Sanjay Sharma vs Kotak Mahindra Bank Ltd. on 16 November, 2017
Further, the Apex court in the
case of Sanjay Sharma Vs. Kotak Mahindra Bank Ltd.& Ors.in
SLP(C) No. 330/2017 has again reiterated that the ownership of
immovable property does not get transferred until the sale deed is
registered.Mere transfer of possession and payment of consideration
will not transfer the ownership unless the sale deed is registered.
Further, we are of the considered opinion that as per section 54 of
the Transfer of Property Act, a Power of Attorney given to the
developer is not an instrument of transfer in regard to any right,
title and interest in immovable property. The power of attorney is
creation of an agency whereby the granter authorizes the grantee to
do the acts specified therein, on behalf of the grantor, which when
ITA Nos.759 to 761/Bang/2025
M/s. Anushka Estates, Bangalore
ITA Nos.779 to 782/Bang/2025
M/s. Anushka Realty Inc., Bangalore
Page 18 of 21
executed will be binding on the grantor as if done by him.
Therefore, merely by giving power of attorney to the developer we
cannot say that the land has been transferred to the developer.
Even in the case of agreement to sale with the ultimate buyer, the
section 54 of Transfer of Property Act makes it clear that a contract
of sale, i.e. an agreement of sale does not, of itself, create any
interest in or charge on such property. This is expressly declared in
section 54 of Transfer of Property Act. Thus, it is very much clear
that transfer of immovable property by way of sale can only be by a
deed of conveyance (sale deed). In the absence of a deed of
conveyance (duly stamped and registered as required under law), no
right, title or interest in an immovable property can be transferred.
The point of tax incidence for the assessee in our view would be the
passing of risk and rewards of the ownership to the ultimate buyers
upon registration of title deeds in favour of the buyer. The
consideration that is earned by the landowner is on account of
"transfer" to the ultimate customer and such transfer is occasioned
on completion of the project and registration of the sale deed.
Therefore, in our view the project completion method in accounting
applied by the assessee is appropriate. We are of the considered
opinion that merely by making advance booking of flats by the
buyer, it cannot be assumed that any income accrued to the
assessee. The advance received remain a liability till the sale
transaction is completed by delivering possession and the sale deed
is executed. Accordingly, there is no element of accrual of income
in these circumstances as contended by AO.