A person having a property has given power of attorney(say in year 2000) in favour of a real estate agent who inturn has paid full consideration to the first party and executed an agreement which states that the real estate agent can register such propertty in his name at any time later as he wishes so. Then the agent holding power finds a prospective buyer and sells the property with out registering such land in his name (say in year 2009). Now the question is how the capital gains will be attracted, in whose hands it will be taxable and in which year.
Please some one help me out in this issue. Support your views with sec.no in income tax act, or notifications, circulars. I need the referrence for this situation so without fail quote sec.no or any other case laws.
07 September 2009
when possession of property is given and part consideration recd it may be a case of TRANSFER under section 2(47)(v).....check out your facts.And if transfer is there , there is capital gain.
Sub-clause (v) - In order that case would fall under extended meaning of word ‘transfer’ possession is essential element to be considered - Ajay Kumar Shah Jagati v. CIT [2008] 168 Taxman 53 (SC)
To attract sub-clause (v) of section 2(47), it is not necessary that entire sale consideration up to last instalment should be received by owner - Jasbir Singh Sarkaria, In re [2007] 164 Taxman 108/294 ITR 196 (AAR - New Delhi).
On a fair and reasonable interpretation and on adopting principle of purposive construction, it can be said that possession contemÂplated by sub-clause (v) of section 2(47) need not necessarily be sole and exclusive possession; once it is held that the transacÂtion of the nature referred to in sub-clause (v) of section 2(47) has taken place on a particular date, the actual date of taking physical possession need not be probed into; it is enough if the transferee has, by virtue of that transaction, a right to enter upon and exercise the acts of possession effectively - Jasbir Singh Sarkaria, In re [2007] 164 Taxman 108/294 ITR 196 (AAR - New Delhi).
Section 2(47)(v) could come to the aid of the Department only if the condiÂtions of section 53A of the Transfer of Property Act are satisÂfied. From a reading of section 53A, it is clear that unless there is a written agreement, section 53A of the Transfer of Property Act will not come into operation - CIT v. G. Saroja [2008] 301 ITR 124 (Mad.).
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