Principal Commissioner Of Income Tax- 4, Kolkata v. M/S. Shelter Project Ltd

Form No.(J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE Present : THE HON’BLE JUSTICE T.S. SIVAGNANAMA N D THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITAT NO: 60 OF 2020Arising out ofIA NO: GA 2 OF 2020 WithITAT NO: 60 OF 2020Arising out ofIA NO: GA 1 OF 2020 PRINCIPAL COMMISSIONER OF INCOME TAX- 4, KOLKATAVS.M/S. SHELTER PROJECT LTD. For the appellant: Mr. S. N. Dutta, Adv. Mr. Soumen Bhattacharjee, Adv. For the respondent: Mr. J. P. Khaitan, Sr. Adv. Mr. Sourav Chunder, Adv.Ms. Swapna Das, Adv. Heard on : 04.02.2022 Judgment on :04.02.2022 Re: IA NO: GA 1 OF 2020 T.S.SIVAGNANAM, J.:Heard Mr. S. N. Dutta duly assisted by Mr. Soumen Bhattacharjee, Counsel appearing for theappellant/revenue and Mr. J. P. Khaitan, learned Senior Counsel dulyassisted by Mr. Sourav Chunder and Ms. Swapna Das, Counsel appearing for the respondent/assessee. There is a delay of 324 daysin filing the appeal. We are satisfied with the reasons given in theaffidavit filed in support of the delay condone petition. Since we areinclined to take up the main appeal itself for hearing, we exercisediscretion and condone the delay in filing the appeal. Accordingly, thedelay in filing this appeal is condoned. The application being IA No. GA/1/2020 for condonation ofdelay stands allowed. Re: ITAT/60/2020 We have perused this appeal filed under Section 260A of theIncome Tax Act, 1961(the Act) as directed against the order dated 17[th]October, 2018passed by the Income Tax Appellate Tribunal, A Bench,Kolkata in ITA No.737/Kol/2014 for the assessment year 2009-10.The revenue has raised the following substantial question of law forconsideration: A.Whether the Learned Tribunal has committed substantialerror in law in deleting the addition of consideration receivedon Transfer of land for Development of Rs.49,92,73,606/- ona completely misinterpreting Section 53A of the Transfer ofProperty Act as well as Section 2(47) of the Income Tax Act,1961?error in law in deleting the addition of consideration receivedon Transfer of land for Development of Rs.49,92,73,606/- ona completely misinterpreting Section 53A of the Transfer ofProperty Act as well as Section 2(47) of the Income Tax Act,1961? We have heard Mr. S. N. Dutta, learned Counsel appearing forthe appellant/revenue. The short question which falls for A.Whether the Learned Tribunal has committed substantialerror in law in deleting the addition of consideration receivedon Transfer of land for Development of Rs.49,92,73,606/- ona completely misinterpreting Section 53A of the Transfer ofProperty Act as well as Section 2(47) of the Income Tax Act,1961?error in law in deleting the addition of consideration receivedon Transfer of land for Development of Rs.49,92,73,606/- ona completely misinterpreting Section 53A of the Transfer ofProperty Act as well as Section 2(47) of the Income Tax Act,1961? We have heard Mr. S. N. Dutta, learned Counsel appearing forthe appellant/revenue. The short question which falls for consideration is as to whether the Tribunal has rightly interpreted theprovision of Section 2(47)(v) of the Act. The question which arose forconsideration before the Assessing Officer was whether pursuant toan un-registered agreement, possession of the property was handedover by the assessee to a company engaged in development of housingprojects wholly owned by the State of West Bengal. The AssessingOfficer completed the assessment vide order dated 29[th] December,2011 holding that the assessee has accepted that possession washanded over. Challenging the said finding, the assessee preferred anappeal before the Commissioner of Income Tax (Appeals)-XII, Kolkata[CIT(A)] specifically contending that possession was not handed overand also the fact that subsequently in the year 2011 the agreementstood cancelled and whatever amounts which were paid were returnedby the assessee. However, CIT(A) did not proceed on the basis of anyconcession being given by the assessee stating that possession of theproperty was handed over to the developer but proceeded to hold thatin the agreement payment has been received by the assessee from thedeveloper and the agreement also stipulates that the developer haslegally enforceable right to take possession of the said land from theassessee on payment of the balance amount. Therefore, the CIT(A)held that the full amount payable under the agreement has accrued tothe assessee in the relevant assessment year, 2009-10. Challengingthe said finding the assessee preferred an appeal before the Tribunal.The Tribunal took note of the factual position and, more particularly,that the case arose much after the amendment to Section 53A of the Transfer of Property Act which was amended by the Amendment Act,2001 which stipulates that if an agreement like the joint developmentagreement is not registered, then it shall have no effect in law for thepurposes of Section 53A of the TP Act. Accordingly, the assessee’sappeal was allowed. The legal position is no longer res integra and itwould be beneficial to refer to the decision of the Hon’ble SupremeCourt in Commissioner of Income Tax Vs. Balbir Singh Maini reportedin (2017) 398 ITR 531 (SC) wherein the Hon’ble Supreme Court on thevery same issue has held as follows: Transfer of Property Act which was amended by the Amendment Act,2001 which stipulates that if an agreement like the joint developmentagreement is not registered, then it shall have no effect in law for thepurposes of Section 53A of the TP Act. Accordingly, the assessee’sappeal was allowed. The legal position is no longer res integra and itwould be beneficial to refer to the decision of the Hon’ble SupremeCourt in Commissioner of Income Tax Vs. Balbir Singh Maini reportedin (2017) 398 ITR 531 (SC) wherein the Hon’ble Supreme Court on thevery same issue has held as follows: “The effect of the aforesaid amendment is that, on and after thecommencement of the Amendment Act of 2001, if an agreement, like theJDA in the present case, is not registered, then it shall have no effect inlaw for the purposes of section 53A. In short, there is no agreement inthe eyes of law which can be enforced under section 53A of theTransfer of Property Act. This being the case, we are of the view thatthe 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 mustbe a "contract" which can be enforced in law under section 53A of theTransfer of Property Act. A reading of section 17(1A) and section 49 ofthe Registration Act shows that in the eyes of law, there is no contractwhich can be taken cognizance of, for the purpose specified in section53A. The Income-tax Appellate Tribunal was not correct inreferring tothe expression "of the nature referred to in Section 53A" in section2(47)(v) in order to arrive at the opposite conclusion. This expressionwas used by the legislature ever since sub-section (v) wascommencement of the Amendment Act of 2001, if an agreement, like theJDA in the present case, is not registered, then it shall have no effect inlaw for the purposes of section 53A. In short, there is no agreement inthe eyes of law which can be enforced under section 53A of theTransfer of Property Act. This being the case, we are of the view thatthe 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 mustbe a "contract" which can be enforced in law under section 53A of theTransfer of Property Act. A reading of section 17(1A) and section 49 ofthe Registration Act shows that in the eyes of law, there is no contractwhich can be taken cognizance of, for the purpose specified in section53A. The Income-tax Appellate Tribunal was not correct inreferring tothe expression "of the nature referred to in Section 53A" in section2(47)(v) in order to arrive at the opposite conclusion. This expressionwas used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 with effect from April 1, 1988. Allthat is meant by this expression is to refer to the ingredients ofapplicability of section 53A to the contracts mentioned therein. It is onlywhere the contract contains all the six features mentioned in ShrimantShamrao Suryavanshi(supra), that the section applies, and this is whatis meant by the expression "of the nature referred to in section 53A".This expression cannot be stretched to refer to an amendment that wasmade years later in 2001, so as to then say that though registration ofa contract is required by the Amendment Act of 2001, yet the aforesaidexpression "of the nature referred to in Section 53A" would somehowrefer only to the nature of contract mentioned in section 53A, whichwould then in turn not require registration. As hasbeen stated above,there is no contract in the eye of law in force under Section 53A after2001 unless the said contract is registered. This being the case, and itbeing clear that the said JDA was never registered, since the JDA hasno efficacy in the eye of law, obviously no "transfer" can be said to havetaken place under the aforesaid document. Since we are deciding thiscase on this legal ground, it is unnecessary for us to go into the otherquestions decided by the High Court, namely, whether under the JDApossession was or was not taken; whether only a licence was grantedto develop the property; and whether the developers were or were notready and willing to carry out their part of the bargain. Since we are ofthe view that sub-clause (v) of Section 2(47) of the Act is not attracted tothe facts of this case, we need not go into any other factual question. 21. However, the High Court has held that section 2(47)(vi) willnot apply for the reason that there was no change in membership of thesociety, as contemplated. We are afraid that we cannot agree with theHigh Court on this score. Under section 2(47)(vi), any transaction whichhas the effect of transferring or enabling the enjoyment of anyimmovable property would come within its purview. The High Court hasnot adverted to the expression "or in any other manner whatsoever" insub-clause (vi), which would show that it is not necessary that thetransaction refers to the membership of a cooperative society. We have,therefore, to see whether the impugned transaction can fall within thisprovision. 22. The object of Section 2(47)(vi) appears to be to bring withinthe tax net a de facto transfer of any immovable property. Theexpression "enabling the enjoyment of" takes color from the earlierexpression "transferring", so that it is clear that any transaction whichenables the enjoyment of immovable property must be enjoyment as apurported owner thereof. 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.” In the light of the law laid down under the Hon’ble SupremeCourt, if the development agreement is not registered, it shall have noeffect in law for the purposes of Section 53A which bodily stoodincorporated in Section 2(47)(v) of the Income Tax Act, 1961. Thus, the Tribunal was right in allowing the assessee’s appeal and grantingthe relief sought for. Thus, we find that there is no error in the conclusion arrived atby the Tribunal. The appeal fails and stands dismissed. The substantialquestion of law is answered against the revenue. The application being IA No. GA/2/2020 for stay also standsdismissed. (T. S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) S. Chandra/mg