Rakesh Yashwant Shinde, Pune V. Income-tax Officer, Ward - 8(3), Pune

ITA 1133/PUN/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0187 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 24-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Retrospective amendment; Question of law; Cost of acquisition; Competent authority; Set aside; Capital Gains
• Section: 48

Judgement Text

आयकर अपीलीय अिधकरण “बी” Ɋायपीठ पुणे मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपीलसं. / ITA No.1133/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 Rakesh Yashwanth Shinde, Shop No.24, Rachana Industrial Complex, Telco Road, Bhosari, Pune – 411034. PAN: AORPS 8006F Vs The Income Tax Officer, Ward-8(3), Pune. Appellant/ Assessee Respondent /Revenue Assessee by None Revenue by Shri M.G.Jasnani – DR Date of hearing 13/07/2022 Date of pronouncement 27/07/2022 आदेश/ ORDER Per S.S.Godara, JM: This assessee’s appeal for Assessment Year 2014-15 is directed against the Commissioner of Income Tax(Appeals)-13, Pune’s order dated 05.03.2018 passed in case no. CIT(A)-13/16- 17/583/617, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short “the Act”]. Case called twice. None appeared at the assessee’s behest. He is accordingly proceeded ex-parte. 2. Coming to the assessee’s sole substantive ground that both the lower authorities have erred in law and on facts in adding the capital gains of Rs.19,10,690/- thereby invoking section 2(47)(v) of the Act, ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 2 we note that the CIT(A)’s detailed discussion to this effect reads as under: “5. DECISION: I have carefully considered the matter. Ground 4 is general in nature, while ground 3 is against initiation of penalty u/s 271 (l)(c). This ground is premature at this stage and is therefore dismissed as such. The only effective grounds are 1 & 2. In Ground 1, the appellant is challenging the action of the AO in holding that there is a ‘transfer’ as per sec 2(47). Ground 2 challenges the year of taxability. Both grounds being interrelated are clubbed together for the sake of convenience. 5.1 The facts are not in dispute. The appellant admittedly entered into a joint development agreement vide deed dated 14/02/2014. The stated consideration for this joint development was that the appellant would be entitled to certain portion of the built up area. There was no monetary compensation to the appellant. The appellant has argued at length before me that there is no ‘transfer’ of his capital asset during the year as envisaged u/s 2(47). Before delving into these arguments, it is important to note that the appellant gave away possession to the builder immediately upon signing of the JDA. This deed is actually called Development Agreement through Power of Attorney (DAPA). The appellant admittedly has given possession. As regards power of attorney, the appellant stated before me that this was not an issue as the tripartite agreement signed with CIDCO and the Developer does not need a POA. Thus the admitted position is that a JDA has been signed and possession of the land handed over to the Developer and the consideration for the transfer of land has also been fixed. There is no dispute or litigation about the JDA with the developer. With this factual background, the appellant argues that as he has not received the consideration, there is no capital gains during the current year and would be declared only when he actually receives the built up area which is his consideration. The appellant also claims that there is no ‘transfer’ as envisaged u/s 2(47) of the capital asset and therefore there is no capital gains to him during the year. The other part of the controversy is whether the promised built up area as consideration to the appellant as per the JDA would be full value of consideration for LTCG. In this connection, the case of the appellant is that as he has not earned real income, there cannot be any capital gains. To resolve this controversy, one has ot first decide whether there is a ‘transfer’ of the capital asset during the year. 5.2 Transfer’ has an inclusive definition in sec 2(47) to include:- (47) 34 ["transfer"- 84 -, in relation to a capital asset, includes,— ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 3 (i) the sale 84 , exchange 84 or relinquishment 84 of the asset; or (ii) the extinguishment of any rights therein 84 ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment;] —[or] 86 [iva) the maturity or redemption of a zero coupon bond; or] 87 [(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A 88 of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. 89 [Explanation 1].—For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (cl) of section 269UA.1 90 [Explanation 2 .—For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;] From the terms of the JDA, it is apparent that the appellant has signed away the development rights embedded in the land. By handing over possession at the time of signing the JDA, the appellant has also physically parted with the land. To my mind, the 1 st act of the appellant transfers the development rights in the land ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 4 in favor of the developer, while the 2 nd act of the appellant in handing over possession right away becomes ‘transfer’ as envisaged in sec 2(47)(v). The appellant himself has quoted sec 53A of the TOPA to argue that there is no transfer. I cannot agree with this argument. Sec 53A of the TOPA protects the rights of the appellant in so far as the developer has taken possession of the land 7 thereby making him liable to honor the contract (in this case the JDA) with the appellant. On the other hand, sec 2(47)(v) specifically states ‘any transaction allowing the possession of any immoveable property to be taken or retained in part performance of a contract...’. The appellant having allowed the possession to be absolutely and without hindrance be passed on to the developer has performed his part of the contract (JDA) and therefore has ‘transferred’ the property as per sec 2(47)(v). There are no restrictions imposed on the Developer by the JDA. Once having taken possession, the developer need not come back to the appellant for any reason. The only thing which remains after the developer taking possession is him actually developing the land and handing over the built up area to the appellant. The appellant is thus out of the picture complete after handing over possession. It is also to be noted that the JDA is a legally enforceable contract between the appellant and the Developer. The terms are agreed, the development rights are transferred to the developer and the consideration to the appellant is fixed. There is no variable component of the consideration to the appellant. Thus the consideration is also not contingent on any future act or happening. The right to receive the consideration therefore has accrued to the appellant during the year. To my mind, all the ingredients of ‘transfer’ are satisfied. Not only has the appellant transferred the development rights, but he has also transferred the ownership of land per se. In fact the insertion of Expl 2 w.r.e.f 01/04/1962 puts the matter to rest. Expl 2 states that ‘transfer* includes disposing off or parting with any asset or creating any interest in the asset. From the facts of the appellant’s case, it is evident that he has parted with the land belonging to him, surrendered the development rights in the land to the Developer and also created an interest in the said land in favor of the developer. The provisions of Expl 2 clearly indicate that the appellant has transferred his capital asset within the meaning of sec 2(47). This explanation is introduced with retrospective effect from 01/04/1962 and therefore would apply to the present case. Let me now examine the judicial wisdom on the issue including the cases relied upon by the appellant. 5.3 The landmark decision in this regard is the case of ChaturbhujDwarkadas Kapadia decided by the Hon’ble Bombay High Court (2003) 129 TAXMAN 497 (Bom). It has been held therein :- ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 5 Under section 2(47)( v), any transaction involving allowing of possession to be taken over or retained in part-performance of a contract of the nature referred to in section 53.4 of the Transfer of Property Act would come within the ambit of section 2(41 )(v ). 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 willing to perform his part of the contract. Even arrangements confirming privileges of ownership without transfer of title can fall under section 2(47)(v ). Section 2(47)(v) was introduced in the Act from assessment year 1988-89 because prior thereto, in most cases, it was argued on behalf of the assessee that no transfer took place till execution of the conveyance. Consequently, assessees used to enter into agreements for developing properties with the builders and under the arrangement with the builders, they used to confer privileges of ownership without executing conveyance and to plug that loop hole, section 2(47)(v) came to be introduced in the Act. It was argued by the assessee that there was no effective transfer till grant of irrevocable licence. [Para 5] In the instant matter, agreement in question was a Development Agreement. Such Development Agreements do not constitute transfer in general law. They are spread over a period of time. They contemplate various stages. The Bombay High Court in various judgments has taken the view in several matters that the object of entering into a Development Agreement is to enable a professional builder/contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors is only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the builder for his services of constructing the building. It was precisely for this reason that the Legislature has introduced section 2(47)( v) read with section 45 which indicates that capital gains 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 the instant case, that test had not been applied by the department. No reason had been given why that test had not been applied, particularly when the agreement in question, read as a whole, showed that it was a Development Agreement. There is a difference between contract on one hand and performance on the other hand. In instant case, the Tribunal as well as the department had come to the conclusion that the transfer took place during the accounting year ending 31-3- ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 6 1996 as substantial payments were effected during that year and substantial permissions were obtained, in such cases of Development Agreements, one could not go by substantial performance of a contract. In such cases, the year of chargeability is the year in which the contract is executed. This is in view of section 2(47)(v). [Para 6] In the instant case, the agreement was a Development Agreement and the test to be applied to decide the year of chargeability was the year in which the transaction had been entered into. That view was taken for the reason that the Development Agreement does not transfer the interest in the property to the developer in general law and, therefore, section 2(47 )(v) had been enacted and in such cases, even entering into such a contract could amount to transfer from the date of the agreement itself. That view was taken for a precise reason. Firstly, in numerous matters where the Assessing Officer and the department generally proceed on the basis of substantial compliance of the contract. For example, in the very instant case, the department had contended that because of substantial compliance of the contract during the financial year ending 31-3-1996, the transfer was deemed to have taken place in that year. Such interpretation would result in anomaly because what is substantial compliance would differ from officer to officer. Therefore, if on a bare reading of a contract in its entirety, an Assessing Officer comes to the conclusion that in the guise of agreement for sale, a Development Agreement is contemplated, under which the developer applies for permissions from various authorities, either under power of attorney or otherwise and in the name of the assessee, then the Assessing Officer is entitled to take the date of the contract as the date of transfer in view of section 2(47)(v ). In this very case, the date on which the developer obtained a commencement certificate was not within the accounting year ending 31-3-1996. At the same time, if one read the contract as a whole, it was clear that a dichotomy was contemplated between limited power of attorney authorising the developer to deal with the property and an irrevocable licence to enter upon the property after the developer obtained the requisite approvals of various authorities. In fact, the limited power of attorney might not be actually given, but once under the agreement a limited power of attorney was intended to be given to the developer to deal with the property, then the date of the contract viz., 18-8-1994 would be the relevant date to decide the date of transfer under section 2(47)(v ) and, in which event, the question of substantial performance of the contract thereafter did not arise. That point had not been considered by any of the authorities below. No judgment had been shown on this point. There was no merit in the argument of the assessee that the Court should go only by the date of actual ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 7 possession and that in the instant case, the Court should go by the date on which irrevocable licence had been given. If the contract, read as a whole, indicates passing of or transferring of complete control over the property in favour of the developer, then the date of the contract would be relevant to decide the year of chargeability. [Para 6] Instant case was not the case where the assessee denied transfer. The assessee had paid capital gains tax for the assessment year 1999-2000. However, the assessee was told that the year of chargeability was the assessment year 1996-97 and not the assessment year 1999-2000. Further,, the assessee had paid the tax for the assessment year 1999-2000. In the instant case, a substantial question of law had arisen on interpretation of section 2(47)(v ). It was for that reason that abovesaid guidelines were given which may be followed by the department in all future cases. After going through the compilation of documents and from mere substantial compliance of the agreement, one could not infer transfer in the accounting year ending 31-3-1996. 5.3.1 From the above it is evident that the HonTole Court has laid down tests to determine the year of transfer of a capital asset being land in case of Development Agreements. As highlighted in the extract above, the test is 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 willing to perform his part of the contract. In the instant case, as pointed out on facts, all these conditions are satisfied. There is a JDA in place, signed by both the appellant as well as the developer, this is for consideration in terms of built up area, it is in writing, it is signed by the appellant transferor, it pertains to transfer of immoveable property, the developer transferee has admittedly taken possession of the immoveable property and is willing to perform his part of the contract. It could therefore be seen on facts that the tests laid down in ChaturbhujDwarkadas are all satisfied in case of the appellant. 5.4 In its latest decision, the Hon’ble Bombay High Court in the case of Dr Jcao Souza Froenca (2018) 90 taxmann.com 83 (Bom) has held as under:- ■ On a close scrutiny of the Power of Attorneys, agreement and the reply, the Assessing Officer recorded a finding that only the agreement dated 30-4-2001 gives rise to the transfer within the meaning of section 2(47)(v) attracting the capital gain arising out of the said transfer. This finding of fact though set aside by the ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 8 Commissioner but was upheld by the Tribunal after elaborate discussion. [Para 10] ■ The agreement dated 30-4-2001 no doubt refers to some oral agreement and Power of Attorneys executed between the assessees and the developer but the fact remains that the agreement dated 30-4-2001 in clear terms recorded that the assessees were the owner and in possession of the property and the Power of Attorney of the year 1993-94 did not disclose that the possession had been given to the developer in pursuance of the said Power of Attorney. Moreover, the assessees in their reply to the notice in unequivocal term have stated that they have not given possession to the developer but had given only access to him to enable to do certain jobs on their behalf. It has also been clearly stated in the reply that the assessees continued to be full owner of the property and there is no transfer. [Para 11] ■ Keeping in view the aforesaid clear factual aspect of the matter and the legal position emerging, the Tribunal has committed no illegality in reversing the order of the Commissioner by holding that the transfer within the meaning of section 2(47)(v) had taken place only in the assessment year 2002-03 vide agreement dated 30-4- 2001, when the actual possession was given to the developer and it was not given on the basis of Power of Attorneys and so called oral agreement entered into between the assessees and the developer in the year 1993-94. [Para 13] ■ Thus, the Assessing Officer and also the Tribunal have correctly appreciated and interpreted the Power of Attorney/s, the agreement dated 30-4-2001 ana the Stand taken by the assessee in reply to the notice under section 148. [Para 14]. 5.5 In the case of Bertha T Almeida (2015) 53 taxmann.com 522 (Bom),it has been held as under: 3. An agreement for development dated 11th November 1999 is between the assessee and a builder and developer. The assessee has 10% undivided share, right, title and interest in a plot of land along with co-owners. She entered into two separate development agreements with M/s Karasha Constructions Pvt Ltd and M/s. Graceland Housing Pvt Ltd on 11th November 1999, for transfer of development rights in respect of the land. In lieu thereof, the Appellant was to receive a sum of Rs. 10,00,000/- from each developers and one ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 9 constructed flat of 700 sq.ft, from M/s. Karasha Constructions Pvt Ltd, as consideration. 4. We need not consider any other clauses in the agreement including when the plot had to be handed over for the purpose of applicability of the provisions in question. What is material to note is the Appellant/assessee's own stand that the developer's took possession of the land and started development work. This was during the relevant period and the subject assessment year, that was admitted. A return of income was filed for this assessment year on 26 th July 2001. That Commissioner of Income Tax equally the Tribunal while upholding the conclusion of the Assessing Officer held that the stand of the assessee herself is enough to denote that Section 2(47) (v) will be applicable. The findings of fact in paragraph nos.8 and 9 of the Tribunal's order reaffirms the position that Section 2(47) (v) is squarely attracted in the facts and circumstances of the present case. The transaction is of Transfer of the rights in the property and to the extent of the assessee's share. 5. Such findings of fact and which are in consonance with the material produced cannot be termed as perverse. We do not see as to how any larger question and which is really not arising from these admitted facts can be raised before us or termed as substantial question of law. We are of the opinion that the concurrent findings of fact do not suffer from any error of law apparent on the face of record or perversity so as to warrant admission. This appeal is, therefore, dismissed. 5.6 It could be seen from all the above decisions that what is important is the performance of the contract envisaged and actual possession of the land. I have already pointed out on facts that the appellant has parted with the possession of the land and the developer has honored the JDA. There is no dispute between the appellant and the developer. The terms of the JDA are also not altered or amended by any party. In such circumstances, I am of the view that in light of the above ratios, especially in the landmark decision of ChaturbhujDwarkadas, the appellant has transferred his capital asset during the year and therefore capital gains has accrued to him. 5.7 Let me now consider the contentions of the appellant. The 1 st argument is that there is no ‘transfer’ u/s 2(47). The appellant relied on the decision of the Hon’ble Supreme Court in the case of Balbir Singh Maini (2017) 86 taxmann.com 94 (SC) and that of the Hon’ble Bombay High Court in the case of Chemosyn Ltd (2015) 64 taxmann.com 219 (Bom). In the case of Balbir Singh Maini, the ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 10 Hon’ble Supreme Court has held as under:- Section 2(47). read with sections 45 and 43, of the Income-tax Act, 1961 - Capital gains - Transfer (Joint Development Agreement) - Assessment year 2007-08 - Whether where for want of permissions, entire transaction of development of land envisaged in Joint Development Agreement (JDA) fell through, there would be no profit or gain which arose from transfer of a capital asset, which could be brought to tax under section 45, read with section 48 • Held, yes [Para 27] In the facts of the present case, it is clear that the income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, where for want of statutory permissions, the entire transaction of development of land envisaged in the JDA fell through. At all that, there will be no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under section 45 read with section 48. [Para 27] In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessee by the developers and therefore, the assessee have not acquired any right to receive income under the JDA. This being so, no profits or gains 'arose' from the transfer of a capital asset so as to attract sections 45 and 48. [Para 28] It is evident from the above that in the case of Balbir Singh Maini before the Hon’ble Supreme Court, the whole transaction of JDA itself did not materialize and therefore there was no right to receive income by that appellant. There is nothing of the sort in the case before me. The present appellant does have a right to receive income in the form of built up area in the future and there has been no dispute with the developer or amendment to the JDA. I am of the view that the case of Balbir Singh Maini does not help the appellant as it is based on difference facts. In the case of Chemosyn, it has been held by the Hon’ble Bombay High Court as under:- 8. We find that on facts the impugned order of Tribunal has held that no income has been accrued or received of the value of 18000 sq.feet of constructed area under the development agreement dated 16.6.2006. This on account of the fact that the agreement dated 16.6.2006 was not acted upon as it came to be superseded/modified by the Tripartite agreement dated 6.7.2007. This was the position ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 11 when the return of income was filed. The income accrued and earned under the subsequent agreement dated 6.7.2002 was offered as capital gains in the subsequent years. Therefore; on the application of the real income theory, the Tribunal held that on these facts there would be neither accrual nor receipt of income to warrant bringing to tax to the constructed area of 18,000 sq.ft which has not been received by the respondent-assessee. As observed by the Apex Court in C!T v. ShoorjiVallabhdas& Co. [1962146ITR 144 : " Income-tax is a levy on income. No doubt, the Income-Tax Act takes into account two points of time at which the liability to tax is attracted viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about a 'hypothetical income' which does not materialise. Where income tax, has in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." (Emphasis supplied) Thus no income has either accrued or received in the form of 18000 sq.feet of constructed area. No occasion to tax the same can arise. The Tribunal on consideration of facts has reached a finding of fact that no income in respect of 18000 sq.ft of constructed area has been accrued or received. This finding cannot be said to be perverse or arbitrary. According to us no substantial question of law arises to warrant interference with the order of the Tribunal. Thus, question nos. 1 and 2 are dismissed. Once again it could be seen that the development agreement in that case was modified by a subsequent agreement. It was based on this fact that the Hon’ble High Court held that once the original development agreement has been modified, no capital gains accrues to the assessee per the 1 st development agreement. However the facts of the present case indicate no such amendment or dispute or litigation. In the present case, both parties are committed to abiding by the JDA and the appellant has confirmed before me that there is no amendment or litigation in the matter. As the facts themselves are different, I do not see how the decision of Chemosyn helps the appellant. 5.8 The 2 nd argument of the appellant is that there is no accrual of capital gains based on the real income theory as he has not ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 12 received the consideration of built up area. He has relied on the decision of the Hon Tale Bombay High Court in the case of Chemosyn and Shiv Sagar Estates. This argument also does not hold water for the simple reason that the appellant has the right to receive the income when the property was transferred as per the JDA and handing over of possession. I have already held above that the property has been transferred during the year and therefore as per sec 45, once there is a transfer of capital asset, capital gains accrues. The consideration having been fixed and there being no change in the terms of the JDA, there being no dispute between the appellant and the developer, the right to receive the income has already accrued to the appellant. Once the appellant has accrued the right to receive income, it becomes real income. It does not matter that the income is to be received in future. The right accrued during the year, only the mechanics of receipt is in the future. In respect of Chemosyn, I have already pointed out, that the court has held in the context of a change in the JDA, that income has not accrued to that assessee. There is no such case here. I therefore reject this argument of the appellant. 5.9 The 3 rd argument of the appellant is that the insertion of sub section (5A) to sec 45 w.e.f 01/04/2018 nullifies the effect of the decision of ChaturbhujDwarkadas and this amendment should be held as retrospective in nature as it is clarificatory. Towards this end, the appellant relied on various decisions in regard to sec 40(a)(ia) which has held it to be retrospective in nature. I cannot agree with the argument of the appellant in view of the clear wordings of sec 45(5A) and its prospective effect from 01/04/2018. There is nothing in the Act to indicate that Legislature intended the provision to be retrospective in nature. In fact if it were so, then it would have been introduced with retrospective effect as are so many other provisions, one example being Expl 2 to Sec 2(47). In fact the explanatory notes to Finance Act 2017 states as under:- 25.1 Under the provisions of section 45 of the Income-tax Act, capital gain is chargeable to tax in the year in which transfer takes place except in certain cases. The definition of 'transfer' includes inter alia any arrangement or transaction where any rights are handed over in execution of part performance of contract, even though the legal title has not been transferred. In such a scenario, execution of Joint Development Agreement between the owner of immovable property and the developer triggers the capital gains tax liability in the hands of the owner in the year in which the possession of immovable property is handed over to the developer for development of a project. 25.2 With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 13 of transfer, a new sub-section (5A) has been inserted in section 45 of the Income-tax Act to provide that in case of an assessee, being an individual or a Hindu undivided family, who enters into a specified agreement for development of a project, 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. 25.3 It has also been provided that the stamp duty value of his share, being iand or building or both, in the project on the date of issuing of said certificate of completion as increased by any monetary consideration received, 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. 25.4 It is also provided that benefit of this regime shall not apply to an assessee who transfers his share in the project to any other person on or before the date of issue of said certificate of completion. It has also been provided that in such a situation, the capital gains as determined under general provisions of the Income-tax Act shall be deemed to be the income of the previous year in which such transfer took place and shall be computed as per provisions of the Income-tax Act without taking into account these provisions. 25.5 Consequential amendment to section 49 of the Income- tax Act has also been made to provide that the cost of acquisition of the share in the project being land or building or both, in the hands of the land owner shall be the amount which is deemed as full value of consideration under section 45(5A) of the Income-tax Act. 25.6 Applicability: These amendments will take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years Para 25.1 of the Explanatory notes itself states that the capital gains is triggered in cases of JDA when the possession is handed over in part performance of the JDA. This actually strengthens my view that once possession is given and the JDA is part performed, LTCG is triggered as there is transfer of property. The Explanatory Notes also categorically state that sec 45(5A) would apply from AY 2018-19 onwards. 5.10 To conclude, I am of the view that the appellant having signed the JDA along with the Developer, giving possession of the land along with the JDA, the consideration for the JDA being quantified, has transferred the land as envisaged u/s 2(47). The action of the appellant along with the developer satisfies all the ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 14 tests of transfer laid down in Chaturbhuj Dwarkadas. It does not matter that the consideration is to be received in future. The appellant at the time of signing the JDA, handing over possession and fixing the consideration, has the right to receive the income even though it’s actual receipt is in the future. I am therefore of the view that capital gains have accrued to the appellant in this year itself and I therefore uphold the action of the AO in assessing capital gains as has been done. Grounds 1 & 2 are dismissed.” 4. It has come on record with the able assistance coming from the Revenue’s side that not only both the learned lower authorities have found the assessee to have transferred the corresponding capital asset in issue by way of the joint development agreement in the relevant previous year in light of settled legal proposition (supra) but also the taxpayer’s plea seeking to invoke section 45(5)(A) inserted in the end w.e.f 01.04.2018 with retrospective effect stand rejected in absence thereof any retrospective effect(supra). We thus find no merit in assessee’s instant sole substantive grievance. The same stands rejected. 5. This assessee’s appeal is dismissed. Order pronounced in the open Court on 27 th July, 2022. Sd/- Sd/- (DR. DIPAK P. RIPOTE (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 27 th July, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, ITA No.1133/PUN/2018 for A.Y. 2014-15 Rakesh Yashwant Shinde Vs. ITO (A) 15 पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT, Pune.