M/S. SESHASAYEE STEELS P. LTD. versus ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(2), CHENNAI

M/S. SESHASAYEE STEELS P. LTD. versus ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(2), CHENNAI

Clause 16 of the agreement merely granted a license to commence construction and therefore Section 53A was not attracted; however, the compromise deed together with actual receipt/encashment of the agreed amounts extinguished the assessee's rights, and the transaction thereby fell within Section 2(47)(ii) and (vi) of the Income Tax Act, so the assessment treating the sale consideration as capital gain was justified.

Parties
Appellant / Assessee: M/s. Seshasayee Steels P. Ltd.; Respondent / Revenue: Assistant Commissioner of Income Tax, Company Circle VI(2), Chennai
Jurisdiction
India
Judgment Date
04 December 2019
Procedural Posture
Civil Appeal (civil Appeal No. 9209 of 2019) / Appeal to the Supreme Court; Final Judgment
Outcome
Appeal dismissed
Legal Topics
Section 53 a Part Performance, Section 2(47)(v) and (vi) Interpretation, Possession Versus License, Effect of Compromise Deed and Encashed Cheques on Extinguishment of Rights
Transfer of Property Act, 1882 Income Tax Act, 1961 Taxation Property Law Capital Gains Section 53 a Part Performance Section 2(47)(v) and (vi) Interpretation Possession Versus License +1 more

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Parties

M/s. Seshasayee Steels P. Ltd.

Appellant / Assessee

Assistant Commissioner of Income Tax, Company Circle VI(2), Chennai

Respondent / Revenue

Procedural Posture

Civil Appeal (civil Appeal No. 9209 of 2019) / Appeal to the Supreme Court; Final Judgment

Legal Issues

  1. 1 Whether Section 53A of the Transfer of Property Act was attracted by the agreement to sell and Power of Attorney
  2. 2 Whether the transaction fell within Section 2(47)(v) or (vi) of the Income Tax Act
  3. 3 Whether the compromise deed and subsequent encashment of cheques effected a transfer/enabled enjoyment of the immovable property for purposes of s.2(47)

Ratio Decidendi

Clause 16 of the agreement merely granted a license to commence construction and therefore Section 53A was not attracted; however, the compromise deed together with actual receipt/encashment of the agreed amounts extinguished the assessee's rights, and the transaction thereby fell within Section 2(47)(ii) and (vi) of the Income Tax Act, so the assessment treating the sale consideration as capital gain was justified.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed; orders under appeal upheld (assessment treating sale consideration as capital gain sustained)