petition on 28.11.1991 whereby and whereunder the Official Liquidator of High Court of Gujarat was appointed to manage the affairs for liquidation of the company under the supervision and as per the said direction. Such liquidator was also assigned to carry out the liquidation proceeding including the sale of assets of the company and distribution of the fund realized to the workers, secured creditors, unsecured creditors and shareholders upon deducting related tax expenses as and when ordered by the Hon ble Court under Section 529A and 530 of the Companies Act, 1956. By and under the order dated 16.06.2011 the Hon ble High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.10.2013 which was paid by the purchaser to the Confirming Party No. 2 i.e. Vaibhav Industries has been confirmed by the said Vaibhav Industries with the following schedule:- Amount (Rs.) Bank Name Cheque No. Date 10,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000002 25-01-2012 10,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000006 01-02-2012 45,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000013 24-03-2012 1,04,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000019 15-01-2013 1,04,00,000/- Kadi Nagrik Sahkari Bank Ltd. Stadium Road, Ahmedabad 000020 15-02-2013 1,05,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, factory building etc. as per its share in the said properties. The AO has observed that the appellant had sold the said assets in total consideration of ₹ 3,78,00,000/- out of which advance of ₹ 21,00,000/- as EMD were received during the year under consideration. Further, the possession of the land was also handed over to the purchaser namely; Vaibhav Industries on 22/09/2011 i.e. the year under consideration. From the deed of conveyance executed on 01/10/2013 relevant to A. Y. 2014-15. It has been noticed that the aforesaid properties were jointly held by appellant company and another party namely; M/s. Reepal Pharmacap Pvt. Ltd. Thus the AO worked out the capital gain in the ratio of area of land held by the appellant i.e. 2604 Sq Mtrs. out of the total area of land of 4248 sq. Mts. and accordingly worked out the sale proceeds in that ratio i.e. 61.29% of the total consideration of ₹ 3.78 crores which came to ₹ 2,31,67,620/-. Since part performance in view of provisions of section 53A of Transfer of Property Act, 1882 has taken place in the year under consideration, thus the same has clearly fallen under the definition of section 2(47)(v) of the I. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year under consideration. In that view of the matter the invocation of Section 53A of the Transfer of Property Act, 1882 is wrong. Thus, no profit or gain which arose from transfer of a capital asset which could be brought to tax under Section 45 r.w.s. 48 of the Act. In this regard, we have further considered the judgment relied upon the Ld. AR in the case of CIT vs. Balbir Singh Maini passed by the Hon ble Apex Court reported in, (2017) 86 taxmann.com 94 (SC) where it has been held that where for want of permission in that transaction of development of land envisaged in Joint Development Agreement (JDA) failed through, there were no profit or gain which arose from transfer of capital asset which could be brought to tax under Section 45 r.w.s 48 of the Act. While dealing with the matter the Hon ble Apex Court has been pleased to observe as follows:- 19. It is also well-settled by this Court that the protection provided under Section 53A is only a shield, and can only be resorted to as a right of defence. Rambhau Namdeo Gajre v. Narayan Bapuji Dhgotra [2004] 8 SCC 614 , para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act. This being the case, we are of the view that the High Court was right in stating that in order to qualify as a transfer of a capital asset under Section 2(47)(v) of the Act, there must be a contract which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. The ITAT was not correct in referring to the expression of the nature referred to in Section 53A in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the enjoyment of takes color from the earlier expression transferring , so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 23. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose -the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction. 24. The matter can also be viewed from a slightly different angle. Shri Vohra is right when he has referred to Sections 45 and 48 of the Income Tax Act and has then argued that some real income must arise on the assumption that there is transfer of a capital asset. This income must have been received or have accrued under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 835] in which this Court also considered the dictionary meaning of the word accrue and held that income can be said to accrue when it becomes due. It was then observed that: (SCC p. 454, para 11) 11. the date of payment does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may not be immediately. 16. This Court further held, and in our opinion more importantly, that income accrues when there arises a corresponding liability of the other party from whom the income becomes due to pay that amount . 17. It follows from these decisions that income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee. 18. Insofar as the present case is concerned, even if it is assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement passbook, there was no corresponding liability on the Customs Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. At the very onset of the proceeding the Ld. Counsel appearing for the assessee submitted before us that the impugned income of interest has already been offered to tax in the subsequent year on received basis. In the event the same is added to the year under consideration on accrual basis then the same would be double addition. In that view of the he prays for remitting the issue to the file of the Ld. AO for verification of the same upon considering the evidence to be produced by the assessee. Such submission made by the Ld. AR has not been controverted by the Ld. DR with all his fairness. Having heard the Ld. Counsel appearing for the parties, having regard to the facts and circumstances of the case we remit the issue to the file of the Ld. AO to consider that if the impugned income has been offered to tax in the subsequent year then the relief is also to be given to the assessee in the respective Assessment Year. The Ld. AO will consider the issue as directed hereinabove upon considering the evidence to be produced by the assessee and after affording opportunity of being herd to the assessee. Assessee s this ground of appeal is, therefore, allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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