ITO, CHENNAI V. P.Madan Mohan, CHENNAI

ITA 1493/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90358 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: P RAJASEKHARAN
• Keywords: Capital asset
• Section: 54; 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1396/MDS/2013 ' (' / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, BUSINESS WARD V(1), CHENNAI - 600 034. V. MRS. P.A. SARALA, 83/48, PUDUPET STREET, ALANDUR, CHENNAI - 600 016. PAN : CPMPS 1262 K (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.1397/MDS/2013 ' (' / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, BUSINESS WARD V(4), CHENNAI - 600 034. V. SHRI A.M. VIJAYARANGAM, NO.48/83, PUDUPET STREET, ALANDUR, CHENNAI - 600 016. PAN : AFTPV 3060 K (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.1493/MDS/2013 ' (' / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, BUSINESS WARD V(2), CHENNAI - 600 034. V. SHRI P. MADAN MOHAN, NO.83 (OLD NO.48), PUDUPET STREET, ALANDUR, CHENNAI - 600 016. PAN : AGZPM 4775 H (*+/ APPELLANT) (,-*+/ RESPONDENT) 2 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 ./ ITA NO.1494/MDS/2013 ' (' / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, SALARY WARD IV(3), CHENNAI - 600 034. V. SHRI A.V. GOPALAKRISHNAN, NO.83 (OLD NO.48), PUDUPET STREET, ALANDUR, CHENNAI - 600 016. PAN : APXPG 8729 G (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.1495/MDS/2013 ' (' / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, SALARY WARD V(4), CHENNAI - 600 034. V. SHRI A.P. RAJMOHAN, NO.83 (OLD NO.48), PUDUPET STREET, ALANDUR, CHENNAI - 600 016. PAN : AJJPR 0649 A (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANTS BY : SH. P. RADHAKRISHNAN, JCIT ,-*+ . / / RESPONDENTS BY : SH. P. RAJASEKHARAN, CA 0 . 1$ / DATE OF HEARING : 09.04.2015 2!( . 1$ / DATE OF PRONOUNCEMENT : 15.05.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE FIVE APPEALS OF THE REVENUE RELATING TO I NDEPENDENT ASSESSEES ARE DIRECTED AGAINST THE RESPECTIVE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, CHENNAI, D ATED 29.3.2013 AND PERTAIN TO ASSESSMENT YEAR 2009-10. SINCE COMMON 3 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 ISSUE ARISES FOR CONSIDERATION IN ALL THE FIVE APPE ALS, WE HEARD THE APPEALS TOGETHER AND DISPOSING BY COMMON ORDER. 2. SHRI P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT ALL THE FIVE ASSESSE ES ALONG WITH THREE OTHERS ENTERED INTO AN AGREEMENT FOR JOINT DE VELOPMENT OF LAND ON 8.12.2006 WITH ONE SHANMUGA CONSTRUCTION SERVICE S. ACCORDING TO THE LD. D.R., THE JOINT VENTURE AGREEM ENT WAS FOR CONSTRUCTION OF A MULTI-STORIED BUILDING WITHIN A P ERIOD OF 18 MONTHS. HOWEVER, THE BUILDER M/S SHANMUGA CONSTRUCTION SERV ICES COULD NOT COMPLETE THE CONSTRUCTION WITHIN 18 MONTHS AS P ROJECTED IN THE AGREEMENT DATED 8.12.2006. THEREFORE, ALL THE ASSE SSEES AND THREE OTHERS ENTERED INTO ANOTHER AGREEMENT TO EXTEND THE PERIOD OF JOINT VENTURE AGREEMENT FOR A PERIOD OF TWENTY FOUR MONTH S, ON 1.7.2008. IN THE STATEMENT FILED ALONG WITH RETURN OF INCOME, THE ASSESSEES CLAIMED THAT THE SALE CONSIDERATION OF THE PROPERTY WAS ONLY TO THE EXTENT OF ` 59,02,664/-. 3. THE LD. D.R. FURTHER SUBMITTED THAT AS PER THE J OINT DEVELOPMENT AGREEMENT, THE ASSESSEES ARE ENTITLED F OR 40% OF THE CONSTRUCTED AREA AND THE BUILDER IS ENTITLED FOR 60 % OF THE CONSTRUCTED AREA. IN LIEU OF THE 40% CONSTRUCTED A REA, THE ASSESSEES HAVE TO TRANSFER PROPORTIONATE AREA TO TH E EXTENT OF 60% 4 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 OF THE LAND TO THE BUILDER TOWARDS COST OF CONSTRUC TION OF 40% OF THE CONSTRUCTED AREA. ACCORDING TO THE LD. D.R., SINCE A REVISED AGREEMENT WAS ENTERED BETWEEN THE ASSESSEES AND THE BUILDER EXTENDING THE PERIOD OF JOINT VENTURE ON 1.7.2008, THE CAPITAL GAIN AROSE TO THE ASSESSEES ONLY DURING THE FINANCIAL YE AR 2008-09, WHICH IS RELEVANT TO THE ASSESSMENT YEAR 2009-10. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE CAPITAL GAIN DURING THE YEAR UNDER CONSIDERATION. SINCE THE ASSESSEES ARE HAVING MULT IPLE FLATS AS THEIR SHARES FROM THE BUILDER, THE ASSESSING OFFICE R DISALLOWED THE CLAIM UNDER SECTION 54F OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. PLACING RELIANCE ON THE JUDGMENT OF BOMBAY HIGH COURT IN BERTHA T. ALMEIDA V. ITO (2015) 53 TAXMANN.COM 522, THE LD. D.R. SUBMITTED THAT FOR THE PURPOSE OF CAPITAL GAIN IN R ESPECT OF DEVELOPMENT AGREEMENT, THE DATE OF AGREEMENT ON WHI CH POSSESSION WAS TAKEN BY THE BUILDER HAS TO BE TAKEN AS THE DATE OF TRANSFER. SINCE THE AGREEMENT WAS EXTENDED ON 1.7. 2008, ACCORDING TO THE LD. D.R., THE POSSESSION WAS DEEME D TO BE GIVEN ONLY ON 1.7.2008. THEREFORE, THE CIT(APPEALS) IS N OT JUSTIFIED IN HOLDING THAT NO CAPITAL GAIN ARISES FOR THE YEAR UN DER CONSIDERATION. REFERRING TO THE ORDERS OF THE CIT(APPEALS), THE LD . D.R. SUBMITTED 5 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 THAT THE CIT(APPEALS) FOUND THERE WAS NO TRANSFER F OR THE YEAR UNDER CONSIDERATION AND THE CIT(APPEALS) DIRECTED THE ASS ESSING OFFICER TO CONSIDER THE DATE OF COMPLETION OF THE CONSTRUCT ION OF FLATS AND ITS HANDING OVER TO THE ASSESSEES AS THE DATE OF TRANSF ER FOR THE PURPOSE OF DETERMINING THE CAPITAL GAIN. ACCORDING TO THE LD. D.R., SINCE THE ASSESSEES ENTERED INTO A REVISED AGREEMEN T DATED 1.7.2008 WITH THE BUILDER FOR EXTENDING THE JOINT V ENTURE AGREEMENT WHICH FALLS IN THE FINANCIAL YEAR 2008-09, RELEVANT TO THE ASSESSMENT YEAR 2009-10, CAPITAL GAIN HAS TO BE ASSESSED ONLY DURING THE YEAR UNDER CONSIDERATION. SINCE THE ASSESSEES ARE HAVIN G MULTIPLE FLATS, THEY ARE NOT ENTITLED FOR EXEMPTION UNDER SECTION 5 4F OF THE ACT. 5. ON THE CONTRARY, SHRI P. RAJASEKHARAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT ALL THE FIVE ASSESSEES ALONG WITH THREE OTHERS ENTERED INTO A JO INT VENTURE AGREEMENT ON 8.12.2006 IN RESPECT OF THE LAND LOCAT ED AT SURVEY NO.150/9 & 150/16 IN ADAMBAKKAM VILLAGE, TAMBARAM T ALUK, KANCHEEPURAM DISTRICT. ALL THE EIGHT CO-OWNERS OF THE LAND ARE HAVING EQUAL SHARE IN THE LAND. AS PER THE DEVELOP MENT AGREEMENT, THE BUILDER M/S SHANMUGA CONSTRUCTION SERVICES HAS TO CONSTRUCT THE BUILDING AT ITS COST AND 60% OF THE CONSTRUCTED AREA WOULD BE RETAINED BY THE BUILDER, NAMELY, SHANMUGA CONSTRUCT ION SERVICES, 6 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 AND 40% OF THE CONSTRUCTED AREA WOULD BE GIVEN TO T HE ASSESSEES IN LIEU OF PROPORTIONATE 60% OF THE LAND AREA THAT WOULD BE GIVEN TO THE BUILDER, SHANMUGA CONSTRUCTION SERVICES. THERE FORE, ACCORDING TO THE LD. REPRESENTATIVE, THE TRANSFER TOOK PLACE ON 8.12.2006. THE SUBSEQUENT AGREEMENT IS ONLY TO EXTEND THE PERIOD O F CONSTRUCTION AS AGREED ON 8.12.2006. 6. REFERRING TO THE COPY OF THE DEVELOPMENT AGREEME NT DATED 8.12.2006, THE LD. REPRESENTATIVE SUBMITTED THAT AS PER CLAUSE (6) OF THE AGREEMENT, THE VACANT POSSESSION OF THE PROPERT Y WAS HANDED OVER TO THE BUILDER. REFERRING TO THE COPY OF THE POWER OF ATTORNEY SAID TO BE EXECUTED IN FAVOUR OF THE BUILDER, SHANM UGA CONSTRUCTION SERVICES, THE LD. REPRESENTATIVE SUBMITTED THAT THE BUILDER WAS AUTHORIZED TO EXECUTE SALE DEEDS IN FAVOUR OF PROSP ECTIVE PURCHASERS IN RESPECT OF THE CONSTRUCTED AREA OF TH E LAND WHICH WAS GIVEN TO IT AND APPLY FOR LOCAL AUTHORITIES LIKE CO RPORATION, CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY, ETC. FOR PLANNI NG PERMISSION. THIS POWER OF ATTORNEY WAS EXECUTED ON 14.12.2006. REFERRING TO THE AGREEMENT EXECUTED ON 1.7.2008 FOR EXTENSION OF PERIOD OF JOINT VENTURE AGREEMENT, THE LD. REPRESENTATIVE SUBMITTED THAT THIS IS ONLY AN EXTENSION OF PERIOD OF AGREEMENT FOR 24 MONTHS A ND THE TERMS AND CONDITIONS AGREED ON 8.12.2006 WERE NOT CHANGED AT ALL. THIS 7 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 AGREEMENT ALSO REFERS TO THE AREA/PORTION OF THE FL AT ALLOTTED TO THE OWNERS. THEREFORE, ACCORDING TO THE LD. REPRESENTA TIVE, THE TRANSFER IN FACT TOOK PLACE ON 8.12.2006 WHEN THE JOINT VENT URE AGREEMENT WAS EXECUTED BETWEEN THE ENTIRE OWNERS AND THE BUIL DER, SHANMUGA CONSTRUCTION SERVICES, AND THE VACANT POSS ESSION WAS HANDED OVER TO THE BUILDER. THEREFORE, ACCORDING T O THE LD. REPRESENTATIVE, THE CIT(APPEALS) RIGHTLY FOUND THAT THERE WAS NO TRANSFER OF LAND FOR ASSESSING THE CAPITAL GAIN DUR ING THE YEAR UNDER CONSIDERATION, I.E. FOR ASSESSMENT YEAR 2009-10. 7. COMING TO THE CLAIM OF EXEMPTION UNDER SECTION 5 4 OF THE ACT, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSE SSEES TRANSFERRED 60% OF THE TOTAL AREA IN LIEU OF 40% OF THE CONSTRU CTED AREA. THEREFORE, THE COST OF CONSTRUCTION OF 40% AREA WOU LD BE THE SALE CONSIDERATION FOR TRANSFERRING 60% OF THE AREA OF T HE LAND. SINCE THE LAND ITSELF WAS GIVEN FOR JOINT DEVELOPMENT AND THE ASSESSEES WERE ENTITLED TO GET BACK ONLY 40% OF THE CONSTRUCTED AR EA ALONG WITH PROPORTIONATE SHARE IN THE LAND, ACCORDING TO THE L D. REPRESENTATIVE, THE ASSESSEES HAVE INVESTED THE ENTIRE FUNDS FOR PURCHASING/CONSTRUCTING RESIDENTIAL HOUSE. PLACING RELIANCE ON THE UNREPORTED JUDGMENT OF THE MADRAS HIGH COURT IN CIT V. V.R. KARPAGAM IN TAX CASE (APPEAL) NO.301 OF 2014, THE L D. 8 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 REPRESENTATIVE SUBMITTED THAT SECTION 54F OF THE AC T WAS AMENDED, WHICH WILL COME INTO EFFECT ONLY FROM 1.4.2015, WHI CH MAKES IT CLEAR THAT BENEFIT OF SECTION 54F OF THE ACT WILL BE APPL ICABLE TO CONSTRUCTION OF ONE RESIDENTIAL HOUSE IN INDIA AND THAT CLARIFIES THE SITUATION IN THE PRESENT CASE, I.E. POST AMENDMENT FROM 1.4.2015, THE BENEFIT OF SECTION 54F WILL BE APPLICABLE TO ON E HOUSE IN INDIA. PRIOR TO THE SAID AMENDMENT, IT IS CLEAR THAT A RES IDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS. SI NCE THESE APPEALS BELONG TO ASSESSMENT YEAR BEFORE 1.4.2015, ACCORDIN G TO THE LD. REPRESENTATIVE, MULTIPLE FLATS/RESIDENTIAL UNITS WE RE ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FIRST ISSUE ARISES FOR CONSIDERATION IS THE YEAR IN WHICH THE CAPITAL GAIN ARISES FOR ASSESSMENT ON TRANSFER OF THE LAND BY ALL THE ASSES SEES ALONG WITH THREE OTHERS. WE HAVE CAREFULLY GONE THROUGH THE A GREEMENT DATED 8.12.2006. CLAUSE (6) OF THE AGREEMENT CLEARLY SAY S THAT THE FIRST PARTY, NAMELY, THE ASSESSEES AND THREE OTHERS SHALL HAND OVER THE POSSESSION OF THE PROPERTY TO THE BUILDER, NAMELY, SHANMUGA CONSTRUCTION SERVICES. THE PERIOD PROVIDED IN THE AGREEMENT IS 18 MONTHS FOR COMPLETION OF THE CONSTRUCTION. THE AGR EEMENT HAS 9 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 PROVIDED FOR EXECUTION OF THE POWER OF ATTORNEY IN FAVOUR OF THE BUILDER TO ENABLE HIM TO DEAL WITH PROPERTY FOR GET TING APPROVAL OF CONCERNED GOVERNMENT AUTHORITIES AND SALE OF THE SA ME TO THE PROSPECTIVE PURCHASERS. SINCE THE CONSTRUCTION COU LD NOT BE COMPLETED WITHIN 18 MONTHS AS PROVIDED, THE PARTIES ENTERED INTO ANOTHER AGREEMENT FOR EXTENSION OF THE TIME PROVIDI NG FOR 24 MONTHS FOR COMPLETION OF THE CONSTRUCTION. THE AGREEMENT DATED 1.7.2008 CLEARLY SAYS THAT THE CONSTRUCTION HAS ALREADY COMM ENCED AND IT IS IN PROGRESS. THEREFORE, IT IS OBVIOUS THAT ALL THE ASSESSEES HANDED OVER THE VACANT PHYSICAL POSSESSION OF THE PROPERTY ON 8.12.2006. THE AGREEMENT DATED 1.7.2008 IS ONLY FOR EXTENSION OF THE TIME FOR COMPLETING THE CONSTRUCTION. HENCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE VACANT POSSESSION WAS G IVEN TO THE BUILDER ON 8.12.2006 IN PURSUANCE TO THE JOINT VENT URE AGREEMENT ENTERED BETWEEN THE PARTIES ON 8.12.2006. 9. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 2(47) OF THE ACT WHICH DEFINES TRANSFER. UNDER T HE COMMON LAW, TRANSFER OF IMMOVABLE PROPERTY VALUING MORE THAN ` 100 WOULD BE MADE ONLY BY EXECUTING A REGISTERED SALE DEED. HOW EVER, UNDER INCOME-TAX ACT, SECTION 2(47) DEFINES TRANSFER IN RELATION TO CAPITAL 10 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 ASSET. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPR ODUCING SECTION 2(47) HEREUNDER:- 2(47) [TRANSFER, IN RELATION TO A CAPITAL ASSET, INCLUDES, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE AS SET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; 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] [(IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR] [(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 T O IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 18 82) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, CO MPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHI CH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. EXPLANATION.FOR THE PURPOSES OF SUB-CLAUSES (V) A ND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING A S IN CLAUSE (D) OF SECTION 269UA;] EXPLANATION 2.- FOR THE REMOVAL OF DOUBTS, IT IS H EREBY CLARIFIED THAT TRANSFER INCLUDES AND SHALL BE DEEMED TO HA VE 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 AGREEME NT (WHETHER ENTERED INTO IN INDIA OR OUTSIDE INDIA) OR OTHERWI SE, NOTWITHSTANDING THAT SUCH TRANSFER OF RIGHTS HAS B EEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT UPON OR FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPAN Y REGISTERED OR INCORPORATED OUTSIDE INDIA;] 10. SECTION 2(47)(I) OF THE ACT TREATS THE SALE OF THE PROPERTY EXCHANGE OR RELINQUISHMENT OF THE ASSET AS TRA NSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. SECTION 2(47) (VI) SHOWS THAT ANY TRANSACTION BY WAY OF AN AGREEMENT OR ARRANGEME NT IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING OR ENAB LING THE 11 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 ENJOYMENT OF IMMOVABLE PROPERTY ALSO TREATS AS TRAN SFER. IN THIS CASE, THE ASSESSEES IN EXCHANGE OF 40% OF THE CONST RUCTED AREA, TRANSFERRED 60% OF THE LAND TO THE BUILDER AND HAND ED OVER THE PHYSICAL POSSESSION. THEREFORE, IT IS AN EXCHANGE OF PROPERTY BETWEEN THE PARTIES. IN OTHER WORDS, THE ASSESSEES EXCHANGED 60% OF THE LANDED AREA FOR 40% OF THE CONSTRUCTED A REA. THEREFORE, THERE IS A TRANSFER WITHIN THE MEANING OF SECTION 2 (47) (I) OF THE ACT ON THE DATE ON WHICH THE AGREEMENT DATED 8.12.2006 WAS EXECUTED. EVEN OTHERWISE, THE JOINT VENTURE AGREEMENT HAS THE EFFECT OF TRANSFERRING 60% OF THE LANDED AREA TO THE BUILDER. THE ASSESSEE CANNOT TAKE BACK 60% LANDED AREA ON WHICH THE BUILD ER HAS COMMENCED CONSTRUCTION. AT THE BEST, THE ASSESSEES WOULD GET ONLY 40% OF THE CONSTRUCTED AREA AND 40% LANDED ARE A PROPORTIONATE TO THE CONSTRUCTED AREA. THEREFORE, THE TRANSACTION BETWEEN THE ASSESSEES AND THE BUILDER IS BY WAY OF ARRANGEMENT OR AGREEMENT WHICH HAS THE EFFECT OF TRANSFERRING THE LANDED PROPERTY FOR ENJOYMENT OF THE BUILDER. IN OTHER WORDS, THE ASSESSEES TRANSFERRED 60% OF THE LAND AREA TO THE BUILDER FOR ITS ENJOYMENT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THERE WAS A TRANSFER ON 8.12.2006 WITHIN THE MEANING OF SECTION 2(47)(I) AND 2(47)(VI) OF THE ACT. THEREFORE, THE RELEVANT TRAN SACTION TOOK PLACE IN THE FINANCIAL YEAR 2006-07 WHICH FALLS IN THE AS SESSMENT YEAR 12 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 2007-08. HENCE CAPITAL GAIN, IF ANY, IS ASSESSABLE ONLY IN THE ASSESSMENT YEAR 2007-08 AND CERTAINLY NOT IN THE YE AR 2009-10. 11. THE CIT(APPEALS) PROCEEDED TO OBSERVE THAT THE CAPITAL GAIN ARISES ONLY ON THE DATE OF COMPLETION OF THE CONSTR UCTION OF FLATS AND ITS HANDING OVER TO THE ASSESSEES. THIS OBSERVATIO N IS TOTALLY CONTRARY TO THE PROVISIONS OF SECTION 2(47) OF THE ACT. IN FACT, THE ASSESSEES ENTERED INTO AN AGREEMENT AND HANDING OVE R THE PHYSICAL POSSESSION OF THE PROPERTY TO BUILDER ALLO WING IT TO ENJOY 60% OF THE LAND IN LIEU OF 40% OF THE CONSTRUCTED A REA. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE TRAN SFER TOOK PLACE ON 8.12.2006 AND THE ASSESSEES ARE LIABLE FOR PAYMENT OF CAPITAL GAIN TAX IN THE ASSESSMENT YEAR 2007-08. THEREFORE, NO CAPITAL GAIN ARISES IN THE YEAR IN WHICH THE CONSTRUCTION WAS CO MPLETED AND THE CONSTRUCTED AREA WAS HANDED OVER TO THE ASSESSEES. ACCORDINGLY, WE HOLD THAT NO CAPITAL GAIN ARISES FOR ASSESSMENT IN THE YEAR UNDER CONSIDERATION. 12. NOW COMING TO THE ISSUE OF EXEMPTION UNDER SECT ION 54F OF THE ACT, THE ASSESSEES ENTRUSTED THE CONSTRUCTION O F THE BUILDING TO THE BUILDER IN LIEU OF 60% OF THE LANDED AREA TRANS FERRED TO THE BUILDER. THEREFORE, THE ASSESSEES, FROM THE DATE O N WHICH THE TRANSFER WAS MADE BY ENTERING INTO AGREEMENT FOR JO INT 13 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 DEVELOPMENT, ARE IN THE PROCESS OF CONSTRUCTING THE RESIDENTIAL HOUSE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE ASSESSEES ARE ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT. NOW THE OBJECTION OF THE DEPARTMENT IS THAT THE ASS ESSEES GOT MULTIPLE FLATS, ALMOST EIGHT FLATS EACH, IN LIEU OF THE LAND TRANSFERRED TO THE BUILDER. THE QUESTION ARISES FOR CONSIDERAT ION IS WHEN THE ASSESSEES RECEIVED EIGHT FLATS/RESIDENTIAL UNITS FR OM THE BUILDER IN LIEU OF COST OF THE LAND TRANSFERRED TO THE BUILDER , WHETHER THE ASSESSEES ARE ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT? WE HAVE GONE THROUGH THE JUDGMENT OF MADRAS HIGH CO URT IN V.R. KARPAGAM (SUPRA). IN THIS CASE, THE ASSESSEE OBTAI NED FIVE INDEPENDENT FLATS IN A MULTI-STORIED CONSTRUCTION A ND CLAIMED EXEMPTION AS INDEPENDENT UNIT UNDER SECTION 54F OF THE ACT. THE MADRAS HIGH COURT, AFTER REFERRING TO THE AMENDMENT MADE WITH EFFECT FROM 1.4.2015, FOUND THAT THE ASSESSEE IS EL IGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT. IN VIEW OF THE JUDGMENT OF THE MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE ASSESSEES ARE ELIGIBLE FOR EXEMPTION EVEN THOUGH MULTIPLE FLATS WERE ALLOTTED TO THEM IN LIEU OF COST OF 60% OF THE LAND ALLOTTED TO THE BUILDER. 14 I.T.A. NOS.1396 & 1397/MDS/13 I.T.A. NOS.1493 TO 1495/MDS/13 13. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE CIT(APPEALS). ACCORDINGLY, TH E SAME ARE CONFIRMED. 14. IN THE RESULT, ALL THE FIVE APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED ON 15 TH MAY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !' ) ( . . . ) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 15 TH MAY, 2015. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-IV, CHENNAI-34 4. 0 81 /CIT-VII, CHENNAI-34 5. 69 ,1 /DR 6. :' ; /GF.