- 1 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF DECEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE T.M.NADAF WRIT APPEAL NO. 607 OF 2023 (T-IT) C/W WRIT APPEAL NO. 593 OF 2023 (T-IT) IN WA No. 607/2023 BETWEEN: 1. THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2) C.R BUILDING, QUEENS ROAD, BENGALURU 560 001. 2. THE PRL. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, C.R BUILDING, QUEENS ROAD, BENGALURU 560 001. 3. COMMISSIONER OF INCOME TAX (APPEALS) -11 C.R BUILDING, QUEENS ROAD, BENGALURU 560 001. &APPELLANTS (BY SRI. Y.V. RAVIRAJ., ADVOCATE A/W SRI. DILIP M.,ADVOCATE) Digitally Signed by REKHA R Location : High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 AND: SMT K SHASHIKALA W/O LATE MANJUNATH AGED ABOUT 43 YEARS, R/AT NO. 97, BILESHIVALE VILLAGE, DODDAGUBBI POST, BANGALORE NORTH TALUK SHIVARAMA KARANTH NAGAR, &RESPONDENT (BY SRI. M.V. SESHACHALA., SENIOR ADVOCATE FOR SRI. NAGHARISH G.S..,ADVOCATE) THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT, 1961 PRAYING TO a. SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W. P. No. 22819/2021 (T-IT) DATED 20.10.2022. IN WA NO. 593/2023 BETWEEN: 1. THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -1(2) C R BUILDING, QUEENS ROAD BANGALORE-560001. 2. THE PR. COMMISSIONER OF INCOME TAX - 3 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 CENTRAL CIRCLE C R BUILDING, QUEENS ROAD BANGALORE-560001. 3. COMMISSIONER OF INCOME TAX (APPEALS)-11 C R BUILDING, QUEENS ROAD BANGALORE-560001. ...APPELLANTS (BY SRI. Y.V. RAVIRAJ., ADVOCATE A/W SRI. DILIP M.,ADVOCATE) AND: SMT K SHASHIKALA W/O LATE MANJUNATH AGED 43 YEARS, R/AT NO.97, BILESHIVALE VILLAGE DODDAGUBBI POST BANGALORE NORTH TALUK SHIVARAMA KARANTH NAGAR BANGALORE-560077. ...RESPONDENT (BY SRI. M.V. SESHACHALA., SENIOR ADVOCATE FOR SRI. NAGHARISH G.S., ADVOCATE) THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO a) SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.22748/2021 DATED 20/10/2022. - 4 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 THESE APPEALS, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD) These intra Court appeals are against similar but separate orders both dated 20.10.2022 in the writ petitions in W.P. Nos.22819/2021 and 22748/2021. The respondent in these writ petitions has challenged the assessment order and the order- in-appeal relevant to the assessment years 2012-13 and 2013-14. The writ Court has remanded the matters back to the Assessing Officer [the first appellant] for reconsideration afresh with certain observations on whether there is a transfer for under Section 2[47][v] of the Income Tax Act, 1961. - 5 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 2. The writ Court has observed that such reconsideration must be in the light of the observations made in the course of the order as also certain decisions relied on behalf of the respondent while providing due opportunity. Sri Y V Raviraj, the learned Senior Standing Counsel for the appellants- Revenue, Sri M V Seshachala, the learned Senior Counsel for the respondent-assessee, are heard for disposal of the writ appeals in the light of the appellants' grievance with the observations in the impugned order. 3. The Revenue contends that the different transactions concluded by the respondent resulted in the conversion of the immovable property into stock- in-trade with liability to pay tax based on the business income on the sale of such stock-in-trade after development. Sri Y V Raviraj and Sri M V Seshachala are categorical that the Assessing Officer, given the simultaneous transactions by the - 6 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 respondent and by the family members, must decide afresh on whether there is indeed a transfer at two stages as contended by the Revenue. 4. The merits of the observation on transfer by the learned Single Judge is examined in the light of the afore, and these observations are as follows. "7. As rightly contended by the learned Senior Counsel appearing for the petitioner, in order to attract Section 2(47)(v) of the IT Act, it is essential that possession of the property in question should be delivered in terms of Section 53-A of the T.P. Act. In the instant case, a perusal of the Sale Agreement, Agency Agreement and GPA, all dated 14.08.2012 will clearly indicate that possession of the said property covered under the said documents has not been delivered as mandatorily required under Section 53-A of the T.P. Act. In fact, the contents of the said documents will clearly indicate that there is no recital with regard to the petitioner handing over possession or putting the party in possession in part performance as required under Section 53-A of the T.P. Act. Further, the Sale Agreement - 7 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 dated 14.08.2012 under which, the petitioner is said to have agreed to sell the said land in favour of the third party is also not a registered document as required under Section 17(1-A) of the Registration Act and on this ground also, it cannot be said that the petitioner had delivered or put the other party in possession in part performance for the purpose of Section 53-A of the T.P. Act. 8. Under these circumstances, I am of the considered opinion that in the absence of any recital in the aforesaid three documents, much less any recital to the effect that possession of the property in question was delivered in part performance of the contract, the three documents executed by the petitioner cannot be construed or treated as constituting a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act. 9. The material on record also discloses that though the Assessing Officer and the Appellate Commissioner have referred to certain decisions during the course of their orders, the aforesaid decisions relied upon by the learned counsel for the petitioner have not adverted to or referred to the aforesaid judgments of the Hon'ble Apex - 8 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 Court, which clearly establishes that so long as the documents do not constitute a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act, the petitioner cannot be made liable to pay capital gains tax on the amount received by him." 5. This Court is of the view that if indeed the Revenue proposes that there is a conversion of the lands into stock-in-trade and a transfer with the subsequent sale of plots in such lands on completion of the development, the Assessing Officer will have to, based on the facts and on the documents that are executed, first decide on whether such are the transactions and then decide on whether the respondent should have the advantage of the writ Court's observations as aforesaid. 6. The respondent is also aggrieved by the additions made by the Assessing Officer based on comparative values without extending an opportunity to respond in that regard, and the respondent also - 9 - HC-KAR NC: 2025:KHC:50215-DB WA No. 607 of 2023 C/W WA No. 593 of 2023 has grievances with the manner in which the assessment is completed. This Court must record that with the remand that is permitted by the learned Single Judge, these will also have to be re-examined. The writ appeals are dismissed with the observations as aforesaid. Sd/- (B M SHYAM PRASAD) JUDGE Sd/- (T.M.NADAF) JUDGE AN/-