Aurangabad 43 001 v. Aurangabad

Heard learned counsel for the parties.

This Appeal is preferred under Section 260-A of the Income Tax Act, 1961, against the order dated 23rd April 2008, passed by the Income Tax Appellate Tribunal, Pune Bench, Pune.

The learned senior counsel Shri P.M. Shah, in substance, urged that the initial agreement in respect of license was executed between Maharashtra Industrial Development Corporation and one Mr. Marlecha. Much emphasis was led by the learned senior counsel on Clause No.2 of the license agreement, which reads thus: "2. Nothing in these presents contained shall be construed as a demise in law of the said land hereby agreed to be 3 demised or any part thereof so as to give to the Licensee any legal interest therein until the lease hereby contemplated shall be executed and registered Licensee/Licensees shall only have a licence to enter upon the said land for the purpose of performing this Agreement. "

The learned counsel submitted that in absence of there being any final deed executed between the parties, the subsequent transaction of execution of agreement between Mr. Marlecha and the Appellant and later on tripartite agreement to which Mr. Marlecha, the Appellant and one Mr. Agrawal were party, ought not to have been considered by the Income Tax Authorities for considering as short term capital gain by the Appellant herein to the extent of Rs.26,10,300/- (Rs. Twenty Six Lakhs Ten Thousand and Three Hundred only). The Tribunal was of the opinion 4 that the Appellant assessee ought to have disclosed the said amount towards the short term capital gain in the Income Tax Return filed for the assessment year 1997-1998, which was treated as undisclosed income for the block period. Learned counsel further referred to Section 53-A of the Transfer of Property Act, 1882 and definition of 'transfer' as envisaged under Section 2(47) of the Income Tax Act, 1961. A Judgment of the learned Single Judge of this Court in Second Appeal No.508 of 1976 dated 6th October, 1981, reported in 1982 (2) Bom. C.R. Page 18 was also relied upon to explain the principle governing the provisions of Section 53-A of the Transfer of Property Act, 1882.

To the facts of the case, Clause (v) of Section 2 (47) of the Income Tax Act, 1961 is applicable, which reads thus: "(v) any transaction involving the allowing of the possession 5 of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53-A of the Transfer of Property Act, 1882 (4 of 1882)."

The learned counsel for Respondents Shri Alok Sharma supported the order passed by the Tribunal and placed reliance on the Judgment in the case of Chaturbhuj Dwarkadas Kapadia vs. Commissioner of Income Tax, reported in 260 I.T.R. 491.

We have considered the provisions of Section 53-A of the Transfer of Property Act, 1882. The Tribunal has, in detail, discussed the facts of the case, the transactions of agreements executed by Maharashtra Industrial Development Corporation, Mr. Marlecha and Appellant. We are not convinced by the submissions advanced by the learned counsel for the Appellant that unless the document is legally executed transferring right, title and 6 interest of the party, the Income Tax Authorities could not get jurisdiction to levy the tax if certain income is derived by an assessee. The Tribunal rightly observed, in view of definition of 'transfer' as per Section 2(47) of the Income Tax Act, 1961, that the expression 'transfer' must be read widely and not narrowly. The word 'transfer' involves sale, exchange, relinquishment and extinguishment of any rights i.e. totality of the interest in any property. The Tribunal rightly pointed out that it was a irrevocable license and therefore certain rights got perpetually transferred as possession was handed over and undertaking was given by the party to complete all the formalities, so that the title could also be transferred in the name of the licensee.

Considering the facts of the case and the provisions of law as stated above, we do not find any error in the view adopted by the Tribunal. The Appellant has failed to make out substantial question of law for entertaining this Appeal. The 7 Appeal is without any merit. Hence the Appeal is dismissed. [N.D. DESHPANDE, J.] [NARESH H. PATIL, J.] asb/MAR10/ta129.08