- (1.) Since the main issue involved in these two appeals filed by the assessee, for the two successive years, is common, the appeals have been consolidated and a common order is being passed for the sake of convenience.
(2.) The facts of the case, as discussed by both the lower authorities, are as under. The assessee was the leasehold owner of a property at Bombay known by the name "Crescent House" comprising of the ground, mezzanine, first, second and the third floors of the building. On 9-9-1989, the assessee entered into an agreement with M/s. Reliance Industries Limited (hereinafter referred to as 'Reliance') for sale of the property to the latter party for a total consideration of Rs. 27 crores. An advance of Rs. 18.9 crores was received by the assessee in certain instalments upto the period ended 31-3-90. The actual Conveyance of the property by a Registered Deed was, however, remaining pending because of lack of completion of certain sale formalities and also non-receipt of approval from the Bombay Port Trust being the owner of the land. During the previous year, corresponding to the assessment year 1991-92, the assessee entered into a Memorandum of Understanding (hereinafter referred to as the MoU) with Reliance. The actual date of the MoU was 3-8-1990. In accordance with this MoU, it was decided upon that the advance of Rs. 18.9 crores received by the assessee would become non-refundable. The assessee-company also agreed to grant Reliance, i.e., the purchaser, a licence to use the basement, ground floor and also the first floor of the said property. It is required to be mentioned in this connection that as per clause 20 of the original agreement dated 9-9-1989, it had been decided upon that vacant possession of the basement, ground and first floors would have to be given by the assessee to the purchaser immediately upon execution of the Deed of Assignment of the property. It was furthermore clarified that possession of the second floor of the property, would be transferred by the assessee after one year from the execution of the aforesaid Deed of Assignment of payment of full purchase price, whichever would be earlier. So far as the third floor of the property is concerned, it was mentioned that the said floor, being under the occupation of government agencies and being also subject to a requisition notice issued by the government, it would not be possible for the assessee to hand over vacant possession of the third floor to the purchaser. On the basis of the above MoU and consequent granting of a licence to the purchaser to use the basement, ground floor and the first floor of the property during the period corresponding to the assessment year 1991-92, the assessee offered the amount of Rs. 18.9 crores received by it till then as the consideration for sale of the capital asset to that extent, in accordance with the extended definition of 'transfer' in relation to a capital asset as provided in , 1961 in its return of income for the assessment year 1991-92 and also wanted to be assessed to capital gains in respect of the aforesaid portion of the property in that year. The actual assignment of the property by way of registered Conveyance Deed was, however, ultimately completed during the period corresponding to the assessment year 1992-93 and, presumably, the assessee received the balance amount out of the total consideration stipulated at Rs. 27 crores. In its return of income submitted for the assessment year 1992-93, the assessee-company showed capital gains in respect of the balance amount of the consideration being Rs. 8.1 crores.
(3.) In the assessment order for the assessment year 1991-92, the assessing officer (assessing officer) made a detailed discussion of the facts as well as of the legal position involved therein. He was of the opinion that under the MoU the assessee merely granted a licence to Reliance to use the basement, ground and first floors of the property and did not exactly hand over the possession in respect of those portions of the property as is required in connection with an outright sale of an immovable property. In this connection, he referred to certain stipulations in the MoU like at paragraph 2 (page 5) stating that the purchaser (Reliance) might carry out repairs and renovations to the licensed premises after giving intimation of the same to the Vendor (the assessee) but without affecting the Vendors' rights and interest into and upon the said property, paragraph 9 (page 9) mentioning that the purchaser shall pay to the Vendor on demand the actual charges for the electricity and water consumed; and also paragraph 11 (page 9) stating that the purchaser shall pay to the Vendor on demand operating and maintenance costs/charges in respect of the aforesaid property and the lifts installed in the said property proportionate to the area in the house of the licensing. On the basis of the above discussion, the assessing officer ultimately held that it cannot be said that possession of the property, or even a part thereof, had been handed over to Reliance in the real sense involving "part performance" of the Agreement for sale. It was contended by the assessing officer that the assessee had merely allowed Reliance to use the property as a licensee.;