Blog # 20. S.53A of the Transfer of Property Act, 1882 and Related Laws

1. Section 53A of the Transfer of Property Act. 1882 is as under:-

“53A. Part performance. – Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,

and the transferee has, in part performance of the contract, taken possession of the property or any pat thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract,

and the transferee has performed or is willing to perform his part of the contract,

then, notwithstanding that [***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:

Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.

• The words ‘the contract, though required to be registered, has not been registered or’ have been omitted by section 10 of the Registration and other Related Laws (Amendment) Act, 2001 (w.e.f. 24 September 2001).

2. Section 17 (1-A) which was inserted in the Registration Act, 1908 under the Registration and Other Related Laws (Amendment) Act 2001 (w.e.f. 24 September 2001) provides as under:-

“Section 17 (1-A): The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53-A of the Transfer of Property Act, 1882, (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said Section 53-A.”

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3. Section 49 of the Registration Act, 1908 as amended by Registration and Other Related Laws (Amendment) Act 2001 (w.e.f. 24 September 2001) provides as under:-

“49. Effect of non-registration of documents required to be registered.- No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882) to be registered shall-

• affect any immovable property comprised therein, or

• confer any power to adopt, or

• be received as evidence of any transaction, affecting such property or conferring such power, unless it has been registered:

Provided that an unregistered document affecting immoveable property and

required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1977 (1 of 1877), [***] or as evidence of any collateral transaction not required to be effected by registered instrument.

• The words ‘or as evidence of part performance of a contract for the purposes section 53-A of the Transfer of Property Act, 1882,’ omitted by section 6 of the Registration and other Related Laws (Amendment) Act, 2001.

4. Section 12 of the Registration and other Related Laws (Amendment) Act, 2001 provides as under:-

“12. Saving.- Notwithstanding anything contained in section 6 and 10, any-

• right of transferor or any person claiming under him debarred under section 53A of the Transfer of Property Act, 1882 (4 of 1882) immediately before the commencement of this Act shall remain so debarred as if section 10 had not come into force in respect of such right; and

• unregistered document relating to the right referred to in clause (a) may be received as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882 (4 of 1882) as if section 6 had not come into force in respect of such document.”

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5. Section 2(47) (as amended w.e.f. 1 April 1985) of the Income Tax Act, 1961 is as under:-

“transfer”, in relation to a capital asset, includes,

• the sale, exchange or relinquishment of the asset; or

• the extinguishment of any rights therein; or

• the compulsory acquisition thereof under any law; or

• in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or

(iva)     the maturity or redemption of a zero coupon bond; or

• (inserted w.e.f. 1 April 1988) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1982); or

• (inserted w.e.f. 1 April 1988) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring or

enabling enjoyment of, any immoveable property.

Explanation 1: For the purposes of sub-clauses (v) and (vi), ‘immoveable property’ shall have the same meaning as in clause (d) of section 269UA.

Explanation 2: (Inserted Finance Act, 2012 w.e.f. 1 April 1962) For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of any agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer or a share or shares of a company registered or incorporated outside India.

6. Section 269UA (d) of the Income Tax Act, 1961 is as under:-

“immovable property” means –

• any land or any building or part of a building and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also.

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Explanation- For the purposes of this sub-clause, “land , building, part of a building, machinery, plant, furniture, fittings and other things” include any rights therein;

• any rights in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed, accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building.

• Section 50C of the Income Tax Act, 1961 as amended by the Finance (No.2) Act, 2009, w.e.f. 1st October, 2009 is as under:-

Special provision for full value of consideration in certain case.

50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both is less than the value adopted or assessed or assessable by any authority of a State Government

(hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted

or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

(2) Without prejudice to the provisions of sub-section (1), where-

• the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section

(1) exceeds the fair market value of the property as on the date of transfer;

• the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or

the High Court,

the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-section (2), (3),

(4), (5) and (6) of section 16A, clause (i) of sub-section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.

Explanation 1- For the purposes of this section, “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).

Explanation 2- For the purposes of this section, the expression “assessable” means the price which the stamp valuation authority would have, notwithstanding

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anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.

• Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.

8. The essential conditions required to be fulfilled for claiming protection of Section 53A of the Transfer of Property Act are as under: [Rambhau Namdeo Gajrav Narayan Bapuji Dhotra (2004) 8 Supreme Court Cases 614]

• There must be a contract to transfer for consideration any immovable property

• Section 53A applies to leases and agreement to lease [Maneklal Mansukhbhai V. Hormusji Jamshedji Ginwalla & Sons AIR 1950 SC1] where in an action to eject a lessee on the ground that he had no registered deed of lease executed in his favour the defendant lessee takes the plea of part performance and proves that there was a written and signed contract of lease in his favour and that he had taken possession in accordance with the terms of the agreement and had built a factory on the land and also that he was paying rent to the plaintiffs in accordance with that agreement the defendant is entitled to retain possession in spite of an absence of the registered deed.]. Agreement to lease may be evidenced by correspondence.

• Section 53A applies to mortgages with possession.

• If the agreement is void under any law, section 53A will not protect possession. The protection of part performance cannot be availed in respect of a transaction which is null and void. (CIT v. Vithalbhai P. Patel (1999) 236 ITR 1001). Sale ab initio null and void as per order of Collector in view of Section 4 of Gujarat Vacant Lands in Urban Areas (Prohibition of Alienation) Act, 1972. Oorder of Collector was not challenged. No transaction of sale in eye of law. Sale not liable to tax on capital gains.

• In case of a agreement conditional on compliance with statute, there is an implied term in the contract that transferor will apply for requisite

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permission and the court will direct him to do so. (Nathulal V. Phoolchand AIR 1970 Supreme Court 546)

• The contract must be in writing, signed by the transferor, or by someone on his behalf.

• It is not necessary that there should be a formal agreement.

• The writing must be in such words from which the terms necessary to construe the transfer can be ascertained.

• The transferee must in part performance of the contract take possession of the property, or of any part thereof,

• It is not necessary that the contract must contain a direct covenant regarding transfer of possession.

• It is only necessary that possession should have been taken (need not be given) in part performance of the contract.

• Where only temporary possession was given for carrying out construction, it was held that the exclusive possession in the legal sense remained with the Transferor and the Transferee was not entitled to protect his possession under Section 53 A of the TP Act.

• It is not necessary that the transferee must be in possession of the entire property.

• It is enough if the transferee continues in possession or takes possession even of a part of the property.

• The transferee must have done some act in furtherance of the contract.

• There should be real nexus between the contract and the acts pleaded as in part performance.

• Continued possession of a tenant in the property after entering into the sale agreement would not by itself amount to a part-performance. There must be some act attributable to the contract for sale and not lease.

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• When a person already in possession of the property in some other capacity enters into a contract to purchase the property, to confer the benefit of Section 53A of TP Act, there must be some act consistent with the contract alleged and such as cannot be referred to the preceding title. [AIR 2003 SC 3542].

• A tenant who continued to be in possession as tenant, cannot take benefit of Section 53A, though subsequently an agreement to sale is entered between the parties.

• Where the person puts up construction after being put in possession under the contract of sale or takes electricity connection, he can gain protection of Section 53A of the TP Act.

(vi)       The transferee must have performed or be willing to perform his part of the contract.

• The acts claimed to be in part performance must be unequivocally referable to the pre-existing contract.

• Section 53A confers no rights on a party who was not willing to perform his part of the contract.

• Part performance as statutory right is conferred upon the transferee on condition that the transferee continues to be willing to perform his part of the contract.

(vii)The document containing contract for transfer of immoveable property, if executed on or after 24th September, 2001 should be registered.

• Part performance applies even if specific performance is not otherwise permissible.

The protection under section 53A can be availed of only under a registered agreement. Sukhminder Kaur V. Amarjit Singh AIR 2012 Punjab & Haryana 97 Section 53-A of the T.P. Act before amendment recognized part performance of the contract even though the contract used to be unregistered and the transferee’s rights to remain in possession was protected. By the Amendment Act No.48 of

2001, the words “the contract though required to be registered, has not been registered, or” have been omitted from the provision. The effect of the amendment is that now if any person takes possession in pursuance to a contract which is required to be registered but has not been registered, the transferee has no right to remain in possession of the property. To give effect to this principle, S. 17 (1A) has

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accordingly been inserted in the Act of 1908 which mandates that such contract is now required to be registered. If such a contract entered into after the amendment is not registered then as per S. 49 of the Act of 1908, the same can neither affect any immovable property comprised therein nor will it be received as evidence of any transaction affecting such property or conferring such power.

• A person seeking protection of his possession on the basis of unregistered agreement is a different situation and where a person seeks possession of the property by way of specific performance of the agreement which is unregistered is a different eventuality. In the latter class of cases, the agreement to sell is not required to be registered as it does not fail within the ambit of either S.53-A of the T.P. Act or S. 17(1A) of the Act of 1908 and does not require any registration. Such agreement to sell falls under the mischief of S.17(2)(v) of the Act of 1908. It itself does not create, declare, assign, limit or extinguish any right, title or interest in the property. Rather it creates a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish. It is the sale deed which when executed will create right, title and interest in the property. Hence, an agreement to sell is not required to be registered and the same is receivable in evidence in a suit for specific performance.

• A transferee in-possession satisfying all conditions of the section 53A is protected by the Court, whether he comes as a plaintiff or as a defendant. The court cannot tell the transferee-in-possession if he comes as a plaintiff – ‘go back, use your physical strength and muscle power to resist and repel the attack of the transferor and drive him to come to the court as a plaintiff and then if you are arrayed as a defendant, the court will protect you.” Chetak Construction Ltd. v. Om Prakash AIR 2003 M.P. 145.

9. Decisions on Section 53A of T.P. Act, 1882 & Section 2(47)(v) of I.T. Act, 1961:-

1. Chaturbhuj Dwarkadas Kapadia v. Commissioner of Income Tax (2003 260 I.T.R 491(Bombay).

• 08.1994Agreement for Sale of shares in immoveable property with right to the Builders to develop the property in accordance with Building Control Regulations under which Assessee agreed to execute a limited power authorizing the Builder to deal with the property and obtain permissions and approvals from Urban Ceiling Authority MCGM and CRZ Authorities. The Agreement provided that on the Builder obtaining all  necessary  permissions  and approvals and upon receipt of the no objection

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			certificate under Chapter XXC of the Income
			Tax Act, the Assessee shall grant to the Builder
			an irrevocable licence to enter upon Assessee’s
			share of the property, after which the Builder
			was entitled to demolish the buildings on the
			subject to the settling the claims of the tenants.
			The  Assessee  was  entitled  to  receive
			proportionate rent and liable to pay outgoings
			till payment of last instalment.  Agreement
			provided  for  completion  of  sale  by  the
			execution of the conveyance.
2	31st	March,	The Builder paid the entire sale price except
	1996		small amount.
3	15th	November,	MCGM issued Commencement Certificate upto
	1996		plinth level.
4	12th	March,	Power of Attorney executed by the Assessee in
	1999		favour of the Builder, Assessee paid tax on
			capital gains in Assessment Year 1999-2000
			but assessing officer held that it was payable in
			A.Y. 1996-97

Held arrangements confirming privileges of ownership without transfer of title could fall under section 2(47(v). Section 2(47)(v) was introduced in the Act from the assessment year 1988-89 because prior thereto, in most cases, it was argued on behalf of the assesse that no transfer took place till execution of the conveyance. Consequently, the assessees used to enter into agreements for developing properties with the builders and under the arrangement with the builders, they used to confer privileges of ownership without executing conveyance and to plug that loophole, section 2(47)(v) came to be introduced in the Act (Page 499).

Capital gains is taxable in the year in which such transactions are entered into even if the transfer of immoveable property is not effective or complete under the general law (Page 500).

In such cases of development agreements, one cannot go by substantial performance of a contract. In such cases, the year of chargeability is the year in which the contract is executed. This is

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in view of section 2(47)(v) of the Act (Page 500).

In this case, the agreement is a development agreement and in our view, the test to be applied to decide the year of chargeability is the year in which the transaction was entered into. We have taken this view for the reason that the development agreement does not transfer the interest in the property to the developer in general law and, therefore, section 2(47)(v) has been enacted and in such cases, even entering into such a contract could amount to transfer from the date of the agreement itself (Page 500-501).

If on a bare reading of a contract in its entirely, an Assessing Officer comes to the conclusion that in the guise of the agreement for sale, a development agreement is contemplated, under which the developer applies for permission from various authorities, either under power of attorney or otherwise and in the name of the assesse, then the Assessing Officer is entitled to take the date of the contract as the date of transfer in view of section 2(47)(v) (Page 501).

We do not find merit in the argument of the assesse 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 (Page 501).

2. Suraj Lamp v. State of Haryana [2012] 340 ITR 1 (SC):

Immovable property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance. Transactions of the nature of general power of attorney sales or sale agreements/general power of attorney/will transfers do not convey title and do not amount to transfer, nor can they be recognized as valid modes of transfer of immovable property. They cannot be recognized as deeds of title, except to the limited extent of Section 53 A of the Transfer of Property Act, 1882.

3. D. Kasturi v. CIT and Another [2010] 323 ITR 40 (Mad):

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The subsequent act of the assessee in executing the power of attorney and the sale deeds executed by the power holder on the basis of such power of attorney would not in any way alter the status of the parties to the agreement for applicability of section 53A of the Transfer of Property Act,1882. The single judge rightly held that the assesse could no longer assert possessory rights against the firm to which possession was already given pursuant to the agreement and that too after receiving the full sale consideration.

4. Jasbir Singh Sarkaria, In re [2007] 294 ITR (AAR):

The applicant and other co-owner of certain agricultural land entered into a collaboration agreement with Santur Developers under which the developers had to obtain a letter of intent from the concerned Government Department for sanction and development of the land for building at its own cost. Under the agreement, the developers would have 84 percent share of the entire built up area and the co-owners 16 percent. The consideration for the agreement was that portion of the built up area which was to be handed over to the owners free of cost. Under clause 18 the ownership was to remain exclusively with the owners till it vested with the parties according to their respective shares on the completion of the project. The steps contemplated in the agreement were : earnest monies of Rs. One crore was to be paid at the time of entering into the agreement; “letter of intent”, viz., the licence to be granted by the Director of Town Planning to develop the land, was to be obtained not later than March 8, 2006, and in case of failure the agreement was to stand terminated; on fulfilment of the requirements of the letter of intent the owners were to execute a power of attorney in favour of the developers authorizing them to book and sell dwelling units and collect money for the same, but sale deed would be executed only after the owners received their share of the constructed area (clause 15); the owners were to grant power to the developers to enable them to transfer rights. On September 15, 2005, a supplementary agreement was entered into the salient feature of which were : apart from the sum of Rs.2 crores paid under the collaboration agreement, the balance of Rs.40 crores was payable by the developers in six instalments starting from March 8, 2006, the last instalment being payable before June 8, 2007; if the payment was not made within the maximum period of extension, the owners were at liberty to terminate the collaboration agreement after giving notice; on receipt of all payments the owners had to grant power to the developers enabling them to transfer and execute deeds in respect of the developers’ share. On these facts the applicant sought the advance ruling of the Authority regarding the year of chargeability to tax of the capital gains arising from the transaction. On the facts stated, the Authority ruled:

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That under clause 15 it was stipulated that on fulfillment of the requirements laid down in the letter of intent, which was a provisional licence, the owner should execute an irrevocable power of attorney in favour of the developers or their nominees, inter alia, authorizing them to book and sell the dwelling units falling to their share. Thus, it was only after the deposit of the requisite charges with the Urban Development Authorities in accordance with the conditions stipulated in the provisional licence and the developers taking necessary steps pursuant to the provisional licence that the general power of attorney would be executed. Therefore, the crucial event or step that amounted to a “transaction involving the allowing of possession to be taken” within the meaning of section 2(47)(v) of the Income-tax Act, 1961, was the execution of the irrevocable general power of attorney in accordance with clause 15 of the collaboration agreement. Such general power of attorney was executed in favour of the developers on May 8, 2006, i.e. during the financial year subsequent to the year of agreement. The general power of attorney unequivocally granted to the developers a bundle of possessory rights : the acts of management, control and supervision of property being explicitly mentioned. The general power of attorney was not a mere licence to enter the land for doing some preliminary acts in relation to the development work; the power of control of the land, which was an incidence of possession, was conferred to the developers under the general power of attorney. The developers, armed with the general power of attorney, could not be regarded merely as a licensee or an agent; their possession could not be characterized as precarious or of tentative nature. The owners’ limited right to enter the land and oversee the development work was not incompatible with the developers’ right of control over the land which they derived from the general power of attorney. Therefore, the irrevocable power of attorney executed by the owners in favour of the developers had to be regarded as a transaction in the eye of law which allowed possession to be taken in part performance of the contract of transfer. The transfer within the meaning of section 2(47)(v) took place during the financial year 2006-07 corresponding to the assessment year 2007-08 and the entire capital gains including that attributable to the instalment amount remaining unpaid by March 31, 2007, arose during the financial year 2006-07 (assessment year 2007-08).

The actual receipt of the entire sale consideration during the year of “transfer” is not necessary for the purpose of capital gains.

ANURAG JAIN, In re [2005] 277 ITR 1 (AAR) and T.V. Sundaram Iyengar And Sons Ltd. Versus CIT [1959] 37 ITR 26 (Mad) relied on.

The purpose of introducing clause (v) in conjunction with clause (vi) in section 2(47) of the Income-tax Act, 1961, defining “transfer” was to widen the net of

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taxation of capital gains so as include transactions that closely resembled transfers but were not treated as such under the general law. Avoidance or postponement of tax on capital gains by adopting devices such as the enjoyment of property in pursuance of revocable power of attorney or part performance of a contract of sale was sought to be arrested by introducing the two clauses, clauses (v) and (vi), in section 2(47).

For clause (v) of section 32(47) to be applicable there must be a “transaction” under which the possession of immovable property is allowed to be taken or allowed to be retained. The Legislature advisedly referred to “any transaction” with a view to emphasize that it is not the factum of entering into agreement or formation of contract that matters, but it is the distinct transaction that gives rise to the event of allowing the contractee to enter into possession that matters. That transaction is identifiable by the terms of the agreement itself and it takes place within the framework of the agreement. What is contemplated by section 2(47)(v) is a transaction which has a direct and immediate bearing on allowing possession to be taken in part performance of the contract of transfer. It is at that point of time that the deemed transfer takes place. Though entering into the agreement/contract might be a transaction in a broad sense, yet when the agreement envisages an event or an act on the happening or doing of which alone possession is allowed to be taken in part performance of the contract, the transaction of the nature contemplated by clause (v) cannot be said to have occurred before that date.

“Possession” contemplated by clause (v) of section 2(47) need not necessarily be sole and exclusive possession. So long as the transferee is, by virtue of the possession given, enabled to exercise general control over the property so as to make use of it for the intended purpose, the mere fact that the owner has also the right to enter the property to oversee the development work or to ensure performance of the terms of the agreement does not introduce incompatibility. The concurrent purpose of the owner who can exercise possessory rights to a limited extent and for a limited purpose and that of the buyer/developer who has a general control and custody of the land can very well be reconciled. Clause (v) will have its full play even in such a situation. There is no warrant to postpone the operation of clause (v) and the resultant accrual of capital gains to a point of time when the concurrent possession will become exclusive possession of the developer/transferee after he pays full consideration. Possession given to the developer need not ripen into exclusive possession on payment of the instalments in entirely for the purpose of determining the date of transfer. It is enough if the transferee has, by virtue of that transaction, a right to enter upon and exercise acts of possession effectively pursuant to the covenants in the contract. That amounts to legal possession.

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5. CIT v. G. Saroja [2008] 301 ITR 124 (Mad):

It was not disputed that there was no written agreement between the assesse and the builder. A written agreement was a basic requirement for invoking the provision of section 53 A of the Transfer of Property Act, 1882. There was no sale Agreement and no sale consideration was received during the relevant period. The Revenue was also unable to prove that the assessee had put the developer in possession of the property by receiving the consideration partly or in full. There was no sale agreement between the assesse and the builder and the assesse had not received the sale consideration. Hence, the Tribunal was right in holding that there was no transfer of property, as contemplated under section 2(47)(v) of the Act.

6. CIT v. K. Jeelani Basha 256 ITR 282 (Mad):

Once possession, even of a part of the property was handed over to the transferee, for the purpose of section 2 (47)(v) of the Income –tax Act,1961, read with section 45, the transfer was complete and therefore the Tribunal was justified in calculating the capital gains on the basis of the consideration received in that particular year for that part of the property which was parted with.

7. Durdana Khatoon v. Assistant CIT 024 [ITR (Trib)] 0055:

“Possession” as contemplated in clause (v) of section 2(47) of the Income –tax Act,1961, need not necessarily be sole and exclusive possession, so long as the transferee is enabled to exercise general control over the property and to make use of it for the intended purpose. In the case of an agreement for development of property, the mere fact that the assesse, as owner, has also the right to enter the property to oversee the development work or to ensure performance of the terms of the agreement, does not restrict the rights of the developer or introduce any incompatibility. Even when there is concurrent possession of both parties, clause (v) has its full role to play. There is no warrant to postpone the operation of clause (v) to that point of time when the concurrent possession would become exclusive possession of the developer.

What is meant in clause (v) is the “transfer” which involves allowing possession so as to allow developer to undertake development work on the site. It is a general control over the property in part performance of the contract. The date of that transaction determines the date of transfer. It is enough if the transfer has, by virtue of the transaction, a right to enter upon and exercise the act of possession effectively

• such an act amounts to legal possession over the property.

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8. Lajwanti Sial v. Commissioner of Income-Tax 1957 32 ITR 526 (Bombay)

The Assessee, who owned coal mines, formed a private company and in consideration of the company paying him a royalty of six annas per ton of coal raised, allowed the use and occupation of the running collieries to the company. HELD that as all that was done was to give the management of a capital asset, there was no transfer, sale or exchange of a capital asset and no capital gain arose out of the transfer of the management of the coal mines.

10. Under the Maharashtra Stamp Act, 1958, stamp duty is required to be paid on the market value of the property in respect of following instruments:-

5. Agreement or its records or memorandum of an agreement –

5(ga[i])if relating to giving authority or power to a promoter or a developer, by whatever name called for construction on, development of or sale or transfer (in any manner whatsoever) of, any immovable property;

5(ga[ii])if relating to the purchase of one or more units in any scheme or project by a person from a developer

5(g-d) if relating to transfer of tenancy of immovable property situate within the Municipal limits for the purpose of non-residential use of any nature whatsoever and if relating to transfer of tenancy of residential premises within Municipal limits having area of more than 300 square feet.

16. Certificate of Sale- granted to the purchaser of any property sold by public auction by Civil or Revenue Court or Collector or other Revenue Officer or any other Officer empowered by law to sell property by public auction.

25. Conveyance –

25(b)	relating to immovable property;
25(da)	relating to amalgamation of companies;

Article 25 - Agreement to sell an immovable property where possession of any immovable property is transferred or agreed to be transferred to the purchaser before the execution or at the time of execution or after the execution of such

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agreement. (The words ‘without executing the conveyance in respect thereof’ deleted by Maharashtra Act 38 of 1994 (w.e.f.17-8-1994).

32. Exchange of property

33. Further charge – any instrument imposing further charge on mortgaged property when the original mortgage is with possession or if at the time of execution of the instrument of further charge, possession of the property is given.

34. Gift

36. Lease – including under-lease or sub-lease and any agreement to let or sub-let or any renewal of the lease or any writing on an application for a lease intended to signify that the application is granted or a decree or final order of any civil court in respect of the lease and hire purchase agreement as under:-

• for a period not exceeding 5 years;

• for a period exceeding 5 years , but not exceeding 10 years;

• for a period exceeding 10 years, but not exceeding 29 years;

• 10% of the market value

• 25% of the market value

• 50% of the market value

(iv)    for a period exceeding 29  -                           90% of the market value

years or in perpetuity or for

any indefinite period;

36A. Leave and License Agreement - for a period exceeding 60 months – stamp duty as leviable on the ‘Lease’ under Article 36.

40. Mortgage Deed – when possession of the property or any part of the property comprised in such deed, is given by the mortgagor or agreed to be given. A mortgagor who gives to the mortgagee a power of attorney to collect rents or a lease of the property mortgaged or part thereof is deemed to give possession within the meaning of this article. Where any part of the amount sought to be secured is advanced or disbursed to the mortgagor without execution of a mortgage deed, an agreement to mortgage becomes chargeable as Mortgage Deed.

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46. Partition

47. Partnership – where share contribution is brought in by way of property.

Dissolution of partnership or retirement of partner - where any property is taken as his share by a partner other than a partner who brought in that property as his share of contribution in the partnership.

48(f)(i) Power of Attorney – when given for a consideration and authorizing sale of immovable property.

48(f)(ii) Power of attorney authorizing sale or transfer of immovable property given without consideration or without showing any consideration to a person other than father, mother, brother, sister, wife, husband, daughter, grandson, grand-daughter or such other close relative.

48(g) Power of Attorney when given to a promoter or a developer by whatsoever name called for construction on, development of or sale or transfer (in any manner whatsoever) of any immovable property.

52. Release – whereby a person renounces a claim upon another person or against any specified property (other than Release Deed of an ancestral property or part thereof executed by or in favour of brother or sister or son or daughter or son of predeceased son or daughter of predeceased son or father or mother or spouse of the renouncer or the legal heirs of the above relations.

55. Settlement– other than settlement made for a religious or charitable

58. Surrender of Lease – including an agreement for surrender of lease with

60. Transfer of Lease - by way of assignment.

61. Trust – Declaration of Trust of concerning any property other than Trust made for a religious or charitable purpose.