Smt. D. Kasturi vs Commissioner of Income Tax and Another

D. Murugesan, J.—This writ appeal is directed against the order dismissing the writ petition filed by the appellant. For deciding the dispute, the following few facts are to be stated. The appellant, being the owner of a residential property situate at No. 16, First Main Road, R.A. Puram, Chennai, entered into an agreement dated March 29, 1993, with M/s. Chettinad Investments, a partnership firm. Under the said agreement, she agreed to sell the property in question and the said firm agreed to purchase the property for a total consideration of Rs. 25,00,000. She received an advance of Rs. 40,000 and a further sum of Rs. 7,10,000 at the time of signing the agreement. As per the agreement, she should obtain a no objection certificate from the authorities concerned under Chapter XX-C of the Income Tax Act, 1961. Such a certificate was also obtained by her. However, she has not executed any sale deed in favour of the agreement holder. But on their request, she executed a power of attorney in favour of an individual by name S. Sivasubramanian, authorising him to do various acts with reference to the property including the execution of deed or deeds or conveyance. The property was sold in four different lots on March 1, 1995, and March 20, 1995. She purchased a residential property for a total consideration of Rs. 10,70,000 under the deed of sale dated December 10, 1995. She filed the return for the assessment year 1994-95 and reported of possession to the proposed vendees in August, 1993, as having resulted in the transfer for the purpose of Section 2(47) of the Income Tax Act. Thereafter, she filed a statement revising the net capital gain as Rs. 7,05,800 claiming that there was no transfer during the assessment years 1993-94 and 1994-95 and that the actual transfer was made in the assessment year 1995-96. The Assessing Officer, having noticed that she had invested a sum of Rs. 4,60,000 in a site at Velachery for the purpose of construction of residential house, but had not constructed the house thereon and the unutilised capital gain had not been deposited in the capital gains scheme account, determined the long-term capital gain at Rs. 19,31,384 and subjected the same to tax. That assessment order was carried on by way of revision to the Commissioner u/s 264 of the Income Tax Act and the same was rejected. She questioned the assessment order and the revisional order in the writ petition, which was also rejected,. Hence, the present appeal.

Mr. V. Ramachandran, learned senior counsel for the applicant-assessee submitted that in order to attract the provisions of Section 53A of the Transfer of Property Act, the identity of the parties to the agreement should remain unchanged. He would submit that though an agreement was entered into by the assessee with the firm M/s. Chettinad Investments and the possession had been given, the subsequent sale deeds, having been executed by the power holder, were only in respect of a portion of the property and not the whole property and in that event, the essential requirements of Section 53A are not satisfied. He would further submit that Section 53A relating to part performance of the contract is based on equity principle and is intended only to see that the agreement holder should have a right to invoke the specific performance and such agreement holder should have a right of defence.

Mr. T. Ravikumar, learned senior standing counsel for Income Tax cases, on the other hand, would submit that the various clauses in the agreement would show that the assessee had entered into an agreement whereby she had not only handed over possession to the agreement holder, but also has received the entire sale consideration mentioned in the agreement even before the sale deeds were executed by the power holder and in view of that, Section 53A is attracted and the reasoning given by the Assessing Officer cannot be found fault with.

We have carefully considered the respective submissions. In order that the doctrine of part performance as contained in Section 53A of the Transfer of Property Act to be invoked, it is necessary that the act or part performance must be such as not only be referable to the contract of which part performance is alleged, but be referable to no other title. The handing over of possession of agreement. All that is required is that an agreement in writing to be signed by the transferor which could be gathered from the evidence as will. The facts of this case would reveal that the agreement dated March 29, 1993, between the assessee and the agreement holder M/s. Chettinad Investments was with reference to the whole property. Clause (1) of the agreement contemplates that the vendor shall sell and the purchaser shall purchase the property in question. For the execution of sale deed, a no objection certificate, from the competent authority under the Income Tax Act is necessary, as could be seen from Clause (4) of the agreement. Such a certificate was also obtained. Nevertheless, the assessee had not executed the necessary sale deeds. The fact remains that the assessee had received the full sale consideration of Rs. 25,00,000 from M/s. Chettinad Investments, namely, the agreement holder even before the power of attorney was executed. The contention of the learned senior counsel for the assessee is that the act of the assessee in selling the portion of the property to third parties in subsequent years and executing the sale deeds in favour of such vendees by utilising the power of attorney granted to the partners of the firm has much relevance while considering the application of Section 53A of the Transfer of Property Act. In our opinion, the said contention cannot be accepted. For application of Section 53A the relevant consideration would be the clauses in the agreement between the parties to the agreement and their performance in terms of the agreement. 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 dated March 29, 1993, for applicability of Section 53A as has been rightly held by the learned single judge. The assessee 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.

In that view of the matter, we find no infirmity in the order of the learned single judge warranting any interference. Accordingly, the writ appeal fails and the same is dismissed. No costs.