ITO., Ward- 4(3), Hyderabad V. Sri B Mahender Reddy (HUF), Hyderabad

ITA 1567/HYD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0367 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 13-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: B SATYANARAYANA MURTHY
• Keywords: Capital asset; Opportunity of being heard; Fair market value; Competent authority
• Section: 54F; 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1567/HYD/2014 ASSESSMENT YEAR 2007-2008 THE INCOME TAX OFFICER, WARD-4(3), HYDERABAD. VS. MR. B. MAHENDER REDDY (HUF), HYDERABAD 89. PAN AAGHB6699N (APPELLANT) (RESPONDENT) FOR REVENUE : MR. RAJAT MITRA FOR ASSESSEE : MR. B. SATYANARAYAN A MURTHY DATE OF HEARING : 18.06.2015 DATE OF PRONOUNCEMENT : 26 . 06.2015 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 30.05.2014 OF THE LD. CIT(A )-V, HYDERABAD FOR THE A.Y. 2007-2008. 2. THE SOLITARY ISSUE ARISING OUT OF THE GROUND RAISED BY THE DEPARTMENT IS WITH REGARD TO THE FIND ING OF THE LD. CIT(A) THAT THERE BEING NO TRANSFER OF CAPI TAL ASSET BY THE ASSESSEE TO THE DEVELOPER IN TERMS OF SECTIO N 2(47)(V) READ WITH SECTION 53A OF THE TRANSFER OF P ROPERTY ACT, 1882, CAPITAL GAIN WILL NOT ARISE IN THE IMPUG NED ASSESSMENT YEAR. 2 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. 3. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISP UTE ARE, THE ASSESSEE IS A HUF. ON RECEIVING INFORMATIO N THAT ASSESSEE HAS RECEIVED HUGE AMOUNTS AND MADE DEPOSIT S IN HIS BANK ACCOUNT DURING THE RELEVANT PREVIOUS YE AR WHEREAS, IT HAS NOT FILED ANY RETURN OF INCOME UNDE R SECTION 139(1) OF THE ACT, THE A.O. INITIATED ACTIO N UNDER SECTION 147 OF THE I.T. ACT, 1961 BY ISSUING A NOTI CE UNDER SECTION 148 OF THE ACT ON 06.03.2012. IN RESPONSE T O THE SAID NOTICE, ASSESSEE ON 17.05.2012 SUBMITTED ITS R ETURN OF INCOME DECLARING TOTAL INCOME OF RS.97,280 INCLU DING AGRICULTURAL INCOME OF RS.63,000. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT ASSESSEE WAS THE OWNER OF AGRICULTURAL LAND ADMEASU RING AC.8.28 GTS. IN SURVEY NO.185, NARSINGPALLI (V) OF RAJENDRANAGAR (M) OF RANGA REDDY DISTRICT. IT WAS F URTHER NOTICED THAT ASSESSEE HAD EXECUTED AN UNREGISTERED DEVELOPMENT AGREEMENT CUM- GENERAL POWER OF ATTORN EY ON 28.04.2005 IN FAVOUR OF M/S. SRI SAI VENKATESWAR A ESTATES, FOR DEVELOPING THE SAID PIECE OF LAND OWNE D BY HIM. SUBSEQUENTLY, THIS UNREGISTERED DEVELOPMENT AGREEMENT WAS CANCELLED AND ASSESSEE ENTERED INTO A REGISTERED DEVELOPMENT AGREEMENT CUM- GENERAL POWE R OF ATTORNEY WITH M/S. SRI SAI VENKATESWARA ESTATES ON 30.08.2006 FOR DEVELOPING THE SAID PIECE OF LAND IN TO A RESIDENTIAL COLONY AFTER OBTAINING NECESSARY PERMIS SION FROM THE AUTHORITIES. AS PER THE TERMS OF THE SAID DEVELOPMENT AGREEMENT, ASSESSEE IS TO RECEIVE 43% O F CONSTRUCTED AREA ALONG WITH UNDIVIDED SHARE IN LAND TO THAT EXTENT IN EXCHANGE OF THE LAND GIVEN TO THE DE VELOPER 3 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. UNDER THE DEVELOPMENT AGREEMENT. FURTHER, THE ASSES SEE ENTERED INTO A SUPPLEMENTARY DEVELOPMENT AGREEMENT ON 19.10.2006 MODIFYING CERTAIN TERMS OF THE REGISTERE D DEVELOPMENT AGREEMENT BY PROVIDING THAT THE AMOUNT OF RS.51,10,000 RECEIVED AS ADVANCE BY THE ASSESSEE FR OM THE DEVELOPER WILL BE TREATED AS NON-RETURNABLE SEC URITY DEPOSIT. 4. ON FINDING THE AFORESAID FACTS, THE A.O. CALLED UPON THE ASSESSEE TO EXPLAIN WHY CAPITAL GAIN WILL NOT BE CHARGED SINCE THERE IS A TRANSFER OF CAPITAL ASSET. IN RESPONSE TO THE QUERY RAISED BY THE A.O., IT WAS SU BMITTED BY THE ASSESSEE THAT THOUGH THE ASSESSEE HAS ENTERE D INTO A DEVELOPMENT AGREEMENT WITH THE DEVELOPER DURING T HE RELEVANT PREVIOUS YEAR AND HAS ALSO HANDED-OVER POSSESSION OF THE LAND TO THE DEVELOPER BUT THERE I S NO TRANSFER OF THE ASSET WITHIN THE MEANING OF SECTION 2(47)(V) READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY A CT. DUE TO VARIOUS FACTORS, THE DEVELOPER HAS NOT BEEN ABLE TO UNDERTAKE THE DEVELOPMENT ACTIVITY EVEN THOUGH MORE THAN 5 YEARS HAVE LAPSED. IN SUM AND SUBSTANCE, IT WAS SUBMITTED THAT AS ACTUALLY NO DEVELOPMENT ACTIVITY HAS STARTED BY THE DEVELOPER WHICH INDICATES UNWILLINGN ESS OF THE DEVELOPER TO PERFORM HIS PART OF THE CONTRACT, NEITHER THERE IS ANY TRANSFER IN TERMS OF SECTION 2(47)(V) NOR THERE IS ACCRUAL OF CAPITAL GAIN. IN SUPPORT OF HIS CONTE NTION, ASSESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADI VS . CIT (2003) 260 ITR 491 (BOM.). THE A.O. HOWEVER DID NOT 4 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. HE OBSERVED THAT NOT ONLY THE ASSESSEE HAS ENTERED INT O A REGISTERED DEVELOPMENT AGREEMENT WITH THE DEVELOPER DURING THE RELEVANT PREVIOUS YEAR BUT HE HAS ALSO H ANDED- OVER POSSESSION OF THE PROPERTY TO THE DEVELOPER. H E ALSO NOTED THAT THE DEVELOPER HAS EXPRESSED ITS WILLINGN ESS TO PERFORM HIS PART OF CONTRACT BY APPLYING FOR PERMIS SION BEFORE THE COMPETENT AUTHORITY AND IN FACT, HAS ALS O PAID AN AMOUNT OF RS.51,10,000 TO THE ASSESSEE TOWARDS P ART- PERFORMANCE OF THE CONTRACT. THUS A.O. RELYING UPON THE DECISION OF ITAT, HYDERABAD BENCH IN THE CASE OF KRISHNAKUMAR D. SHAH (HUF) AND OTHERS VS. DCIT IN ITA.NO. 1164 TO 1167/HYD/2010 DATED 12.07.2012 OPINED THAT AS ALL THE INGREDIENTS OF SECTION 2(47) (V) READ WITH SECTION 53A OF TRANSFER OF PROPERTY ACT HAS BE EN FULFILLED, THERE IS A TRANSFER OF CAPITAL ASSET DUR ING THE YEAR UNDER CONSIDERATION GIVING RISE TO CAPITAL GAIN. ACCORDINGLY, HE PROCEEDED TO COMPUTE THE CAPITAL GA IN WHICH WAS DETERMINED AT RS.4,59,92,944. 5. BEING AGGRIEVED OF THE ACTION OF THE A.O. IN CHARGING CAPITAL GAIN, ASSESSEE PREFERRED APPEAL BE FORE THE LD. CIT(A). IN COURSE OF HEARING OF APPEAL, THE ASS ESSEE REITERATING WHAT WAS STATED BEFORE THE A.O. SUBMITT ED THAT SINCE THE DEVELOPER FAILED TO EVEN OBTAIN THE SANCT ION TILL 2013, IT CANNOT BE SAID THAT THERE IS A TRANSFER OF ASSET WITHIN THE MEANING OF SECTION 2(47)(V). IN SUPPORT OF ITS CONTENTION, ASSESSEE RELIED UPON FEW DECISIONS OF T HE ITAT. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSI ONS OF 5 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. THE ASSESSEE IN THE LIGHT OF DECISIONS CITED BEFORE HIM, CONCLUDED THAT SINCE TILL 2013 NO DEVELOPMENT ACTIV ITY HAS STARTED, IT INDICATES UNWILLINGNESS ON THE PART OF THE DEVELOPER TO PERFORM HIS PART OF THE CONTRACT. HE W AS OF THE VIEW THAT THOUGH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO AND POSSESSION OF LAND WAS GIVEN IN TH E YEAR 2006, BUT THE WILLINGNESS OF THE DEVELOPER TO CARRY ON DEVELOPMENT IN TERMS OF DEVELOPMENT AGREEMENT HAS N OT BEEN TAKEN-UP FOR MORE THAN 7 YEARS. THEREFORE, THE TRANSACTION WILL NOT FALL WITHIN THE SCOPE OF SECTI ON 53A OF THE TRANSFER OF PROPERTY ACT. ACCORDINGLY, HE HELD THAT THE CAPITAL GAIN WILL NOT ACCRUE IN THE IMPUGNED ASSESS MENT YEAR AND THEREBY, DELETED THE ADDITION OF RS.4.59 C RORES BEING MADE BY THE A.O. AS LONG TERM CAPITAL GAIN. 6. THE LEARNED D.R. SUBMITTED BEFORE US THAT THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE DURIN G THE RELEVANT PREVIOUS YEAR HAS ENTERED INTO A DEVELOPME NT AGREEMENT WITH THE DEVELOPER AND HAS ALSO HANDED-OV ER POSSESSION OF THE LAND TO THE DEVELOPER. IT WAS SUB MITTED, ASSESSEE HAS ALSO RECEIVED AN AMOUNT OF RS.51,10,00 0 AS NON-REFUNDABLE SECURITY DEPOSIT FROM THE DEVELOPER. IT IS ALSO A FACT THAT THE DEVELOPER HAS APPLIED FOR SANC TION OF THE PLAN TO START THE DEVELOPMENT ACTIVITY BUT IT C OULD NOT BE STARTED AS SANCTION WAS NOT GIVEN BY THE COMPETE NT AUTHORITY DUE TO SOME DIFFICULTIES BEYOND THE CONTR OL OF THE DEVELOPER. HOWEVER, THAT WILL NOT LEAD TO THE CONCLUSION THAT THE DEVELOPER WAS UNWILLING TO PERF ORM HIS PART OF THE CONTRACT IN TERMS OF SECTION 53A OF THE 6 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. TRANSFER OF PROPERTY ACT. THE LEARNED D.R. FURTHER SUBMITTED THAT SINCE THERE IS NOTHING ON RECORD TO SUGGEST THAT THE DEVELOPER HAS EXPRESSED HIS UNWILLINGNESS TO GO AHEAD WITH THE DEVELOPMENT WORK, ASSESSEES CLAIM T O THAT EFFECT CANNOT BE ACCEPTED. HE SUBMITTED THAT SINCE THE CONDITIONS OF SECTION 2(47)(V) READ WITH SECTION 53 A OF THE ACT ARE FULFILLED, THE CAPITAL GAIN IS CHARGEABLE T O TAX FOR THE IMPUGNED ASSESSMENT YEAR. FOR SUCH PROPOSITION, HE RELIED UPON THE DECISION OF THE HONBLE A.P. HIGH C OURT IN THE CASE OF POTLA NAGESWARA RAO VS. DCIT 365 ITR 24 9 AND DECISION OF ITAT, HYDERABAD BENCH IN THE CASE O F KRISHNA KUMAR D. SHAH (HUF) AND OTHERS VS. DCIT IN ITA.NO. 1164 TO 1167/HYD/2010 DATED 12.07.2012. 7. THE LEARNED A.R. MORE OR LESS REITERATING THE SUBMISSIONS MADE BEFORE THE DEPARTMENTAL AUTHORITIE S SUBMITTED THAT TILL THE DATE OF ASSESSMENT ORDER, PERMISSION COULD NOT BE OBTAINED BY THE DEVELOPER F ROM THE COMPETENT AUTHORITY FOR CONSTRUCTION ACTIVITIES . IT WAS SUBMITTED THAT ONLY ON 28.03.2014 THE PLAN WAS APPR OVED BY THE COMPETENT AUTHORITY AND BUILDING PERMISSION WAS GRANTED. ONLY THEREAFTER, IN THE F.Y. 2014-2015, TH E DEVELOPER STARTED CONSTRUCTION WORK AND THE ASSESSE E COULD ENTER INTO AGREEMENT WITH SOME PROSPECTIVE BU YERS TO SELL ITS SHARE IN THE BUILT-UP AREA. THUS, IT WA S SUBMITTED THAT ASSESSEE IS CONTEMPLATING TO SHOW TH E CAPITAL GAIN IN A.Y. 2014-2015 AND KEEPING THAT IN VIEW, HAS PAID FIRST INSTALLMENT OF ADVANCE TAX. THUS, IN SUM AND SUBSTANCE, IT WAS SUBMITTED BY THE ASSESSEE THA T 7 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. SINCE THERE WAS UNWILLINGNESS ON THE PART OF THE DE VELOPER TO PERFORM HIS PART OF THE CONTRACT DURING THE IMPU GNED ASSESSMENT YEAR AND AS NO DEVELOPMENT ACTIVITY HAS TAKEN PLACE, NEITHER THERE IS ANY TRANSFER OF CAPIT AL ASSET DURING THE YEAR UNDER CONSIDERATION NOR CAPITAL GAI N WILL ACCRUE. FOR SUCH PROPOSITION, HE RELIED UPON THE FO LLOWING DECISIONS. (1) M/S. BINJUSARIA PROPERTIES P. LTD., HYDERABAD VS. ACIT, HYDERABAD ITA.NO.157/HYD/2011 DT.04.04.2014. (2) ACIT VS. MR. R. SRINIVASA RAO & OTHERS, HYDERABAD ITA.NO.1786/HYD/2012 DATED 28.08.2014 (3) ITO, HYDERABAD VS. MR. SHAM KUMAR, HYDERABAD ITA.NO.1604/HYD/2014 DATED 20.03.2015. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE ORDERS OF THE REVENUE AUTHORIT IES AS WELL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO CAR EFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY TH E PARTIES. THE ISSUE TO BE DECIDED IN THE PRESENT APP EAL, PRECISELY IS, WHETHER THERE IS TRANSFER OF LAND BY ASSESSEE TO THE DEVELOPER IN TERMS OF SECTION 2(47)(V) READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, GIVING RISE TO CAPITAL GAIN IN THE IMPUGNED ASSESSMENT YEAR. THERE IS NO DISPUTE TO THE FACT THAT DURING THE RELEVANT PREVIO US YEAR I.E., ON 30.08.2006, THE ASSESSEE HAD ENTERED INTO A REGISTERED DEVELOPMENT AGREEMENT CUM- GENERAL POWE R OF ATTORNEY WITH M/S. SRI SAI VENKATESWARA ESTATES AND HAS ALSO IN TERMS WITH THE DEVELOPMENT AGREEMENT 8 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. HANDED-OVER POSSESSION OF THE LAND TO THE DEVELOPER TO START THE DEVELOPMENT ACTIVITY. IT IS ALSO A FACT T HAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS.51,10,000 FRO M THE DEVELOPER AS NON-REFUNDABLE SECURITY DEPOSIT IN TERMS WITH THE DEVELOPMENT AGREEMENT. KEEPING IN VIEW THE AFORESAID FACTS, LET US EXAMINE THE RELEVANT STATUT ORY PROVISION. THE TERM TRANSFER IS DEFINED UNDER SEC TION 2(47) OF THE ACT. AS PER CLAUSE (V) OF THE SAID PRO VISION, ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART- PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO , IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, IS TO BE TREATED AS TRANSFER. THUS, SECTION 2(47)(V) HAS TO BE READ IN CONSONANCE WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT. A CAREFUL ANALYSIS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, WOULD INDICATE THAT TO CO NSTITUTE A TRANSFER UNDER THE SAID PROVISION, THE FOLLOWIN G THREE SITUATIONS MUST EXIST. (I) THERE MUST BE A WRITTEN CONTRACT BETWEEN THE TRANSFEROR AND THE TRANSFEREE FROM THE TERMS OF WHICH, THE FACT OF TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY. (II) IN PART-PERFORMANCE OF THE CONTRACT, THE TRANSFEREE HAS TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF. (III) THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. 8.1. AS FAR AS THE FIRST TWO CONDITIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT IS CONCERNED, T HERE IS 9 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. NO DOUBT THAT IN THE FACTS OF THE PRESENT CASE THEY STAND SATISFIED. THE ONLY DISPUTE REMAINS WITH REGARD TO SATISFACTION OF THE THIRD CONDITION I.E., WILLINGNE SS OF THE DEVELOPER TO PERFORM HIS PART OF THE CONTRACT. AS C AN BE SEEN THE REGISTERED DEVELOPMENT AGREEMENT CUM- GEN ERAL POWER OF ATTORNEY WAS EXECUTED ON 30.06.2008 BETWEE N THE ASSESSEE AND DEVELOPER. IT IS ALSO EVIDENT THAT AFTER TAKING POSSESSION OF THE PROPERTY, THE DEVELOPER NO T ONLY TOOK IMMEDIATE STEPS TO IMPLEMENT THE PROJECT BY PREPARING BUILDING PLAN/LAY OUT, BUT, AS PER ASSESS EES OWN ADMISSION, MADE AN APPLICATION BEFORE THE COMPE TENT AUTHORITY IN 2008 SEEKING BUILDING PERMISSION. HOWE VER, THE DELAY IN OBTAINING BUILDING PERMISSION WAS FIRS TLY BECAUSE THE LAND WAS UNDER THE GROWTH CORRIDOR WHIC H REQUIRED SPECIFIC CLEARANCE FROM THE AUTHORITIES CO NCERNED AND SECONDLY, BECAUSE IT WAS FOUND FROM THE GOVERNM ENT ORDER ISSUED ON 06.06.2005 THAT PART OF THE LAND IS TREATED AS GOVERNMENT LAND. DUE TO THESE EXIGENCIES NECESSARY PERMISSION COULD NOT BE OBTAINED FOR STAR TING THE DEVELOPMENT ACTIVITY. FROM THE AFORESAID FACTS, IT IS VERY MUCH CLEAR THAT THE DELAY IN DEVELOPMENT OF PR OJECT IS NOT DUE TO EITHER ANY UNWILLINGNESS OR DEFAULT O N THE PART OF THE DEVELOPER TO UNDERTAKE THE DEVELOPMENT ACTIVITY BUT BECAUSE OF EXTRANEOUS CIRCUMSTANCES BE YOND HIS CONTROL WHICH RESULTED IN DELAY IN OBTAINING TH E APPROVAL FROM THE COMPETENT AUTHORITY. IN FACT, THE ASSESSEE HAS NOT BROUGHT A SINGLE PIECE OF EVIDENCE ON RECORD TO DEMONSTRATE THAT AT ANY POINT OF TIME THE DEVELOPER HAS EXPRESSED HIS UNWILLINGNESS TO PERFOR M HIS 10 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. PART OF THE CONTRACT OF UNDERTAKING THE DEVELOPMENT ACTIVITY. 8.2. AS CAN BE SEEN, AS PER CLAUSE 5(1) OF REGISTE RED DEVELOPMENT AGREEMENT, THE DEVELOPER HAS TO COMPLET E THE DEVELOPMENT WORK WITHIN 30 MONTHS FROM THE DATE OF PROVISIONAL SANCTION GRANTED BY HUDA. THUS, THE COMMENCEMENT OF DEVELOPMENT WORK IS INEXTRICABLY LI NKED WITH THE SANCTION OF HUDA. THEREFORE, UNLESS SANCTI ON WAS GRANTED BY THE COMPETENT AUTHORITY, THE DEVELOP ER COULD NOT HAVE STARTED THE DEVELOPMENT WORK. IT IS EVIDENT FROM RECORD THE DEVELOPER WAS READY AND WILLING TO IMPLEMENT THE PROJECT AS HE HAS APPLIED FOR BUILDIN G PERMISSION/SANCTION OF PLAN IN THE YEAR 2008 ITSELF . HOWEVER, AS SANCTION WAS NOT GRANTED, DEVELOPER COU LD NOT START THE DEVELOPMENT WORK. FROM THESE FACTS, I T IS CLEAR THAT THE DELAY IN STARTING THE DEVELOPMENT WO RK IS NOT DUE TO UNWILLINGNESS OF THE DEVELOPER TO PERFOR M HIS PART OF THE CONTRACT. IF THE ASSESSEES CLAIM THAT DELAY WAS DUE TO UNWILLINGNESS OF DEVELOPER IS ACCEPTED, THEN , THERE IS NO REASON OR LOGIC WHY ASSESSEE SHOULD HAVE CONT INUED WITH THE DEVELOPMENT AGREEMENT INSTEAD OF TAKING ST EP TO CANCEL THE SAME FOR BREACH OF CONTRACT BY THE DEVEL OPER. THEREFORE, ASSESSEES CONDUCT ITSELF SHOWS THAT DEL AY IN IMPLEMENTING THE PROJECT CANNOT BE ATTRIBUTED TO TH E DEVELOPER. MOREOVER, THE FACT THAT THE DEVELOPER WA S VERY MUCH INTERESTED AND WILLING TO DEVELOP THE PROJECT IS EVIDENT FROM THE FACT THAT AFTER NECESSARY SANCTION/APPROVAL WAS GRANTED BY THE COMPETENT 11 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. AUTHORITY ON 28.03.2014 IT HAS STARTED THE DEVELOPM ENT WORK IMMEDIATELY. UNDER THESE CIRCUMSTANCES, IT CAN NOT BE SAID THAT THE CONDITIONS OF SECTION 2(47)(V) OF THE I.T. ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPER TY ACT ARE NOT SATISFIED DUE TO UNWILLINGNESS ON THE PART OF THE DEVELOPER TO PERFORM HIS PART OF THE CONTRACT. THE HONBLE A.P. HIGH COURT IN THE CASE OF POTLA NAGESWARA RAO VS. DCIT (2014) 365 ITR 249 (A.P) WHILE INTERPRETING TH E PROVISIONS OF SECTION 2(47) OF THE I.T. ACT AS WELL AS SECTION 53A OF THE TRANSFER OF PROPERTY ACT HELD THAT TRANS FER IN TERMS WITH SECTION 2(47)(V) READ WITH SECTION 53A O F THE TRANSFER OF PROPERTY ACT TAKES PLACE IN THE ASSESSM ENT YEAR IN WHICH THE DEVELOPMENT AGREEMENT IS ENTERED INTO AND POSSESSION IS DELIVERED. THE OBSERVATION OF THE HONBLE JURISDICTIONAL HIGH COURT IS EXTRACTED HERE UNDER FOR CONVENIENCE. THEREFORE, WE ARE OF THE VIEW, WHILE UPHOLDING THE LEARNED TRIBUNALS APPLICATION OF LAW ON THIS FACT, THAT PAYMENT OF CONSIDERATION ON THE DATE OF AGREEMENT O F SALE IS NOT REQUIRED, IT MAY BE DEFERRED FOR FUTURE DATE. THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT ARE CONTEMPLATED AS TRANSFER WITHIN THE MEANING OF THE AFORESAID SECTION. WHEN THE TRANSFER IS COMPLETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN THE AGREEMENT FOR SALE HAS TO BE TAKEN INTO CONSIDERATI ON FOR THE PURPOSE OF ASSESSMENT OF INCOME FOR THE ASSESSMENT YEAR WHEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN. HERE, FACTUALLY IT W AS FOUND THAT BOTH THE AFORESAID ASPECTS TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003-04. HENCE, THE LEARNED TRIBUNAL HAS RIGHTLY HE LD THAT THE APPELLANT IS LIABLE TO PAY TAX ON THE CAPI TAL 12 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. GAIN FOR THE ASSESSMENT YEAR. ACCORDINGLY, WE DO NO T FIND ANY ELEMENT OF LAW TO ADMIT THIS APPEAL. 8.3. THEREFORE, APPLYING THE PRINCIPLE LAID DOWN B Y THE JURISDICTIONAL HIGH COURT AS AFORESAID AND ALSO KEEPING IN VIEW THE FACT THAT THERE IS NOTHING ON R ECORD TO PROVE THAT THE DEVELOPER WAS UNWILLING TO PERFORM H IS PART OF THE CONTRACT AS PROVIDED UNDER SECTION 53A OF TH E TRANSFER OF PROPERTY ACT, WE ARE OF THE VIEW THAT T HERE IS A TRANSFER OF CAPITAL ASSET IN THE IMPUGNED ASSESSMEN T YEAR AS ENVISAGED UNDER SECTION 2(47)(V) OF THE ACT RESU LTING IN CAPITAL GAIN. IN OUR VIEW, LD. CIT(A) FELL INTO ERR OR IN NOT APPRECIATING THE AFORESAID FACTS. AS FAR AS THE DEC ISIONS RELIED UPON BY THE LEARNED A.R. ARE CONCERNED, ON C AREFUL ANALYSIS OF THE SAME, WE ARE OF THE VIEW THAT THEY DO NOT APPLY TO THE FACTS OF THE PRESENT CASE AS IN THOSE CASES THE UNWILLINGNESS OF THE DEVELOPER TO PERFORM HIS PART OF THE CONTRACT WAS PROVED BY THE CONCERNED ASSESSEES BY BRINGING EVIDENCE ON RECORD. WHEREAS, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS FAILED TO DO SO. ON THE CONTRARY, THE MATERIAL ON RECORD DEMONSTRATES THAT DEVELOPER WAS ALL ALONG WILLING TO PERFORM HIS PART OF THE CONTRACT. FOR THE AFORECITED REASONS, WHILE AGREEIN G WITH THE VIEW OF THE A.O. TO THE EFFECT THAT THERE IS A TRANSFER OF LAND BY ASSESSEE TO DEVELOPER GIVING RISE TO CAPITA L GAIN IN THE IMPUGNED ASSESSMENT YEAR, WE SET ASIDE THE FIND ING OF THE LD. CIT(A) ON THIS ISSUE. HOWEVER, IT IS SEEN T HAT THE LD. CIT(A) IN PARA 6.2 OF THE ORDER, HAS ALSO RECOR DED CERTAIN FINDINGS DISAPPROVING THE ADOPTION OF FAIR MARKET VALUE AND COMPUTATION OF CAPITAL GAIN BY THE ASSESS ING 13 ITA.NO.1567/HYD/2014 MR. B. MAHENDER REDDY (HUF), HYDERABAD. OFFICER. SIMILARLY, LD. CIT(A) IN PARAS 9 AND 9.1. OF HIS ORDER, HAS OBSERVED THAT THE ASSESSEE WOULD BE ELIG IBLE TO CLAIM DEDUCTION UNDER SECTION 54F OR 54 OF THE I.T. ACT. THESE FINDINGS OF THE LD. CIT(A) HAVE NOT BEEN CHAL LENGED BEFORE US BY THE DEPARTMENT. KEEPING THAT IN VIEW W E DIRECT, WHILE COMPUTING CAPITAL GAIN THE A.O. SHOUL D LOOK INTO THE OBSERVATIONS MADE BY THE LD. CIT(A) WITH R EGARD TO ADOPTION OF FAIR MARKET VALUE AND INDEXED COST O F ACQUISITION. HE SHOULD ALSO DECIDE THE ISSUE RELATI NG TO DEDUCTION UNDER SECTION 54 OR 54F IN ACCORDANCE WIT H LAW. NEEDLESS TO SAY, A.O. MUST GIVE FAIR AND REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26.06. 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 26 TH JUNE, 2015 VBP/- COPY TO : 1. THE INCOME TAX OFFICER, WARD - 4(3), 5 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. MR. B. MAHENDER REDDY (HUF), F.NO.203, CHALLAS CRIZENTA PANCHAVATI COLONY, MANIKONDA, HYDERABAD-89. 3. CIT(A) - V, HYDERABAD. 4. CIT - I V, HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE