SHRI NARESH VASANTRAI TRIVEDI, NAGPUR V. ACIT, CENTRAL CIRCLE-1(3), NAGPUR

CO 2/NAG/2021

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0900 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Document seized; Tangible material; Competent authority; Benefit of exemption; Documents seized; Capital Gains
• Section: 54F; 195; 250; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA No. 88/Nag./2021 (Assessment Year : 2012-13) Assistant Commissioner of Income Tax, Central Circle-1(3), Nagpur ................ Appellant ................ Appellant v/s Shri Naresh Vasantrai Trivedi, At 365, Krishnakrupa Palace, Near Gandhi Bagh, Above Central Bank Of India, Near Sona Hotel Square, Central Avenue, Nagpur, ............. Respondent PAN : AAFPT4557J AND CO NO. 02/NAG/2021 (ARISING OUT OF ITA No. 88/Nag./2021) (Assessment Year : 2012-13) Shri Naresh Vasantrai Trivedi, At 365, Krishnakrupa Palace, Near Gandhi Bagh, Above Central Bank Of India, Near Sona Hotel Square, Central Avenue, Nagpur, PAN : AAFPT4557J ...... Cross Objector v/s Assistant Commissioner of Income Tax, Central Circle-1(3), Nagpur ............... Respondent ................ Respondent Assessee by : Shri Kapil Hirani, Advocate Revenue by : Shri Kailash C. Kanojiya, CIT .DR ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 2 Date of Hearing – 20/06/2024 Date of Order – 18/07/2024 O R D E R PER V. DURGA RAO, J.M. The present appeal has been preferred by the revenue challenging the impugned order dated 28/07/2021, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)-3, Nagpur, [“learned CIT”], for the assessment year 2012-13. 2. The grounds of appeal are as follows: “1. On the facts and circumstances of the case & in law, the Learned. CIT(A) erred in deleting the addition of Rs. 3,17,62,833/ made by the AO as Long Term Capital Gain in respect of development agreement entered with M/s Concrete Developres for development of land. 2. On the facts and circumstances of the case and in law, the Learned. CIT(A) has erred in holding that in the year under consideration, there being no transfer of capital asset no liability to pay capital gain tax arises. 3. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that Sec.2(47)(v) read with section 45 which indicates that capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. 4. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that in terms of Section 45(1) of the Act, transfer of capital asset would attract the capital gains tax, the amount to be taxes u/s 45(1) is not dependent upon the receipt of the consideration. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee has correctly declared the capital gains on sale of immovable property in the assessment year 2017-18. 6. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that the facts of the case were similar to the facts in the case of CIT V.K. Jeelani Basha, 256 ITR 282 (Mad) wherein Hon'ble High Court after analyzing the provisions of section 2(47)(v) has held that once the possession ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 3 even for a part of property was handed over to the transferee for purpose of section 2(47) (v) read with section 45, the transfer was complete. 7. On the facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate that the facts of the case were similar to the facts in the case of CIT vs. T.K. Dayalu (KAR,60 DTR 403). In this case the Hon'ble High Court of Karnataka has held that in case of joint development agreement, relevant date for attracting Capital Gain is date on which possession was handed over to the Developer and not the date of completion of the project. Similar view was accorded by the Hon'ble ITAT Bombay in the case of Rubab M.Kazerani vs. JCIT (91 ITD 429). 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the facts of the case were similar to the decision of the Hon'ble ITAT, Hyderabad in the case of Shri Akkimeni Nagarjun Rao (TS-248-ITAT- 2012(HYD). Development agreement giving right to receive fixed share in built up area and putting the developer in possession of land constitutes transfer u/s 2(47). Capital gains is taxable in the year in which development agreement is entered. 9. Any other ground that may be urged at the time of hearing”. 3. The CIT DR has submitted the gist of submission culled out elaborately, which is reproduced below for easy recapitulation of issue:– “GIST OF SUBMISSION The Department is in appeal before Hon'ble ITAT, Nagpur on the ground that the Ld. CIT(A) is erred in deleting the addition of Rs. 3,17,62,833/- in the case of Shri Naresh Vasantrai Trivedi made by the AO as Long Term Capital Gain in respect of development agreement entered with M/s Concrete Developers for development of the land. In this regard the virtual hearing was conducted on 01/02/2024. During the hearing on various dates the AR of the assessee has sought various adjournment and submitted the details. During the course of hearing on 01.02.2024 the CIT(DR) has requested for submitting the written submission before the Hon'ble members. In compliance to the same the following submission was made before the Hon'ble ITAT Bench. 2. The brief history of the case is as under. 3. During the course of search proceedings in the case of M/s Concrete Developers certain documents were found and seized. The description of the documents is as under: Bundle No. Page No. Description & Remarks Asstt. Year B-47 Seized on 04,12,2015 from 72 to 102 Agreement of Joint Development of Construction and sale dated 05.08.2011 2012-13 ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 4 the premises of Concrete Developers Gauri Heights Plot No. 19, Ground Floor, Kachipura, Ramdaspeth, Nagpur between Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi and M/s Concrete Developers. For development of land at Mouza Somalwada CTS No. 504, Nagpur 4. On verification of the seized material, it was seen that the Joint Development Agreement was made between the three brothers Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi, and M/s Concrete Developers on 05.08.2011 for property at Mouza Somalwada CTS No. 504, Nagpur. The Stamp duty value of the property as per the Joint Development Agreement was Rs. 9,62,20,000/-. 5. During Course of assessment proceedings, on perusal of the seized documents B-47 Page No. 1 to 176 found and seized from the office premises of M/s Concrete Developers Ground Floor, Gauri Heights. Canal Road, Ramdaspeth, Nagpur, it was seen that a Joint Development Agreement was made between Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi (Land Owners) and M/s Concrete Developers (Developers) for development of land at Mouza Somalwada CTS No. 504, Nagpur. According to the Joint Development Agreement, the assessee along with his two brothers was to receive 42.5% of constructed land, in the form of 55 flats. Further the developer (M/s Concrete Developers) paid a refundable security deposit of Rs. 1,31,00,000/- to the land owners. The stamp duty value of the land on the date of the joint development agreement was Rs. 9,62,20,000/-. A general power of attorney was also executed, by the land owners, in favour of Shri Sanjay Paidlewar; partner M/s Concrete Developers for various acts deeds and things in respect of the above property. 6. In facts, briefly are, that a joint development agreement was entered into, between Smt. Arpita and M/s Concrete Developers, on 16.10.2010 to develop land at Mouza Somalwada City, Survey No. 504 Nagpur. According to this agreement, 42.5% of land was to be constructed (in the form of 55 flats constructed in the project) and given by the developer, M/s Concrete Developers to Arpita Trivedi and the balance 57.5% of land was to be retained by the developer. The security deposit of Rs. 75,00,000/- was received at the time of agreement. Subsequently, the above land was gifted by Smt. Arpita Trivedi to her three brothers Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, and Shri Ajay Vasantrai Trivedi vide gift deed dated 05.08.2011. The assessee along with his two brothers has then entered into a modified joint development agreement with M/s Concrete Developers on 05.08.2011. The assessee along with his two brothers was to receive 42.5% of constructed land in the form of 55 flats, ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 5 as per the agreement. The stamp duty value of the property on the date of the joint development agreement was Rs. 9,62,20,000/-. The security deposit received was Rs. 56,00,000/-. Thus, the total security deposit received was Rs. 1,31,00,000/-. The assessee has also executed general power of attorney in favour of Shri Sanjay Nagorao Paidlewar partner in M/s Concrete Developers for various acts deeds and things in respect of the property. 7. On perusal of the Joint Development Agreement it is seen that the assessee has transferred the development right to the developer. This fact is clearly brought out in para 3 of the Joint Development Agreement dated 05.08.2011. 3] THAT, in consideration of the OWNER transferring development right and authority to the DEVELOPER to deal with the said property, the DEVELOPER shall construct a portion of the building for the OWNER'S which shall be in proportion of 42.5% out of the total built up area of the proposed building, from and out of his own expenses and in accordance with the same amenities and attached specifications as would be made available to the remaining portion of the building. The said portion of the building to be constructed by the DEVELOPER for the OWNERS equal to 42.5% shall be the full and final consideration to be paid by the DEVELOPER to the OWNERS for giving unfettered and absolute authority for development and sale of the remaining portion of the building equal to 57.5% along with undivided proportionate share of land. The DEVELOPER agrees to pay the OWNERS a refundable security deposit of Rs. 1,31,00,000/- (Rs. One Crore Thirty One Lakh Only) for faithful implementation of the development and the terms and conditions mentioned hereinafter out of which the OWNERS hereby acknowledged the receipt of Rs. 75,00,000/- paid by the DEVELOPER to the previous owner vide various cheques as per the Agreement of Joint Development, Construction and Sale and the remaining amount of Rs. 56,00,000/- shall be paid by the DEVELOPER to the OWNERS at the time of signing of this modified Agreement. 8. Further, on perusal of para 6, 7, 9, 10, 20, 21, 22, 23 & 26 of the agreement, it is clear that the assessee has transferred vacant possession of the property to the developer. The relevant paras are reproduced below: 6] THAT, the OWNERS hereby confirm the licensee and permission given to the DEVELOPER by the previous owner to enter upon the said property descried in schedule of property hereunder written or any part thereof as aforesaid in accordance with the permission herein mentioned. However, if the DEVELOPER OR his agent commits any breach of any term and condition of this agreement then the OWNERS shall be entitled to refer the matter for breach of Agreement to arbitration OF Arbitrators (1) ADV. ARVIND KULKARNI (2) ADV. L. S. DEVANI, their decision shall be final and binding on both the parties and then Court of Law. The said ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 6 license to the DEVELOPER is personal and under no circumstances the DEVELOPER shall transfer the same to any third party. 7] THAT, the OWNERS are herewith giving a registered general power of Attorney to the DEVELOPER in respect of the said property the request and costs of the DEVELOPER giving all the general power in respect of obtaining sanction of the layout and, building Plan and to appear various authorities for mutation and sanction of the said property on behalf of the OWNERS and to do all general acts, deeds and things in the name of OWNERS to commence and complete the development of the said property as per the terms and conditions mentioned in this agreement and to execute and registers Sale Deeds In respect of apartments, penthouse, duplex apartment, shops, chambers etc., in respect of 57.5% of built-up area out of the total built-up area to be sanction on the said property described in the schedule as the remaining 42.5% of built- up area shall be the property of the OWNERS and the DEVELOPER hereby indemnifies and keep indemnified the OWNERS from and against all actions, suits, proceedings, fines, penalties, architect's fees and all costs, charges, expenses, and damages incurred or suffered by the OWNERS due to the use of the said power of attorney by the DEVELOPER. 9] THAT, the parties hereby agrees that after the sanction of building plan is received by the DEVELOPER by the Nagpur Improvement Trust the OWNERS shall have first choice of reserving their 42.5% of built-up area from the buildings to be sanctioned on the same property with a condition that the said choice shall be taken by the OWNERS from one side only and in continuation. 10] THAT the OWNERS hereby permits the DEVELOPER to commence, carry on and to complete development in accordance with the building plans that will be sanctioned on the said property by the concerned authority by loading the permissible T.D.R/F.S.I. on the said land. It will be responsibility of the DEVELOPER to obtain sanction of the building plans on the land of OWNERS. The Development of the property as per the development rules and bye laws shall be done by the DEVELOPER at the entire cost, risk and Consequences of the DEVELOPER, The OWNERS hereby agrees to render all assistance and co-operation that may be required by the DEVELOPER from time to time to carry out the development work in respect of the said property and construction and completion of buildings and structures thereon in accordance with the terms and conditions as may be stipulated by the concerned authorities and in respect of any other matter relating to or arising there from provided that the OWNERS, shall not be liable to incur any financial obligation in that behalf. ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 7 20] THAT, the DEVELOPER shall be entitled to mortgage the 57.5% of land share or apartments to be built on the said 57.5% of land share to financial institution for raising the finance. 22] THAT, the DEVELOPER shall be at liberty to enter into separate contract in his name for carrying out the said development of construction of multistoried building, water line and electrification in the said land. 23] THAT, the DEVELOPER shall be at liberty to execute the sale deeds, transfer deeds, in favour purchaser's and the possession of the same to be handed over to the prospective purchaser/s, in the proportion of below mentioned stages of the constructions of Owners 42.5% share. I. Completion of structure-25% II. Completion of Brick work-25% III. Completion of Plastering Work-25% IV. Completion of Finishing Work-25% 26] THAT, all the expenses in respect of stamp duty value, registration charges, for obtaining any type of N.O.C. clearances or permission are borne by the DEVELOPER the Stamp duty value as applicable on this Modified Agreement Development, Construction and Sale is paid as provided under Article 25(b) of the Bombay Stamp Act for the document of sale. 9. Further the assessees have not only given the license but also the right to mortgage and sale the property as per clause 20 of Joint Development Agreement at the time of agreement on 05.08.2011. 10. It can be seen from the above clauses of agreement that assessee has not only given the license for development and construction of the land but also given the irrevocable and unfettered right in respect of the land. 11. As per clause 6 of the development agreement, the owner of the plot has given possession to the developer as licensee for development, construction of building etc. As per clause No. 10 of the development agreement the owner of the plot has given entire rights to the developer in respect of the plot of land. He has also given rights in respect of construction and sale of flats. As per clause 20 of the agreement the owner has also given right to the developer to mortgage the land to financial institutions for raising the finance. It is also mentioned that at the time of development of plot the owner is not required to attend in person hence general power of attorney is given to Shri Sanjay Paidlewar, partner in M/s Concrete developer. 12. The possession was given to the builder by the assessee under G.P.A. The assessee acted upon the agreement and received the security deposit of Rs. 1,31,00,000/-, Based on facts on record, all the conditions of sub-clause (v) of ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 8 section 2(47) are satisfied in the case and therefore it had to be inferred that a transfer did take place within the meaning of Sec. 2(47) (v). 13. It is not clear LTCG shown in return of income for AY 2017-18, the amount of Rs. 3.40 Crore is the value of land or the value of new asset in the forms of flats. In the case of Shri Naresh Vasantrai Trivedi it is seen from the CIT(A)'s order at para-No. 4.2.3 that assessee has declared capital gain taxes in the AY 2017-18. Thus, it can be seen that for the transfer of same land on 05.08.2011, out of 3 Co-owners, 2 Co-owners have declared Long Term Capital Gain in the A.Y. 2018-19 and one in A.Y. 2017-18. The inconsistency in declaring of LTCG by the assessees holding the same asset and getting the same consideration in the same year has been disclosed in A.Y. 2017- 18 and 2018-19 which is not as per the law. Therefore, the provisions of section 2(47)(v) have been considered by various judicial authorities time and again and is considered in various judicial decisions relied upon by AO and also by appellant's AR in his written Submissions. As per the provision of section 2(47), any transaction involving the allowing of the possession of any immovable property to the taken or retained in part performance of a contract of the nature referred to in Sec. 53A of the Transfer of Property Act would come within the ambit of Section 2(47)(v). That, in order to attract Section 53A, the following conditions need to be fulfilled: -  There should be a contract for consideration;  It should be in writing;  It should be signed by the transferor; * It should pertain to transfer of immovable property  The transferee should have taken possession of the property  Lastly the transferee should be ready and uniting to perform his part of the contract 14. The CIT(A) has distinguished the case of Chaturbhuj Dwarkadas Kapadia delivered by Hon'ble Bombay HC is not correct. It is mentioned by the CIT(A) that the issue is in respect of what is the consideration received for the transfer of an asset, whereas in the case of Chaturbhuj Dwarkadas Kapadia the issue was the year in which the property was transferred for the purpose of Capital gains. The same issue is involved in the case of assesses therefore, the order of Ld. CIT(A) is not correct. The decision of Hon'ble Bombay HC in the case of Chaturbhuj Dwarkadas Kapadia is squarely applicable to the case of assessee. 15. In view of the above facts it is submitted as under. ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 9 * Capital gain tax is attracted the moment the assessee has acquired the right to receive the profits and it is not necessary that the assessee should have actually received the profits. * Sec. 2(47)(v) read with section 45 which indicates that capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law- * In terms of section 45(1) of the Act, transfer of capital asset would attract the capital gains tax, the amount to be taxed u/s 45(1) is not dependent upon the receipt of the consideration. * The facts of the case were similar to the facts in the case of CIT vs. V. K. Jeelani Basha, 256 ITR 282 (Mad) wherein Hon'ble High Court after analyzing the provisions of section 2(47)(v) has held that once the possession even for a part of property was handed over to the transferee for purpose of section 2(47)(v) r.w.s. 45, the transfer was complete. * The Finance Act, 2017 has inserted sub-section (5A) to Section 45 of the IT Act, 1961. As per the said sub section Capital Gain on transfer of land or building or both in the case of Individual or HUF shall be taxable in the previous year relevant to assessment year wherein completion certificate is issued by the Competent Authority. The said sub section 5A is applicable w.e.f. 01.04.2018 i.e. from the A.Y. 2018-19. This clearly reveals that intention of the legislature that Capital gain on transfer of land or building or both will be taxable up to A.Y. 2017-18 in the assessment year in which development agreement is entered by the assessee. Therefore, AO was correct in making addition in the assessment year 2012-13. 16. The Ld. CIT(A) has not appreciated that the amount to be taxed u/s 45(1) is not dependent upon the receipt of the consideration. As observed by the Apex Court in Morvi Industries Ltd. vs. CIT (1971) 82 ITR 835. "The income can be said to9 accrue when it becomes due.... 17. The test of accrual is whether there is a right to receive the amount though later and such right is legally enforceable. In fact, as observed by the Hon'ble Supreme Court in E.D. Sassoon & Co. Ltd. Vs. CIT (1954) 26 ITR 27. "It is clear therefore, that income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in presenti, solvendum in futurose......" 18. Also, the facts of the instant case are similar to the facts in case of CIT Vs. V.K. Jeelani Bash, 256 ITR 282 (Mad) wherein Hon'ble High Court after ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 10 analyzing the provisions of section 2(47)(v) had held that once the possession even for a part of the property was handed over to the transferee, for the purpose of Section 2(47)(v) r.w.s. 45, the transfer was complete. The assessee's case is also covered by the provisions of section 2(47)(vi) which deals with any transaction which had the effect of transferring or enabling the enjoyment of any immovable property and assigning various rights in the property. 19. In the assessee's case, the owner is transferring the development right and authority to the Developer TO DEAL WITH THE SAID PROPERTY, THE DEVELOPER SHALL CONSTRUCT a portion of the building for the owner's and has a right to sell his share of the proposed building even during the time of construction. Therefore, it is crystal clear that 57.5% of the land share has been sold in the year of transfer, i.e. FY 2011-12 and hence capital gain is chargeable in this year only. 20. Further, as per the decision of the Hon'ble ITAT, Hyderabad in the case of Shri Akkimeni Nagarjun Rao TS-248 - ITAT-2012 (HYD). Development Agreement giving right to receive fixed share in built up area and putting the developer in possession of land constitutes transfer u/s 2(47). Capital gains is taxable in the year in which development agreement is entered. 21. In the case of Chemosyn Ltd., the Hon'ble Court has held that no income is accrued or received on the value of 18,000 sq. ft. of constructed area under the development agreement because the said agreement was not acted upon as it came to be superseded / modified by the Tripartite agreement. This was the position when the return of income was filed. Therefore, the Hon'ble Court held that no income has accrued or arisen to the assessee on constructed are of 18,000 sq. ft. But, in the instant case, there is no tripartite agreement. The appellant at the time of filing or return of income. Ld. CIT(A) has not appreciated the act that the case of the assessee is distinguishable on facts and hence the ratio of the decision cited is not applicable to the instant case. 22. As per section 45 of the IT Act, Income-tax is to be charged under the head "Capital Gain" on transfer of a capital asset and shall be deemed to be the income of the previous year in which the transfer took place. The year of transfer is the crucial year and not the time of the receipt. Section 2(47)(v) read with section 45 indicates that capital gains is taxable in the year in which such transactions were entered into even if the transfer of immovable property is not effective or complete under the general law and therefore, CIT(A) has erred in holding that the capital gains is chargeable in the assessee's case in AY 2018-19. 23. In addition to the above case laws, the revenue also relies on the following case laws in the case of Shri Naresh Vasantrai Trivedi. * K.P. Varghese Vs. ITO, Ernakulum and Anr. 181 ITR page 597 * T.V. Sundaram Iyengaar and sons Ltd. Vs. CIT, 37 ITR 26 (Mad) * CIT Vs. T.K. Dayaluu (KAR, 60 DTR 403) ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 11 * Rubab M. Kazerani Vs. JCIT (91 ITD 429) * Bertha T. Almeida Vs. ITO (2015) 53 taxman.com 522/229 taxmann 159 (Bom) (Bombay High Court) * CIT Vs. Rohtak Textile Mills Ltd. (Del.) 138 ITR 195 (Delhi High Court) * CIT Vs. Geeta Devi Pasri 17 DTR 280 (BOM) * Dnyaneshwar Malik - ITAT, Pune (TS-2-ITAR-2005) * Shri Shafiq Mohammed Shah - ITAT, Chennai T. A. No. 1331 & 945/16 * J. S. Meena Somashekaran Vs. ITO (2010) 9 ITR (ITIB) 271, (Chennai) (ITAT-Chennai) 24. In view of the above facts in the appeal of Shri Naresh Vasantrai Trivedi, it is humbly requested to kindly confirm the order of the AO. 4. We find that the matter is already covered by the Hon’ble ITAT, Nagpur Bench, in case of Shri Ajay Trivedi (ITA No. 412/Nag/2019) and Shri Ashok Trivedi (ITA 413/Nag/2019), the brothers of the appellant. The findings of the ITAT are as follows; “9. Heard both the parties and perused the material available on record. The short point arises is as to whether any transfer of property effected, if so, in which year the Long Term Capital Gain is to be assessed, whether it is in the A.Y. 2012- 13 being the year in which the modified Joint Development Agreement executed or in the year where the assessee received his share in the form of constructed area which was offered to tax in A.Y. 2018-19. On perusal of the modified Joint Development Agreement as placed on record by the ld. DR, clause 3 reads that in consideration of the owner transferring development right and authority to the developer to deal with the said property, the developer shall construct a portion of the building for the owner's which shall be in proportion of 42.5% out of the total built-up area of the proposed building, from and out of his own expenses and in accordance with the same amenities and attached specifications as would be made available to the remaining portion of the building. We note it is clear from the above narration where the donor has given a property for development to the developer and the developer shall construct building for owners with his own expenses which clearly establishes that no consideration was paid on to the assessee in the year under consideration and the assesses will get his share only the constructed area. The CIT(A) observed that in the impugned order that the developer has given possession of constructed area to the assessee in June, 2017 vide para 5.3.3 of the impugned order. Further, clause 6 of the modified Joint Development Agreement which explains that the owners has confirmed the ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 12 license and permission given to the developer by the previous owner to enter upon the said property in accordance with the permission herein mentioned. Further, clause 7, wherein, it describes that the owners has given registered general power of attorney to the developer in respect of the said property giving all the general power in respect of obtaining sanction of the layout and building plan and to appear before the various authorities for mutation and sanction on behalf of the owners which clearly shows that no possession whatsoever given by the assessee to the developer and it was only general power of attorney to obtain requisite permissions and sanctions on behalf of the assessee to carry out the development. We note vide para 9 of the modified Joint Development Agreement that the assessee shall have first choice of reserving their 42.5% built-up area which also supports the arguments of ld. AR. 10. The ld. AR placed on record the decision dated 10-02-2023 of Hon'ble High Court of Bombay in the case of Late Bharat Jayantilal Patel in Writ Petition No. 1612 of 2022 and by referring to para 7 of the said decision, the ld. AR submits that the facts in the present case are identical to the facts of the case before Hon'ble High Court of Bombay, argued that the license for the purpose of developing the land into flats and selling the same, such license cannot be said to be possession within the meaning of section 53A of the Transfer of Property Act, 1882. He submits that, in order to come to such conclusion by the Hon'ble High Court of Bombay, placed reliance on the decision of Hon'ble Supreme Court in the case of Seshasayee Steels (P.) Ltd. reported in (2020) 115 taxmann.com 5 (SC). For better understanding the relevant portion of the decision of Hon'ble High Court of Bombay is reproduced as under: 7. The Apex Court in Seshasayee Steels (P.) Ltd. (supra), held that Section 53A of the Transfer of Property Act, 1882 would not be attracted in a case where a license was given to another for purposes of development of the flats and selling the same and that granting such a license could not be said to be granting possession within the meaning of Section 53A. It was held: "11. In order that the provisions of Section 53A of the T.P. Act be attracted, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case. 12. On a reading of the agreement to sell dated 15-5-1998, what is clear is that both the parties are entitled to specific performance. (See clause 14) ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 13 13. Clause 16 is crucial, and the expression used in clause 16 is that the party of the first part hereby gives 'permission' to the party of the second pat to start construction on the land. 14. Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of developing the land into flats and selling the same. Such license cannot be said to be 'possession' within the meaning of Section 53A, which is a legal concept, and which denotes control over the land and not actual physical occupation of the land. This being the case, Section 53A of the T.P. Act cannot possibly be attracted to the facts of this case for this reason alone. 8. Learned Counsel for the Petitioner, vehemently, urged that even in the present case there was a development agreement executed between the owners including the Petitioner and the developer, namely, Sai Ashray Developers Put Ltd., which had permitted the said developer to develop the property belonging to the owners only as a 'licensee'. Reliance in this regard was placed upon the clause 10(i) of the development agreement, which reads as under: "10. DEVELOPERS' RIGHTS, ENTITLEMENTS, DECLARATIONS AND OBLIGATIONS On and from execution hereof and subject to the fulfillment of all the terms and conditions to be performed and complied with by them under this Agreement, the Developers shall have rights and be entitled to do the following, at its own costs and expenses:” i) To enter into the said properties as an exclusive licensee for the purpose of development of the said Properties thereon with their own sources and cost as per the permission/NOC that may be given by the Local Authorities and the Applicable law; 9. Applying the principle as crystallized by the Apex Court reproduced herein above, to the facts of the present case, it can be seen that the development agreement permitted construction on the land in question only as a licensee which did not have the effect of transmitting possession in favour of the licensee within the meaning and spirit of Section 53A of T.P. Act. If that is so, then there would be neither any tangible material nor any reason for the assessing officer to believe that 'any income chargeable to tax had escaped assessment' and the action of the assessing officer, therefore, would be without jurisdiction." 11. On careful reading of the above, we note that the Court held that section 53A of the Transfer of Property Act, 1882 would not be attracted in a case where a license was given to another for the purpose of development of flats and selling the same and granting such license could not be said to be granting possession ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 14 within the meaning of section 53A of the Transfer of Property Act, 1882. In the present case also, as discussed above, clause 6 of the modified agreement of Joint Development, Construction and Sale clearly shows that the owners which includes the assessee confirmed the license and permission given to the developer by the previous owner to enter into upon the said property. The said license to the developer is personal) and under no circumstances the developer shall transfer the same to any third party. Therefore, the argument of ld. DR is not acceptable that the license and permission is a right itself gives rise transfer of property u/s. 2(47)(v) of the Act. Further, clause 3 of the said agreement establishes that the developer shall construct a portion of building for the owners in proportion of 42.5% out of total built up area of the proposed building which supports the case of the assessee no capital gain arose in the year under consideration, but it could be in the year in which possession of share of assessee in the proposed building is given. Further, clause 7 reads that the owners including the assessee given a registered power of attorney to the developer, in order to obtain the sanction of layout, building plan and to appear before various authorities for mutation on behalf of the owners and to do all general acts, deeds and things in the name of owners to commence and complete the development of the said property as per the terms and conditions mentioned in the said agreement. Therefore, as per the said agreement, the owners has permitted the said developer to develop the property belonging to the owners only as a licensee which did not have the effect of transfer of property to the licensee. Further, the developer has given possession of the assessee's share in June, 2017 which is evident from para 5.3.3 of the impugned order which is also not disputed by the ld. DR. The CIT(A) clearly recorded that the assessee offered the capital gain in the year in which share in the constructed area is given to the assessee, which is subjected to tax in A.Y. 2018-19 which is also not disputed by the ld. DR. If we accept the contention of the ld. DR that the capital gain was rightly determined by the AO in A.Y. 2012-13, certainly, it amounts to double taxation, having offered the same in A.Y. 2018-19, as rightly pointed by the 1d. AR. Therefore, the facts and circumstances of the case before the Hon'ble High Court of Bombay is similar and the ratio laid down by the Hon'ble Court is applicable to the facts on hand. Thus, we find no infirmity in the order of CIT(A) in holding that there is no transfer u/s. 2(47)(v) of the Act and no capital gain is chargeable thereon in the year under consideration. Thus, the grounds raised by the Revenue fails and are dismissed. 5. Since the matter is identical, we absolutely find no compelling reason to differ with the decision taken in the case of the brothers who were also the co-signatories to the joint development agreement. CIT-DR failed to demolish the binding precedent. We also fortified by Section 45(5A) of the ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 15 Income Tax Act brought into effect from 1-4-2018 to gauge the intention of legislature. “(5A) Notwithstanding anything contained in sub-section (1), where the capital gain arises to an assessee, being an individual or a Hindu undivided family, from the transfer of a capital asset, being land or building or both, under a specified agreement, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority; and for the purposes of section 48, the stamp duty value, on the date of issue of the said certificate, of his share, being land or building or both in the project, as increased by [the consideration received in cash, if any,] shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. Provided that the provisions of this sub-section shall not apply where the assessee transfers his share in the project on or before the date of issue of the said certificate of completion, and the capital gains shall be deemed to be the income of the previous year in which such transfer takes place and the provisions of this Act, other than the provisions of this sub-section, shall apply for the purpose of determination of full value of consideration received or accruing as a result of such transfer. Explanation. For the purposes of this sub-section, the expression- (i) "competent authority" means the authority empowered to approve the building plan by or under any law for the time being in force; (ii) "specified agreement" means a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such land or building or both, in consideration of a share, being land or building or both in such project, whether with or without payment of part of the consideration in cash; (iii) "stamp duty value" means the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of an immovable property being land or building or both.]. Upon conspectus of the materials on record, we dismiss the appeal of the department. ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 16 CO NO. 2/NAG/2021 6. The Ld.AR submitted the following grounds of cross objection. “1) On the facts and circumstances of the case and in law, the entire assessment framed and the additions to the extent confirmed are bad in law and liable to be quashed in the interest of justice. 2) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not adjudicating on merits the ground pertaining to grant of exemption under section 54F of the Income Tax Act, 1961 ("Act") considering the addition on account of long-term capital gains was deleted. In case the Respondent is held liable for long term capital gains as originally assessed then the benefit of exemption under section 54F of the Act in respect of residential building to be received as consideration for transfer of property deserves to be allowed in the interest of justice. 3) The Ld. AO grossly erred in making and the Ld. CIT(A) – 3, Nagpur grossly erred in confirming the addition to the extent of Rs. 3,65,425 treating the same in the nature of unexplained deposits in bank account ignoring the submissions of the Respondent. The source of the amounts totaling to Rs. 3,65,425 being from explainable sources, the addition confirmed deserves to be deleted in the interest of justice. 4) The Respondent craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of cross objection with the kind permission of the Hon'ble Tribunal.” 7. The sole point of dispute is towards an addition in the bank account of Rs.3,65,425/-. In the course of hearing before us, the Ld. AR Shri Kapil Hirani strenuously argued that the rental income from house property of Rs.1,05,160/- was received during the year. He fairly submitted that the same may be considered as income from house property subject to statutory deduction u/s 24A of 30%. In effect, he submitted that a sum of Rs.73,612/- may be sustained as addition. Such rental income was included in the sum of Rs.3,65,425/-, considered as unexplained deposit (supra). ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 17 8. The Ld.DR in all fairness accepted to this proposition. Accordingly, we direct the addition of Rs.73,612/- as income from house property. Thereafter, Shri Hirani also submitted that Rs.1,70,000/- has been received by the assessee from his daughter and wife. The bank statement of daughter was enclosed. Thus, the genuineness, identity and correctworthyness is never in doubt. However, as far as his wife is concerned, he could not submit any document. But, in view of the fact that it is a loan from his own wife, we accept the same to be duly explained in view of the fact that the amount is negligible and further normally wives help husband in distress. 9. Now, there remains an unexplained balance of Rs.90,625/-. Shri Hirani fairly submitted that Rs.16,625/- may be added and balance sum of Rs.74,000/- is out of accumulated past capital. Keeping in view the status of the assessee, his age and his financial position, this sum of Rs.74,000/- can be ascribed to his past savings which has been accumulated from years together. The Ld.DR in all fairness accepted that this could be a reasonable plausibility keeping in view the fact that the assessee has explained a substantial part of the credit in the bank account. 10. We have given our thoughtful consideration to the above submissions. It is quite possible that a person can always have some minimum savings for which perhaps no detailed explanation is required. It is also a fact that the case pertains to financial year 2011-12 and as on date 12 years have passed. So it may not be possible for a person to meticulously remember such minuscule transactions which have transpired about such a long period ago. So, we deem it fit not to make any separate addition of Rs.90,625/- as well as Rs.1,70,000/- towards loan received from the relatives. In effect, only a ACIT Central Circle-3 Nagpur vs. Shri Naresh Vasantrai Trivedi ITA no.88/Nag./2021 Page | 18 sum of Rs.90,237/- is considered to be taxable. The appellant gets a relief of Rs.2,75,188/-. In view of dismissal of appeal of department, Ground Nos. 1 & 2 have become of academic importance and we need not delve on the same. In the result cross objection of the assessee is partly allowed. 11. In effect, the appeal filed by the department is dismissed and the cross objection filed by the assessee is partly allowed. Order pronounced on 18/07/2024. Sd/-- K.M. ROY ACCOUNTANT MEMBER Sd/-- V. DURGA RAO JUDICIAL MEMBER NAGPUR, DATED: 18/07/2024. Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Rajesh V. Jalit Private Secretary Sr. Private Secretary ITAT, Nagpur