The entries in the account books of the vendor and the vendee are not relevant for the purpose of determining whether a sale of immovable property had taken place.

Its was too well settled that the litle to lands and buildings could not pass till a conveyance deed was executed and duly registered. The assessee remained the owner of the properties irrespective of the fact that he was not earning any income there from.

Commissioner of Income tax , Delhi   Vs. Hans Raj Gupta (Delhi High Court) Dt. 11.09.1981 Income tax Act , 1922 Section 9

The assessee was the registered owner of certain immovable properties at S P D and K. A company R Ltd., passed a resolution on May 23, 1950, to the effect that the freehold property comprising of the land at S be purchased from the assessee for Rs. 2 Lakhs  and paid that amount to the assessee. H Ltd., another company, passed a resolution on January 22, 1950 to the effect that the properties  at P, D and K be acquired from the assessee, that the company should take over the premises as from July 1. 1950, and that no rent shall be paid thereafter; and H Ltd. also paid the sale consideration. No registered document was executed. The question was whether the income from these properties after those dates should be taxed in the hands of the assessee or in the hands of the respective companies which were using the properties by virtue of payment of the sale price:

Held, that the assessee was liable to be assessed to tax on the entire income from the property in relation to the properties at S.P.D. and K as he remained the legal owner. The resolutions of the purchasing companies and the payment of purchase price by them could not have the effect of depriving the seller of his ownership; nor could the fact that the purchasers continued in possession of the property without payment of rent, even assuming it amounted to constructive delivery in consequence of payment of consideration, be equated with a conveyance, and the entries in the account books of the vendor and the vendee are not relevant for the purpose of determining whether a sale of immovable property had taken place. Its was too well settled that the litle to lands and buildings could not pass till a conveyance deed was executed and duly registered. The assessee remained the owner of the properties irrespective of the fact that he was not earning any income there from.

R.B. Jodha Mal Kuthiala V. CIT (1971)82 ITR 570 (SC)

CIT V. Ganga Properties Ltd. (1970) 77 ITR 637 (Cal),

CIT V. Union, Land and Building Society P, Ltd. (1972) 83 ITR 794 (Bom),

Modern Flats P. Ltd (1967) 65 ITR 67 (Bom),

CIT V. Meatles Ltd. (1972) 84 ITR 37 (Delhi),

CIT V. Hindustan Cold Storage and Refrigeration P. Ltd. (1976) 103 ITR 455 (Delhi) applied.

Cases referred to:

Alapati Venkataramaiah V. CIT (1965) 57 ITR 185 (SC).

CIT V. Bhurangiya Coal Co. (1958) 34 ITR 802 (SC).

CIT V. Jadhamal Kuthiala (R.B.) (1968) 69 ITR 598 (Delhi) (FB).

Kala Rani (Smt.) V. CIT (1981) 130 ITR 321 (P&H).

Kartar Singh (S.) V. CIT (1969) 73 ITR 438 (Delhi).

Ram Gopal Reddy V. Addl. Custodian of Eva. cuee Property (1966)    SC 1438.

Author Bio

Qualification: LL.B / Advocate
Company: S.K. Jain and Co.
Location: Faridabad, Haryana, India
Member Since: 16 May 2019 | Total Posts: 102
I am S.K.Jain , Tax Consultant cum Advocate practising in Income Tax , GST , Company Matters . The name of the concern is S.K. Jain and Co. and I am prop. of this concern . I am in practice for the last 30 years . Professionals and non professional can feel free to contact me on mail . My mail ID is View Full Profile

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2 Comments

  1. N P Sinha says:

    Can this be basis of transfer of ownership of land and title of holding of the Apartment ownews collectively from the original owner of the land by a conveyance deed execution?

    1. skjain1147 says:

      sir , conveyance deed is the first registry between the Govt. and the buyer .Apartment constructed on the land . Builder shall transfer the title to the buyer of the apartment making reference of the conveyance deed executed in his favour and sale deed for sale of the apartment is required for the title to be transferred in the favour of the buyer of the apartment .

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