Madras High Court
Commissioner Of Income-Tax vs Sivan Soap Factory on 20 June, 1996
Equivalent citations: [1997]227ITR126(MAD)
JUDGMENT
Thanikkachalam, J.
1. This is an appeal under section 269H(1) of the Income-tax Act, 1961 ('the Act') against the order of the Tribunal, Madras 'A' Bench, dated 30-6-1980, made in I.T. (Acquisition) Appeal No. 21 (Mad.) of 1974-75 under section 269G of the Act.
2. The revenue is the appellant herein. The respondent is Sivan Soap Factory, Madurai. One A. B. Balakrishnan transferred the property in question situated at No. 46B, Chairman Muthuramier Road, Madurai (Factory site and building) under a document, dated 11-12-1972, for a stated consideration of Rs. 1,40,000. The IAC initiated the proceedings under Chapter XX-A of the Act for the acquisition of the property on the ground that the fair market value of the property sold in favour of the respondent herein was in excess of the stated consideration by more than 15 per cent. After giving notice to the parties and after hearing them, he determined the fair market value of the property as Rs. 2,54,000, and as the stated consideration of Rs. 1,40,000 was much below the fair market value, attracting the provisions of the Chapter referred to above, he proceeded to acquire the property as contemplated by the Act. It is against this order of the said IAC, the owner of the property, who is the transferee, preferred an appeal before the Tribunal. The Tribunal, by an order, dated 31-7-1975, allowed the appeal and set aside the acquisition proceedings. As against the said order passed by the Tribunal, the department went in appeal before this Court in T.C. No. 88 of 1976. While disposing of this tax case, this Court, by its judgment, dated 27-11-1978, set aside the order of the Tribunal and remanded back the matter to the file of the Tribunal with a direction to dispose of the same in accordance with law and after taking into consideration the direction given by this Court in the abovesaid judgment. Accordingly, Income-tax (Acquisition) Appeal 21 (Mad.) of 1974-75, was remitted back to the file of the Tribunal for fresh disposal. When the appeal came up for hearing, the Tribunal on the basis of a remand report furnished by the competent authority, proceeded to dispose of the appeal on the merits.
3. The stated or apparent consideration is Rs. 1,40,000. The fair market value as fixed by the competent authority is Rs. 2,53,794. If the fair market value should exceed the apparent consideration by 15 per cent, then that market value should be more than Rs. 1,61,000. If it should exceed by 25 per cent then the market value should be more than Rs. 1,75,000. The document was executed on 11-9-1972. It was registered on 11-12-1972.
4. After hearing the parties, the Tribunal framed the following issues :
"1. Whether the law relating to acquisition of immovable property contained in Chapter XX-A of the Income-tax Act, 1961, which came into force only with effect from November 15, 1972, applies to documents of transfer of immovable properties executed on September 11, 1972, but registered at a date after November 15, 1972 ?
2. What is the fair market value of the property transferred ?
3. Whether the transfer is with such objects as is referred to in clause (a) or clause (b) of sub-section (1) of section 269C of the income-tax Act, 1961 ?"
5. In view of the decision in Mahavir Metal Works (P.) Ltd. v. Union of India , the first issue was answered against the assessee.
6. Insofar as issue No. 2 is concerned, the Tribunal was of the view that the apparent consideration is the fair market value of the property in question. Therefore, there is no question of the fair market value as fixed by the competent authority exceeding the apparent consideration by 15 per cent or the fair market value fixed by the competent authority exceeded by 25 per cent than the apparent consideration.
7. Insofar as issue No. 3 is concerned, the Tribunal took the view that inasmuch as it fixed the fair market value at Rs. 1,40,000, this question does not arise. However, for the sake of completeness, the Tribunal answered the third issue in the following manner :
"In this case, the department failed to establish that there is conclusive proof to show that the consideration has not been truly stated in the instrument of transfer. The object with which the consideration has not been so stated was also not established. Even if the fair market value exceeds the stated consideration by 25 per cent, the presumption indicated under section 269C(2)(b) is only a rebuttable presumption. In this case, the Tribunal found that the contrary has been proved. The department has no case that there is, in fact, any extra consideration. There is also no case of any other form of tax evasion by the transferor or the transferee. Under such circumstances, on a guess work and by some exercise in estimating the value of the property, the department cannot resort to the proceedings under section 269C of the Act."
8. In view of the abovesaid findings recorded by the Tribunal, it ultimately came to the conclusion that the acquisition proceedings under section 269F(6) are liable to be cancelled. It is against that order, the department is now in second appeal before this Court.
9. The learned standing counsel, appearing for the department, submitted that the assessee failed to rebut the presumption as contemplated under section 269C(2)(a). According to the learned standing counsel, when the department succeeded in establishing such a presumption as contemplated under section 269C(2)(a), it is not necessary for the department to prove that extra consideration passed in this case. The IAC after determining the fair market value of the property in question clearly established that the fair market value is exceeding by 25 per cent of the apparent or stated consideration. But, however, the assessee failed to rebut the presumption by adducing cogent and convincing reasons. It was further submitted that the onus is on the assessee to prove that there is no extra consideration received by the assessee in the transaction. Reliance was placed upon the decision in Smt. Pushpalata v. IAC . The Tribunal was not correct in stating that the department failed to produce any material to show that extra consideration passed in this case. The Tribunal was also not correct in placing the onus of proof on the department in establishing that no extra consideration passed. The Tribunal was also not correct in stating that the apparent consideration is the fair market value. If the fair market value as determined by the IAC and the assessee's approved valuer are taken into consideration that would go to show that the fair market value exceeded the apparent consideration by 15 per cent, warranting jurisdiction under section 269C. In fact, the valuation report filed by the department and the fair market value fixed by the IAC would definitely go to show that the fair market value is over and above 25 per cent of the apparent consideration so as to enable the department to raise the presumption as contemplated under section 269C(2)(a). While remanding the appeal, the High Court directed the Tribunal to consider the wealth-tax assessment of the assessee, but the Tribunal failed to consider this aspect while disposing of the appeal on remand. Depreciation of 10 per cent given by the IAC is reasonable. The assessee's valuer ignored the additional constructions put up in 1969 to 1972 in the valuation report filed by the assessee's valuer. The assessee's valuer was not correct in granting four per cent depreciation for a period of 13 years without considering the fact that there was additional construction from 1969 to 1972.
10. The Tribunal was not correct in stating that the department failed to prove that extra consideration passed between the parties. The Circular issued by the CBDT would not apply in the present case when the matter is pending before the High Court by way of second appeal. The Circular would be applicable only when the matter is pending before the IAC before passing the order of acquisition. 'Proceedings pending', occurring in the Circular issued by the CBDT, would not mean the proceedings pending in the High Court by way of second appeal. It would mean the proceedings pending before the IAC before passing the order of acquisition by him. Reliance was placed upon the decision of the Kerala High Court in CIT v. Mathew M. Thomas (FB).
11. In determining the fair market value of the property, the Tribunal was not correct in adopting the lowest value as provided in the valuation report filed by the assessee and the valuation report filed by the Income-tax Inspector, ignoring the valuation report filed by the approved valuer of the assessee and the report filed by the department by the executive engineer. For all these reasons, the learned standing counsel appearing for the department, submitted that the Tribunal was not correct in cancelling the acquisition proceedings initiated by the department under section 269C.
12. On the other hand, the learned counsel appearing for the assessee, while supporting the order passed by the Tribunal, submitted that a perusal of the wealth-tax assessment made by the department for the assessment year 1972-73 would go to show that the value of the property in question was taken at a figure, which cannot be stated to be more than 15 per cent of the apparent or stated consideration. In the wealth-tax assessment for the assessment years 1971-72 and 1972-73, the valuation of the land and original building has been given at Rs. 1,11,079 in 1968 and the additions up to March 31, 1972, at Rs. 1,06,153, thus, totalling Rs. 2,17,232. According to the department, even if the value of 10,535 sq. ft., retained by the assessee/transferee is valued at Rs. 3 per sq. ft., which would come to Rs. 31,605 and is deducted, the balance would be Rs. 1,85,627 which is very much above the sale figure of Rs. 1,40,000. The assessee's counsel submitted that out of the balance of Rs. 1,85,627, a sum of Rs. 27,381.50 is further liable to be deducted, since there was double addition while valuing the old shed. According to the learned counsel, the department ought to have valued 10,535 sq. ft. at the rate of Rs. 4 per sq. ft., uniformly as in the other case than at the rate of Rs. 3 per sq. ft. If 10,535 sq. ft., was valued at Rs. 4 per sq. ft., then the value would come to Rs. 42,140. According to learned counsel, if this figure is deducted from Rs. 1,85,627, then the fair market value would not exceed even by 15 per cent over and above the sale consideration or the apparent consideration. The fact that the value of the old shed valued at Rs. 27,318.50 was added twice, was also accepted by the IAC. In view of these factual positions, the learned counsel appearing for the assessee, submitted that the IAC ought not to have initiated the acquisition proceedings under section 269C.
13. The learned counsel appearing for the assessee submitted that the department has not proved any unexplained investment. According to the learned counsel, the values mentioned in the inspector's report and the values mentioned in the executive engineer's report should be taken into consideration in determining the fair market value of the building. The department has also not established that extra consideration passed in the transaction.
14. According to the learned counsel appearing for the assessee, the Circular issued by the CBDT would apply to the facts of this case. The proceedings pending would mean proceedings pending even before the High Court. Therefore, when the value of the transaction is less than rupees five lakhs, the competent authority ought to have withdrawn the acquisition proceedings, in view of the abovesaid CBDT Circular. Reliance was placed upon the decision in CIT v. Rattan Chand Sood [1987] 166 ITR 497/33 Taxman 224 (Delhi) and CIT v. Export India Corpn. (P.) Ltd. . In order to show that the burden is not on the transferee to prove that the consideration recorded in the sale deed is the correct consideration and no extra consideration passed, the learned counsel was relying upon a passage occurring at page 1587 in the Commentary of Income-tax by Kanga and Palkhivala, 8th edn., Volume 1. Lastly, the learned counsel appearing for the assessee also submitted that in view of the fact that the sale deed registered on 11-12-1972, would take effect from the date of execution, i.e., 11-9-1972, therefore, Chapter XX-A which came into effect from November 15, 1972, will not be applicable to the facts of the present case. The learned counsel relied upon the decision of the Supreme Court in Hamda Ammal v. Avadiappa Pathar . On this aspect, reliance was placed upon the decision of the Gujarat High Court in Arundhati Balkrishna v. CIT [1982] 138 ITR 245. For these reasons, the learned counsel appearing for the assessee, submitted that the Tribunal was correct in cancelling the acquisition proceedings.
15. We have heard the rival submissions. The fact remains that one A. B. Balakrishnan transferred the property situated at No. 46B, Chairman Muthuramier Road, Madurai. It is a factory with land and building. The sale agreement was executed on 11-9-1972, and the sale deed was registered on 11-12-1972 for a sale consideration of Rs. 1,40,000. Rs. 1,40,000 is the apparent or stated consideration. The IAC determined the fair market value of this property at Rs. 2,54,000. Since according to the IAC, the fair market value is more than 15 per cent of the apparent consideration, he initiated the acquisition proceedings under section 269D and completed the acquisition proceedings, since he ultimately came to the conclusion that the sale consideration is over and above 25 per cent of the apparent consideration. The transferred property consisted of 24,000 sq. ft. of vacant land and a factory building thereon. The IAC came to the conclusion that there was overwhelming evidence to take the value of the land at Rs. 4 per sq. ft., and he computed the value of the land and building at Rs. 2,54,000. He observed that even if this value was to be assailed, the Valuation Officer's computation of Rs. 2,11,000 could not be rejected and that the approved valuer's own figure would be Rs. 1,75,456. This rock-bottom value as propounded by the transferee's technical expert would not save the case from section 269D, according to the IAC. Finally, the IAC was satisfied that the understatement definitely exceeded the apparent consideration by 25 per cent and section 269C(2)(a) would apply. In the light of the same, he got the proceedings approved by the Commissioner to acquire the property.
16. There are four valuation reports filed in this case, which are as under :
"Valuation as per the Income-tax Inspector's Report (Pages 191-192 of the typed set) Rs.
Site 26,985 sq. ft., at Rs. 8 per sq. ft. 2,15,880 Building 8,400 sq. ft. at Rs. 6 per sq. ft. 50,400 Compound wall 6,000 ---------- Total value 2,72,280 ----------
Valuation as per Departmental Valuer's report (Pages 133-137 of the typed set) Value of the building (gross) 1,27,804 Depreciation at 10 per cent 12,780 Depreciated value of the building 1,15,024 Value of the land 24,000 sq. ft. at Rs. 4 per sq. ft. 96,000 ---------- Total value 2,11,024 ----------
Rounded off 2,11,000
Transferee's approved valuer's report
(Pages 139-141 of the typed set)
Value of the land 24,766 sq. ft. at Rs. 1,000 per cent 56,810 Value of the building 1,71,920 ---------- 2,28,730 Less : Depreciation at 4 per cent for a period of 13 years 70,762 ---------- Total value 1,57,968 ----------
The Inspecting Assistant Commissioner's valuation
(Pages 127-129 of the typed set) Rs.
Building value (gross) 1,71,190 Depreciation at 10 per cent 17,190 ---------- Net depreciated value of the building 1,54,730 Land 24,766 sq. ft. at Rs. 4 per sq. ft. 99,064 ---------- 2,53,794 ---------- Rounded off 2,54,000" ----------
17. The department was not able to find out any other unexplained investment or expenditure for few assessment years either prior to or subsequent to the impugned transfer of property either with the transferor or with the transferee. The transferor and the transferee are not relatives. They have also no common business or financial interest between them. The determination of the market value of a property in question at a given time is based upon estimate and guess work. The valuation reports are based only upon the estimate and the opinion of the valuer. The inspector of the department valued the house only at Rs. 56,400 at the rate of Rs. 6 per sq. ft. (Rs. 50,400 for building and Rs. 6,000 for compound wall). The value of the land according to the competent authority at the rate of Rs. 4 per sq. ft., would come to Rs. 99,064. The value of the land and building, thus, would come to Rs. 1,55,504 (Rs. 99,064 less plus Rs. 56,400). The competent authority has not explained in his order of acquisition as to how this estimate made by the Inspector of the value of the building is wrong and not acceptable.
18. The executive engineer valued the building at Rs. 1,27,804 at the rate of Rs. 14 per sq. ft. Then he gives a 10 per cent depreciation. The competent authority estimates the value at Rs. 1,71,920 at the rate of Rs. 20 per sq. ft., and gives a 10 per cent depreciation. The competent authority has not placed any reliance on the figures estimated by his own departmental valuer. It seems that the competent authority adopted the highest rate wherever it is possible.
19. The transferee's valuer has given depreciation at 4 per cent for 13 years. According to the learned standing counsel for the department, there were additional constructions from 1968 to 1972, and, therefore, 4 per cent depreciation cannot be given for a period of 13 years. On the other hand, the transferee submitted that there was no additional construction except repairing and raising a compound wall. The property in question is not a rented property. Therefore, the only method that can be adopted for determining the value of the property would be the land and building method. The competent authority describes the building as first class.
20. Till 1968, the building was only an open shed with no side wall and no flooring and with a compound wall and the building was used till then for foundry purposes. Its depreciated value in 1968 was stated to be Rs. 30,000 or near about. During December 1969 to 1972, it was repaired or renovated by the transferor. It is not any new construction that was done in those years. According to the Departmental Valuation Officer, the construction was like providing steel doors and windows, providing cement concrete flooring, steel trusses and roofing with asbestos sheets, etc. According to the Tribunal, these are only works on repairs on renovations. However, the Tribunal considered that in the matter of granting depreciation, one should not be confused between the extensive repair made and the additional constructions. Therefore, the Tribunal came to the conclusion that 4 per cent depreciation granted by the Valuation Officer appears to be reasonable. It is also significant to note that 4 per cent depreciation can be granted even according to the depreciation Schedule contained in the Act.
21. So far as the value of the land is concerned, the inspector took the value of the land at Rs. 8 per sq. ft., and the executive engineer took the value at Rs. 4 per sq. ft. The record contains comparable sales in the nearby vicinity. A look at the comparable sales would go to show that adopting the value of the land at Rs. 4 per sq. ft., cannot be said to be unreasonable. Accordingly, the value of the land at Rs. 4 per sq. ft., would come to Rs. 96,000 for 24,000 sq. ft.
22. In this context, it is useful to note the value adopted in the wealth-tax assessment of the assessee for the assessment years 1971-72 and 1972-73. The valuation of the land and original building has been given at Rs. 1,11,079 in 1968 and the additions up to 31-3-1972, at Rs. 1,06,153, thus, totalling Rs. 2,17,232. The IAC pointed out that even if the value of 10,535 sq. ft., returned by the transferor is taken at Rs. 3 per sq. ft., i.e., Rs. 31,605 is deducted, the balance would come to Rs. 1,85,627, which is very much above the sale figure of Rs. 1,40,000. It was represented that the old shed was wrongly included in both figures to Rs. 1,11,079 as well as in the cost of addition of Rs. 1,06,153. This double addition was accepted even by the IAC in his order. If this Rs. 27,318 is deducted from Rs. 1,85,627, the balance would come to Rs. 1,58,309. The learned counsel appearing for the assessee submitted that the IAC was not correct in valuing the land at Rs. 3 per sq. ft., in the case of the transferor, while in the case of the transferee, it was valued at Rs. 4 per sq. ft. Therefore, according to the learned counsel, this 10,535 sq. ft., should be valued at Rs. 4 per sq. ft. In such a case, another Rs. 10,535 is to be deducted from Rs. 1,58,309. In such a case, the balance would come to Rs. 1,47,774. If this figure is compared to the apparent consideration, it cannot be said that the fair market value is over and above 15 per cent of the apparent consideration. It also remains to be seen that the department is not entitled to adopt one value for wealth-tax purposes and another value for acquisition purposes with regard to the same property. This line of argument advanced by the learned counsel appearing for the assessee appears to be acceptable. Thus, from any point of view, the value adopted by the IAC for the land and building in order to initiate the proceedings under section 269D appears to be not supported by any material on record. As already pointed out, the IAC also intended to take the highest value for both the land and building as furnished by the executive engineer. In view of all these findings, we hold that the Tribunal was correct in coming to the conclusion that the acquisition proceedings cannot be initiated under section 269D.
23. The learned standing counsel appearing for the department submitted that under section 269C(2)(a), if the department established that the fair market value is over and above 25 per cent of the apparent consideration, it need not establish that extra consideration passed in the transaction. While considering this aspect in Kanga and Palkhivala's The Law and Practice of Income-tax, 8th edition, Volume 1, at page 1587, it is stated as under :
"Clause (a) goes further and provides that where the market value of the property exceeds the apparent consideration by more than 25 per cent of such apparent consideration, it shall be conclusive proof that the agreed consideration 'has not been truly stated in the instrument of transfer'. This is a patently absurd provision. There are countless bona fide cases where the agreed consideration specified in the sale deed is lower than the fair market value on the date of execution of the sale deed, e.g., where the property has appreciated in value between the date of the agreement to sell and the date of conveyance - Blue Star v. Santosh 150 ITR 356, or where the transfer is made at a concessional price to a friend, or to a relative not falling within section 2(41) or to a subsidiary or other associate company. In such cases the agreed consideration is truthfully stated in the instrument of transfer, yet under clause (a) the mere disparity between the apparent consideration and the fair market value is conclusive proof that the innocent parties have been untruthful in stating the agreed consideration in the instrument of transfer. When one fact is declared by a statute to be conclusive proof of another, on proof of the one fact, the other must be regarded as proved and no evidence can be allowed to be given for the purpose of disproving it - See S. 4 of Evidence Act, 1872. The irrebuttable presumption against the parties to the transfer raised by clause (a) [in contradistinction to the rebuttable presumption raised by clause (b)] is so irrational that the Delhi High Court virtually rewrote clause (a), held the presumption raised by it to be rebuttable and ruled it to be constitutional in Mahavir Metal Works (P.) Ltd. v. Union of India [1974] 95 ITR 197, 218. For the same reason, the Gujarat High Court has also held that clause (a) raises a rebuttable presumption - CIT v. Vimlaben [1979] 118 ITR 134, 176.
24. Whatever may be the right construction of the words 'conclusive proof', clause (a) unlike clause (b) raises a presumption only as regards understatement of the agreed consideration, but not as regards the object of tax evasion. The presumption under clause (b) as to the object of tax evasion is clearly a rebuttable presumption in every case including a case falling under clause (a) ...."
25. Thus, considering the facts arising in this case, the Tribunal came to the conclusion that there is no understatement of consideration in the present case, so as to evade the tax. The Tribunal was also of the view that the assessee rebutted the presumption on the facts arising in this case. Accordingly, it ultimately came to the conclusion that initiation of the acquisition proceedings under section 269D is unwarranted.
26. Our attention was drawn to a Circular issued by the CBDT to the effect that after 1-4-1986, the proceedings earlier initiated should be dropped unless the apparent consideration exceeded rupees five lakhs. The learned standing counsel appearing for the department, submitted that proceedings earlier initiated would mean the proceedings initiated by the IAC till its disposal. It cannot extend beyond the order passed by the IAC. In the present case, inasmuch the second appeal is pending before the High Court, on the basis of the Circular cited supra, the assessee cannot ask to drop the proceedings. In order to support this contention, the learned standing counsel appearing for the department relied upon the Full Bench decision of the Kerala High Court in Mathew M. Thomas' case (supra). In that decision, the Kerala High Court held that the acquisition proceedings were over long ago and the matter is at present pending by way of second appeal before the High Court after the order was passed by the competent authority. The Circular aforesaid contemplates that the proceedings initiated in pursuance of notice under section 269D should be pending. Inasmuch as no such proceedings were pending, Circular No. 455 had no application and the proceedings could not be dropped. On the other hand, the learned counsel appearing for the assessee, in order to support his submission that in view of the Circular issued by the CBDT, the department cannot continue the proceedings before the High Court, placed reliance upon the decision of the Delhi High Court in Rattan Chand Sood's case (supra), wherein the Delhi High Court held that the CBDT had issued a Circular to the effect that after 1-4-1986, the proceedings earlier initiated should be dropped unless the apparent consideration exceeded rupees five lakhs. The Court felt that whatever might be the legal rights of the parties, this was a case in which the department should administratively drop the proceedings having regard to the equities and the unintended hardship to persons, who had acted bona fide.
27. The Punjab and Haryana High Court in Export India Corpn (P.) Ltd's case (supra) held that the word 'proceedings' occurring in the Circular is not qualified by the word 'initial'. Therefore, the word 'proceedings' shall include proceedings at the appeal stage as well. Every officer and person employed in the execution of the Act shall observe and follow the orders, instructions and directions of the CBDT. The Circulars issued by the CBDT would, thus, be generally binding on the authorities and other persons employed in the execution of the provisions of the Act and these authorities and officers shall follow those orders, instructions and directions issued by the CBDT. A benevolent Circular, such as Circular No. 455 would be binding on all the authorities. Circular No. 455 would be applicable to the proceedings pending at the appeal stage as well if the apparent consideration of the immovable property is below rupees five lakhs. In this decision, the Punjab and Haryana High Court also considered the Full Bench decision of the Kerala High Court in Mathew M. Thomas' case (supra) and the decision of the Delhi High Court in Rattan Chand Sood's case (supra). Considering the reasons given by the Delhi, Punjab and Haryana High Courts, we are in entire agreement with those decisions than placing reliance upon the decision of the Kerala High Court in Mathew M. Thomas' case (supra) on this aspect.
28. The sale deed was executed on 11-9-1972. The sale deed was registered on 11-12-1972. Chapter XX-A came into effect from 15-11-1972. According to the learned counsel appearing for the assessee, the sale deed registered on 11-12-1972, would relate back to the date of execution of the sale deed, viz., 11-9-1972. In such a case, Chapter XX-A, which came into effect from 15-11-1972, would not be applicable to the facts of this case.
29. Reliance was also placed upon the decision of the Supreme Court in Hamda Ammal's case (supra). In that decision, the Supreme Court held that the document after its registration relates back to the date of execution of the sale deed. Therefore, when the property belonged to the defendants/judgment-debtors (vendors) and the sale deed had already been executed by them prior to the attachment before judgment and only its registration remains, then neither attachment before judgment nor a subsequent attachment or court sale of the property would confer any title by preventing the relation back. The fact that the document of sale had not been registered until after the attachment makes no difference. Even an unregistered document can be received as evidence for purposes mentioned in the proviso to section 49 of the Indian Registration Act. The contention that till registration the execution of the sale deed does not confer any rights whatsoever on the vendee cannot be accepted.
30. The question which calls for consideration in that case was whether Hamda Ammal is entitled to the property sold in her favour by virtue of the sale deed, dated 9-9-1970, but registered subsequently on 26-10-1970, or Avadiappa has a better claim to the property on account of an attachment before judgment made on 17-9-1970, in the suit filed by him on 13-9-1970, i.e., prior to the date of registration of the sale deed in favour of Hamda Ammal. It is in this context that the Supreme Court held as stated above.
31. The Gujarat High Court in Arundhati Balkrishna's case (supra), on a similar question held that the transaction must be treated as having become effective from the date on which the document was executed, in case its registration is subsequently admitted before the Registrar and eventually it is registered.
32. In Mahavir Metal Works (P.) Ltd's case (supra), while considering this aspect, the Delhi High Court held that for the purpose of Chapter XX-A, a transfer of immovable property must be taken to be effective only when the instrument of transfer is registered. Any transfer, to attract the provisions of the Chapter, will have to be registered under the Indian Registration Act, 1908, till then the provisions would not apply to it. The provisions of Chapter XX-A apply if the registration of the deed of transfer is effected after the Chapter came into force even though the deed might have been executed before the provisions of the Chapter came into force and under section 47 of the Indian Registration Act, the title of the transferee dates back to the date of execution.
33. In Divvi Suryanarayana Murthy v. Competent Authority , the Andhra Pradesh High Court held on this aspect that the fact that the Parliament has provided in section 269C that the proceedings thereunder can be initiated only on registration of the transfer and only within nine months from the end of the month in which the transfer by registration was effected by the vendor (under section 269D), makes the legislative intent also clear, that the crucial date for the purpose of initiation of the acquisition proceedings is the date of registration of the deed of transfer and not any date earlier to that.
34. In Amarchand Jainarain Aggarwal v. Union of India [1983] 142 ITR 410, the Bombay High Court while considering this aspect held that for the purpose of acquisition of immovable property under section 269C, the transfer was complete not on the date of the execution of the document of sale but only on its registration and where a sale deed was executed before the introduction of section 269C but was registered after the introduction of the provision in the Act, the initiation of proceedings by the competent authority was valid as the effective date to be considered was the date of registration of the document.
35. In view of the foregoing judicial pronouncements, we are also of the opinion that Chapter XX-A would be applicable in the case of the assessee herein even though the sale deed was executed on 11-9-1972, but the same was registered on 11-12-1972. In view of the foregoing reasons, we confirm the order of the Tribunal in setting aside the acquisition proceedings initiated under section 269D.
36. In the result, this tax appeal filed by the department stands dismissed. No costs.