The main legal point established in the judgment is the interpretation and application of Section 2(47)(v) of the Income Tax Act, 1961, in the context of determining the timing of the transfer of property and the resulting tax liability.

SHANTANU KEMKAR, J.

1. These Appeals are filed under Section 260A of the Income Tax Act, 1961 (for short “the Act”) challenging the common order dated 29th June, 2011 passed by the Income Tax Appellate Tribunal (for short “the Tribunal”), Panaji Bench in Income Tax Appeal Nos. 185 and 186/PNJ/2007.

2. Both these Appeals were admitted on following substantial questions of law.

(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in reversing the order of the Commissioner (Appeals) and holding that the transfer within the meaning of Section 2(47)(v) had taken place only in 2002-03 assessment year ignoring the development agreement by way of Power of Attorney, based on which transfer of possession and development have taken place much earlier and when the order of the Tribunal is contrary to facts and law?

(ii) Whether the Appellate Tribunal is right in reversing the order of the Commissioner (Appeals) based on incorrect appreciation of facts and law and so its order is perverse in nature?

3. The Appellants are husband and wife. Briefly stated, for the Assessment Year 2002-03 the Appellant of Appeal No. 5 of 2012 returned Income of Rs. 1,34,516/- on 2nd July, 2002 whereas the Appellant of Appeal No. 6 of 2012 returned income of Rs. 92,698/-. The returns were processed under Section 143 (1) of the Act. The Assessing Officer (for short “A.O.”) having in possession of the information entertained a belief that the Appellants (assessees) who are the owners of the property bearing Survey No. 186/6 situated at Nayakwada, Calangute, Bardez, Goa measuring 14,875 sq. mtrs. have entered into agreement on 30th April, 2001 with M/s. Braganza Construction, a partnership firm, for development and sale of property and flats for a consideration of Rs. 80 lacs and allotment of three flats on ownership basis having total built-up area of 170 sq. mtrs. According to the A.O. income of these assessees have escaped assessment as income from the capital gains which was not disclosed in the original return filed by them on 2nd July, 2002. In the circumstances, the A.O. issued notice under Section 148 of the Act of which reply was submitted by the Appellants. The notice under Section 142(1) of the Act was also issued of which also reply was submitted by the assessees/Appellants. After considering the material on record and the reply to the notice, the A.O recorded a finding vide order dated 11th March, 2004 to the effect that there is transfer of property on 30th April, 2001 vide written agreement between the Appellants and the Developer viz. M/s. Braganza Construction within the meaning of Section 2(47)(v) of the Act as on the basis of the said agreement in writing, the possession of the property in question has been handed over by the Appellants to the Developer as also the part consideration was received by them and as such there was part performance of the contract within the meaning of Section 53A of the Transfer of Property Act.

4. Feeling aggrieved by the said common order passed by the A.O. on 11th March, 2004 under Section 148 of Act, the Appellants filed Appeals before the Commissioner of the Income Tax Appeals (for short “the Commissioner”), Panaji, Goa. The case of the Appellants was that no transfer was effected in the Assessment Year 2002-03. The same was effected in the financial year 1993-94 when the two Power of Attorneys dated 14th March, 1993 and 29th April, 1994 were executed into by the Appellants in favour of M/s. Braganza Construction. It was also the case of the Appellants that the consideration was also received out of the agreed sum of Rs. 80 lacs in terms of the said two Power of Attorneys which according to the assessee are the Development Agreements.

5. The Commissioner accepted the contention of the Appellants and set aside the order of the A.O. vide order dated 10th August, 2007. The said order of the Commissioner was challenged by the Revenue by filing Appeals before the Tribunal