2003 Supreme(Bom) 180

IN THE HIGH COURT OF BOMBAY
Kapadia S.H. Devadhar J.P., JJ.
Chaturbhuj Dwarkadas Kapadia .... Petitioner.
Versus
Commissioner of Income-tax, Bombay City-VIII.... Respondents.
Income Tax Appeal No. 24 of 2003, decided on 13-2-2003.
Advocates appeared :
S.E. Dastur, Sr.C. with P.J. Pardiwala, F.V. Irani N.R. Modi i/b. Rustomji Ginwala, for appellant.
R.V. Desai, Sr.C. with P.S. Jetley i/b. K.B. Rao, for respondents.

Headnote:Income Tax Act, 1961 Sections 260-A and 2(47), (v) - Liability of capital gains - When arises - Agreement for transfer of property entered into 1994 - Actual conveyance and right to possess transferred in 1999 - After obtaining all permissions of department - Transfer deemed completed when deed of conveyance was executed - Taking into consideration totality of circumstances appeal of assessee is allowed. - In this very case, the date on which the developer obtained a commencement certificate is not within the Accounting Year ending 31st March, 1996. At the same time, if one reads the contract as a whole, it is clear that a dichotomy is contemplated between limited power of attorney authorising the developer to deal with the property vide para 8 and an irrevocable licence to enter upon the property after the developer obtains the requisite approvals of various authorities. In fact, the limited power of attorney may not be actually given, but once under clause 8 of the agreement a limited power of attorney is intended to be given to the developer to deal with the property, then Court is of the view that the date of the Contract viz. 18th August, 1994 would be the relevant date to decide the date of transfer under Section 2(47)(v) and, in which event, the question of substantial performance of the contract thereafter does not arise. This point has not been considered by any of the authorities below. No judgment has been shown to this case, Court has enunciated the principles for applicability of Section 2(47)(v). Court does not find merit in the argument of the assessee that the Court should go only by the date of actual possession and that in this particular case, the Court should go by the date on which irrevocable licence was given. If the contract, read as a whole, indicates passing of or transferring of complete control over the property in favour of the developer, then the date of the contract would be relevant to decide the year of chargeability. Having laid down broad principles Court comes to the facts of this case. This is not that case where the assessee denies transfer. In this case, the assessee has paid capital gains tax for Assessment Year, 1999-2000. However, the assessee is told that the year of chargeability is Assessment Year 1996-97 and not Assessment Year 1999-2000. Moreover, this is the first time that Court has laid down the guidelines. Further, the assessee has paid the tax for Assessment Year 1999-2000. Generally, the Court does not interfere in concurrent findings of facts. However, in this case, a substantial question of law has arisen on interpretation of Section 2(47)(v). It is for this reason that Court has given the guidelines, which may be followed by the department in all future cases. Court has gone through the compilation of documents and from mere substantial compliance of the agreement, one cannot infer transfer in the Accounting Year ending 31st March, 1996. Court may also mention that there are mistakes, apparent on the fact of the record, in the order of the Tribunal. The Tribunal has relied upon assessee obtaining 7 permissions. Court finds that Item (vi) and Item (vii) are mere repetitions of Item (iii) and Item (i) respectively. Similarly, the Tribunal has referred to permissions obtained during Financial Years other than the concerned Financial Year ending 31st March, 1996 to come to the conclusion that the transfer had taken place during that year. Lastly, the Tribunal has referred to permission dated 25th June, 1995 for redevelopment of property vide Item (iii). However, in the compilation given by the assessee there is no such permission. The assessee has disputed the existence of this document. Office is directed to take the assessee s compilation on record and mark "x". It is for this reason that vide order dated 29th January, 2003, Court called upon the Commissioner of Income-tax (Judicial) to forward to us the R & P. However, counsel for the department has informed us that R & P is not available. There are the apparent errors in the order of the Tribunal.

       Trade and Merchandise Marks Act, 1958 - Section 53-A - Liability of capital gains - Transfer of property by sale for development - Major amount received - Finalisation in 1999 - After all necessary permissions were gained - Written contract in nature as referred to in Section 53-A of T.P. Act - Considering the totality of circumstances appeal of assessee is allowed. - Having laid down broad principles Court comes to the facts of this case. This is not that case where the assessee denies transfer. In this case, the assessee has paid capital gains tax for Assessment Year 1999-2000. However, the assessee is told that the year of chargeability is Assessment Year 1996-97 and not Assessment Year 1999-2000. Moreover, this is the first time Court has laid down the guidelines. Further, the assessee has paid the tax for Assessment Year 1999-2000. Generally, the Court does not interfere in concurrent findings of facts. However, in this case, a substantial question of law has arisen on interpretation of Section 2(47)(v). It is for this reason that the guidelines, may be followed by the department in all future cases. Court has gone through the compilation of documents and from mere substantial compliance of the agreement, one cannot infer transfer in the Accounting Year ending 31st March, 1996. Court may also mention that there are mistakes, apparent on the fact of the record, in the order of the Tribunal. The Tribunal has relied upon assessee obtaining permissions. Court finds that Item (vi) and Item (vii) are mere repetitions of Item (iii) and Item (i) respectively. Similarly, the Tribunal has referred to permissions obtained during Financial Years other than the concerned Financial Year ending 31st March, 1996 to come to the conclusion that the transfer had taken place during that year.