- (1.) ON an application filed under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal, Jaipur, was justified in holding that capital gains, in respect of sale of property, was not attracted in the assessment year under consideration as there has been no transfer ?"
(2.) THE assessee-company which derives income from the manufacture and sale of containers had sold its factory building for consideration of Rs. 45,000 to a firm, Krishna Agencies, Jaipur, wherein the relatives of the company's directors were partners. THE matter was referred to the valuer under Section 55A of the Income-tax Act, who valued the property at Rs. 1,35,000, which value was adopted as the market value for the purpose of Section 52 of the Income-tax Act after obtaining the necessary sanction of the Inspecting Assistant Commissioner. On the basis of the proposal, the amount of Rs. 73,618 was taken as income under the head "Capital gains". THE assessee has objected to tax this amount as a capital gain, as the property has not been registered and in the absence of the registration, there is no transfer and unless the property is transferred, there is no question of capital gain on the ground of transfer. This view has been negatived by the Income-tax Officer on the ground that though the property is not registered, it attracts the capital gain tax. In appeal before the Commissioner of Income-tax (Appeals), the assessee has not only argued on the ground of registration of the transfer deed, but also argued on the proposition laid down by the Supreme Court in the case of K. P. Varghese v. 1TO [1981] 131 ITR 597. The Commissioner of Income-tax (Appeals) has allowed the appeal on both the grounds and deleted the capital gain for tax. In appeal before the Tribunal, the Tribunal has not considered the aspect of the proposition laid down by the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597, and dismissed the appeal of the Department holding that in the absence of transfer of the property by registered deed, capital gain tax does not attract. Mr. Singhi placed reliance on the decision of the Supreme Court in the case of CIT v. Podar Cement Pvt. ltd. [1997] 226 ITR 625 and submits that for capital gain tax registration is not necessary. Mr. Jain, learned counsel for the assessee, submits assuming that in the absence of registration of the deed, there can be capital gain tax, but even otherwise when the issue has been decided by the Commissioner of Income-tax (Appeals) in favour of the assessee in the light of the proposition laid down by the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597, there is no capital gain for tax under Section 52 of the Act. The Tribunal has decided the issue only an the basis of non-registration of the transfer deed. The Tribunal has taken the view that in the absence of the registration of the sale deed, there is no transfer and no capital gain tax is attracted. Now this controversy has been resolved by their Lordships in the case of CIT v. Podar Cement Pvt. Ltd, [1997] 226 ITR 625. At page 653, their Lordships observed as under : "We are conscious of the settled position that under the common law, 'owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, Registration Act, etc. But, in the context of Section 22 of the Income-tax Act, having regard to the ground realities and further having regard to the object of the Income-tax Act, namely, 'to tax the income', we are of the view, 'owner' is a person who is entitled to receive income from the property in his own right."
(3.) FOLLOWING the view taken by their Lordships, we are of the view that for taxing the capital gain, registration of the sale deed is not necessary under the provisions of the Income-tax Act. In the result, we answer the question in the negative, i.e., in favour of the Revenue and against the assessee. Mr. Jain, learned counsel for the assessee, submits that when the issue regarding whether there was underhand dealing or the consideration was passed more than shown in the deed, the burden is on the Department and if the Department could not prove it, the issue has been decided in favour of the assessee. That has also been argued before the Tribunal, but the Tribunal has not given any decision on this issue. ;