Asst,Centrial Cir - 5, Hyderabad V. Sri S Srinivasa Rao, Hyderabad

ITA 1806/HYD/2012

• Counselvise Citation: 180622514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Unexplained cash credit; Capital asset; Search and seizure; Advance ruling; Cost of acquisition; Fair market value; Corroborative evidences; Competent authority
• Section: 2(14); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1 1786/H/12 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 5, HYD. SRI R. SRINIVASA RAO, HYDERABAD. PAN- AAYPR6365H 2 1787/H/12 2008-09 -DO- SRI M.S. RAGHAVA REDDY, HYDERABAD PAN- AFYPM0613C 3 1788/H/12 2008-09 -DO- BHAVYA CONSTRUCTIONS PVT. LTD., HYDERABAD PAN- AAACB8482C 4 1789/H/12 2008-09 -DO- R. VIJAYA LAKSHMI, HYDERABAD PAN- AECPR1242P 5 1806/H/12 2008-09 -DO- SHRI S. SRINIVASA RAO, HYDERABAD PAN- AWMPS6837M 6 1807/H/12 2008-09 -DO- SRI T. GOPICHAND, HYDERABD PAN- AAXPG5449G 7 1808/H/12 2008-09 -DO- SHRI G.C. SUBBA NAIDU, HYDERABAD PAN- ADJPG5842N 8 1809/H/12 2008-09 -DO- SRI P. SHIVA KUMAR, HYDERABAD PAN- AGUPP5736F 9 1703/H/12 2008-09 SHRI S. SRINIVASA RAO, HYDERABAD PAN- AWMPS6837M ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 5, HYD. REVENUE BY SHRI D. SUDHAKAR RAO ASSESSEE BY SHRI A. SRINIVAS DATE OF HEARING 23-07-2014 DATE OF PRONOUNCEMENT 28-08-2014 2 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS O R D E R PER BENCH: APPEALS IN ITA NOS. 1786 TO 1789/HYD/12 AND 1806 T O 1809/HYD/12 ARE FILED BY THE REVENUE AND APPEAL IN ITA NO. 1703/HYD/12 IS FILED BY THE ASSESSEE. SINCE IDENTIC AL ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE CLUBBED AND HE ARD TOGETHER, THEREFORE WE FIND IT CONVENIENT TO DISPOSE OF THESE APPEALS BY WAY OF THIS COMMON ORDER. ITA NOS. 1786 TO 1789/HYD/2012 AND 1806 TO 1809/HYD /12 2. THE COMMON EFFECTIVE GROUNDS RAISED BY DEPARTMEN T IN ALL THE APPEALS ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT THERE WAS NO TRANSFER WITHIN THE MEANING OF SECTION 2(47)(I) OR SECTION 2(47)(V) R.W.S. 53A OF TRANSFER OF PROPERTY ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT THE VALUE OF CONSIDERATION RE CEIVED OR ACCRUING CANNOT BE DETERMINED AND THEREBY THE COMPU TATION OF CAPITAL GAINS FAILS. 3. AS FACTS ARE COMMON IN ALL THE APPEALS, FOR THE SAKE OF CONVENIENCE, WE REFER TO THE FACTS AS INVOLVED IN I TA NO. 1788/HYD/2012. BRIEFLY, THE FACTS ARE ASSESSEE A CO MPANY IS ENGAGED IN REAL ESTATE BUSINESS. FOR THE AY UNDER DISPUTE T HE ASSESSEE ORIGINALLY HAD FILED ITS RETURN OF INCOME ON 27/09/ 2008 DECLARING TOTAL INCOME OF RS. 2,97,79,960. SUBSEQUENTLY, ON 07/10/2 009, A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUC TED IN CASE OF SHRI VENGELLA ANAND PRASAD AND OTHERS IN THE GROUP WHICH ALSO INCLUDED THE ASSESSEE. AS A CONSEQUENCE OF THE SEA RCH ACTION, NOTICE U/S 153A WAS ISSUED CALLING UPON THE ASSESSE E TO SUBMIT HIS 3 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS RETURN OF INCOME. IN RESPONSE TO THE SAID NOTICE, A SSESSEE FILED HIS RETURN OF INCOME SHOWING THE SAME INCOME AS WAS DEC LARED ORIGINALLY. DURING THE ASSESSMENT PROCEEDING, THE AO ON THE BAS IS OF THE MATERIALS AVAILABLE ON RECORD NOTICED THAT ASSESSE E ALONG WITH 33 OTHERS HAD ENTERED INTO A DEVELOPMENT AGREEMENT WIT H M/S AMSRI DEVELOPERS PVT. LTD. VIDE REGISTERED DOCUMENT NO. 7 110, DATED 04/05/2007 FOR DEVELOPMENT OF THEIR LAND, PUT TOGE THER ADMEASURING TO 123.05 ACRES INTO AN INTEGRAL RESIDENTIAL TOWNSH IP. ON FURTHER EXAMINATION, THE AO NOTICED THAT AS PER THE TERMS O F THE DEVELOPMENT AGREEMENT, THE LAND OWNERS HAVE HANDED OVER THE POS SESSION OF THE ENTIRE LAND FOR DEVELOPMENT. FURTHER, THE MARKET V ALUE FOR THE ENTIRE PROJECT AS PER THE REGISTERED DOCUMENT IS RS. 720 C RORE WITH SHARING RATIO OF 35% WITH THE LAND OWNERS ON THE BUILT UP A REA AND UNDIVIDED LAND. AO NOTICED THAT IN TERMS WITH THE DEVELOPMEN T AGREEMENT, THE DEVELOPER HAS GIVEN AN ADVANCE TO EACH LAND OWNER A T THE RATE OF 13 LAKHS PER ACRE AND THE TOTAL AMOUNT RECEIVED BY ALL LAND OWNERS PUT TOGETHER IS RS. 21,26,15,000. ON THE BASIS OF THE AFORESAID FACTS, THE AO WAS PRIMA-FACIE OF THE VIEW THAT THERE BEING A TRANSFER OF CAPITAL ASSET UNDER THE DEVELOPMENT AGREEMENT, ASSESSEE IS SUBJECT TO CAPITAL GAIN. ASSESSEE OBJECTING TO SUCH VIEW OF TH E AO SUBMITTED THAT DATE OF HANDING OVER OF LAND TO THE DEVELOPER CANNOT BE CONSIDERED AS THE DATE OF TRANSFER AS PER SECTION 2 (47)(V) OF THE ACT, BUT, THE DATE OF TRANSFER SHOULD BE THE DATE ON WHI CH DEVELOPER HANDS OVER POSSESSION OF THE BUILT UP AREA TO THE ASSESSE E. IT WAS SUBMITTED THAT THE LAND TRANSFERRED BY THE ASSESSEE IS AN AGRICULTURAL LAND, WHICH ALSO REMAINED AS AGRICULTURAL LAND AT T HE TIME OF TRANSFER TO THE DEVELOPER. HENCE, THE PROPERTY TRANSFERRED N OT BEING A CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT, IS EXEMPT F ROM CAPITAL GAIN. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT EVEN THOUGH THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT AND PERFOR MED HIS PART OF CONTRACT, BUT, THE DEVELOPER HAS NOT TAKEN ANY STEP S EITHER TO CONVERT THE NATURE OF LAND INTO NON-AGRICULTURAL OR HAS TA KEN ANY STEPS FOR DEVELOPMENT OF THE PROPERTY. THE INACTION ON THE PA RT OF THE 4 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS DEVELOPER CLEARLY INDICATES THAT THERE IS NO INTENT ION ON HIS PART TO PROCEED WITH THE DEVELOPMENT ACTIVITY TO BE UNDERTA KEN. THUS, IT WAS SUBMITTED THAT WHEN THE DEVELOPER IS NEITHER WILLIN G TO PERFORM OR HAS SHOWN NO INTENTION TO PERFORM HIS PART OF THE CONTR ACT, THEN, THE ENTIRE AGREEMENT FAILS AND THERE CANNOT BE ANY TRANSFER WI THIN THE MEANING OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT READ WITH SECTION 2(47)(V) OF THE ACT. IT WAS ALSO SUBMITTED BY THE A SSESSEE THAT AS PER CLAUSE 11 OF THE AGREEMENT ALLOTMENT OF CONSTRUCTED AREA PROPORTIONATE TO THE UNDIVIDED SHARE OF LAND OF THE LAND OWNER WILL BE WORKED OUT AFTER MAKING VARIOUS ADJUSTMENTS. AS ON THE DATE OF AGREEMENT, SINCE THE INTEREST OR CONSIDERATION RELA TABLE TO THE LAND OWNER IS NOT CRYSTALLIZED, THE COMPUTATION OF CAPI TAL GAIN FAILS. 4. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WAS NOT CONVINCED WITH THE SAME. HE WAS OF THE VIEW THA T CAPITAL GAIN HAPPENS AT THE HANDS OF THE LAND OWNER ON THE DATE OF ENTERING INTO THE DEVELOPMENT. THE AO REFERRING TO THE DEVELOPME NT AGREEMENT OPINED THAT AS THE ASSESSEE HAD DELIVERED POSSESSIO N OF THE PROPERTY TO THE DEVELOPER THERE IS A TRANSFER WITHIN THE MEA NING OF SECTION 2(47)(V) OF THE ACT READ WITH SECTION 53A OF THE TR ANSFER OF PROPERTIES ACT. THE AO RELYING UPON A NUMBER OF DECISIONS OF DIFFERENT HIGH COURTS AS WELL AS AUTHORITY FOR ADVANCE RULING FINA LLY CONCLUDED THAT AS THE ASSESSEE HAS NOT ONLY ENTERED INTO DEVELOPME NT AGREEMENT WITH DEVELOPER BUT HAS ALSO HANDED OVER POSSESSION OF THE PROPERTY ON THE DATE OF ENTERING INTO DEVELOPMENT AND ALSO H AS RECEIVED SUBSTANTIAL AMOUNT TOWARDS ADVANCE AT THE RATE OF R S. 13 LAKHS PER ACRE ASSESSEE IS LIABLE FOR CAPITAL GAIN IN THE IMP UGNED ASSESSMENT YEAR. ACCORDINGLY, THE AO PROCEEDED TO COMPUTE SHOR T TERM CAPITAL GAIN OF RS. 64,10,52,596 AFTER ALLOWING DEDUCTION T OWARDS COST OF LAND AS SHOWN IN THE BALANCE SHEET. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE T HE CIT(A). 5 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS 5. DURING THE HEARING OF APPEAL BEFORE THE CIT(A), AS REFERRED TO IN PARA 5.3 OF HIS ORDER, THE AR OF THE ASSESSEE CO NTENDED AS UNDER: THERE WAS NO TRANSFER WITHIN THE MEANING OF SECTIO N 2(47); RELIANCE WAS PLACED ON THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BAISAKHI BHATTACHARJEE VS SHYAMALAL BOSE & OTHERS (2002) 4CHN) 115, WHEREIN, IT WAS HELD THAT A DEVELOPMENT AGREEMENT DOES NOT COME WITHIN THE AMBIT OF SECTION 53 OF THE TRANSFER OF PROPERTY ACT . RELIANCE WAS ALSO PLACED ON THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF K.KARUNA & ANOTHER VS APPROPRIATE AUTHORITY & OTHERS (251 ITR 230) AP, WHEREIN, IT WAS HELD THAT ALLOWING OF POSSESSION TO BE TAKEN OR RETAIN IN PART PERFORMANC E OF THE CONTRACT OF THE NATURE REFERRED TO IN SECTIO N 53 OF THE TRANSFER OF PROPERTY ACT ALONE COULD BE CONSIDERED AS TRANSFER, BUT NOT ON A PERMISSIVE POSSESSION GIVEN BY A LAND OWNER TO A DEVELOPER . FULL VALUE OF CONSIDERATION CANNOT BE ASCERTAINED IN THE YEAR OF ENTERING INTO DEVELOPMENT AGREEMENT, AS THE SAME IS IN THE WOMB OF FUTURE . IT WAS FURTHER SUBMITTED THAT THIS IS A CASE WHERE THE COMPUTATION SECTION I.E. SECTION 48 OF THE I.T. ACT FAILS, AS FULL VALUE OF CONSIDERATION CANNOT BE ASCERTAINED TO COMPUTE THE CAPITAL GAIN. FOR THIS PURPOSE, RELIANCE WAS PLACED IN THE DECISION OF B.C.SRINIVASA SETTY (1981) 128 ITR 294. IT WAS DECIDED THAT THE CHARGING SECTION (45) AND THE COMPUTATION SECTION (48) FORMS AN INTEGRATED CODE AND IF THE PROVISIONS OF ANYONE OF THE SECTION FAIL S, THEN COMPUTATION OF CAPITAL GAINS FAILS . IT WAS SUBMITTED THAT FULL VALUE OF CONSIDERATION CANNOT BE EQUATED WITH FAIR MARKET VALUE FOR THE PURPOSE OF SECTION 48. FOR THE PURPOSE, RELIANCE WA S PLACED IN THE CASE OF CIT VS GEORGE HENDERSON & CO. LTD (1967) 66 ITR 622 (SC) AND CIT VS GILLANDERS ARBUTNON & CO. (1973) 87 ITR 407 (SC) . IT WAS VEHEMENTLY ARGUED THAT THE PROVISIONS OF SECTION 53 OF THE TRANSFER OF PROPERTY ACT READ WIT H 2(47)(V) OF THE I.T.ACT DO NOT APPLY IN THE PRESENT CASE AS ALL THE PARAMETERS FOR APPLICATION OF SECTI ON 53A OF THE TRANSFER OF PROPERTY ACT FAILS IN THIS C ASE. IN THIS CONTEXT, IT WAS POINTED OUT THAT ALTHOUGH T HE DEVELOPMENT AGREEMENT WAS ENTERED INTO ON 04.05.2007, NO WORK WHATSOEVER HAS COMMENCED EVEN TILL TODAY. THIS INDICATES THAT THE DEVELOPER IS 6 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS NOT SHOWING HIS WILLING AND READY TO EXECUTE THE CONTRACT. IT WAS ARGUED THAT IF THE TAX IS LEVIED IN THE YEA R OF ENTERING INTO DEVELOPMENT AGREEMENT, IT WOULD MILITATE AGAINST THE THEORY OF REAL INCOME. IN THE INSTANT CASE, NEITHER ANY INCOME HAS ACCRUED NOR RECEIVED BY THE LAND OWNER, OTHER THAN SOME REFUNDABLE DEPOSIT ON WHICH THE LAND OWNER HAS NO DOMINION, AS THE SAME WAS TO BE RETURNED AS PER THE TERMS OF THE AGREEMENT. ON THE ISSUE OF THEORY OF R EAL INCOME, THE LEARNED AR PLACED RELIANCE ON THE FOLLOWING CASES: (A) CIT VS M/S. SHOORJI VALLABHDAS AND CO. (1962) 46 ITR 144 (SC) AND (B) CIT VS A GAJAPATI NAIDU (1964) 53 ITR 114 (SC). WHILE COMPLETING HIS ARGUMENT, THE LEARNED AR PLACE D RELIANCE IN THE UNREPORTED CASE PASSED BY THE JURISDICTIONAL ITAT IN THE CASE OF SRI RAGHURAMI RE DDY VS. ITO IN ITA NO. 296/H/2003, DATED 30/07/2004. IN THIS CASE, IT WAS DECIDED THAT ANY PROFIT OR GAIN I S ONLY ASSESSABLE WHEN THE LAND OWNER RECEIVES THE CONSTRUCTED AREA. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, AS WELL ON INTERPRETING THE MEANING OF TRANSFER AS CONTAINED U/S 2(47)(V) READ WITH SECTION 53A OF TP ACT, WAS OF THE VIEW THAT TO CONSTRUE A P ARTICULAR TRANSACTION TO BE A TRANSFER AS ENVISAGED U/S 2(47) (V) READ WITH SECTION 53A OF TP ACT, FIVE CONDITIONS HAVE TO BE F ULFILLED CUMULATIVELY, WHICH ARE AS UNDER: THERE SHOULD BE A CONTRACT FOR A CONSIDERATION. TH E CONTRACT SHOULD BE IN WRITING. THE TERMS OF THE CON TRACT SHOULD BE ASCERTAINABLE WITH REASONABLE CERTAINTY; THE CONTRACT SHOULD BE SIGNED BY THE TRANSFER; IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERT Y; THE TRANSFEREE SHOULD HAVE PERFORMED OR WILLING TO PERFORM HIS PART OF THE CONTRACT. THIS IS BASED ON THE DOCTRINE OF READINESS AND CONTINUOUS WILLINGNESS TO ABIDE BY TERMS OF THE AGREEMENT BY THE TRANSFEREE; THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF THE IMMOVABLE PROPERTY COVERED UNDER THE CONTRACT. 7 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS 7. THE CIT(A) OBSERVED THAT IN ABSENCE OF ANY ONE O F THE AFORESAID CONDITION, THE DOCTRINE OF PART PERFORMAN CE AS CONTEMPLATED U/S 2(47)(V) READ WITH SECTION 53A OF THE PT ACT WO ULD FAIL, AS SECTION 53A OF TP ACT HAS BEEN INCORPORATED IN SECTION 2(47 )(V) OF THE ACT BY WAY OF A REFERENTIAL LEGISLATION. THE CIT(A) WHILE EXAMINING THE IMPORT OF THE PHRASE PART PERFORMANCE NOTED THAT IT IS B ASED UPON THE DOCTRINE OF EQUITY. IF ONE PARTY HAS PERFORMED HIS PART OF DUTY, THEN, EQUITY DEMANDS THAT THE OTHER PARTLY ALSO PERFORM H IS PART OF OBLIGATION. THEREFORE, THE MOST NOTICEABLE INGREDI ENT IS NOT ONLY THE TRANSFEROR HAS TO PERFORM HIS PART OF CONTRACT BUT THE TRANSFEREE EQUALLY MUST PERFORM OR IS WILLING TO PERFORM HIS P ART OF CONTRACT. WILLINGNESS TO PERFORM FOR THE PURPOSE OF SECTION 5 3A OF THE TP ACT, IS SOMETHING MORE THAN A STATEMENT OF INTENT. IT IS TH E UNQUALIFIED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE VENDEE TO PERFORM ITS OBLIGATIONS. UNLESS THE PARTY HAS PERFORMED OR IS W ILLING TO PERFORM ITS OBLIGATIONS UNDER THE CONTRACT AND IN THE SAME SEQU ENCE IN WHICH THEY ARE TO BE PERFORMED IT CANNOT BE SAID THAT THE PROVISIONS OF SECTION 53A OF THE TP ACT WILL COME INTO PLAY. ONCE PROVISIONS OF SECTION 53A OF TP ACT ARE NOT SATISFIED, THE TRANSA CTION IN QUESTION CANNOT ALSO FALL WITHIN THE SCOPE OF DEEMED TRANSF ER U/S 2(47)(V) OF THE ACT. THE CIT(A) ON EXAMINING THE FACTS OF THE A SSESSEES CASE, IN THE AFORESAID LEGAL CONTEXT, FOUND THAT THE TRANSFE REE HAD NEITHER PERFORMED NOR IS WILLING TO PERFORM HIS OBLIGATION UNDER THE AGREEMENT IN THE IMPUGNED ASSESSMENT YEAR. THE CIT(A) NOTED T HAT THE DEVELOPMENT AGREEMENT ON THE BASIS OF WHICH AO SOUG HT TO TAX CAPITAL GAIN WAS ENTERED INTO ON 04/05/2007, BUT, T HE TRANSFEREE HAS NOT PERFORMED EVEN A SINGLE ACT UNDER THE AGREEMENT EVEN AS ON DATE. HE NOTED THAT THE TRANSFEREE ORIGINALLY HAS M ADE PAYMENT OF RS. 13 LAKHS PER ACRE TO THE ASSESSEE AS A REFUNDABLE S ECURITY DEPOSIT. HOWEVER, THAT AMOUNT CANNOT BE CONSTRUED AS RECEIPT OF PART SALE CONSIDERATION. THE CIT(A) NOTED THAT AS PER CLAUSE 5 OF THE DEVELOPMENT AGREEMENT, THE DEVELOPER IS TO CONSTRUC T AT ITS OWN 8 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS COST, THE INTEGRATED RESIDENTIAL TOWNSHIP AS PER TH E PLAN APPROVED BY GHMC/HUDA OR ANY OTHER COMPETENT AUTHORITIES AND AS PER THE DETAILED SPECIFICATIONS TO BE AGREED. HOWEVER, THE RE IS NO PROGRESS IN THE DEVELOPMENT AGREEMENT IN THE IMPUGNED ASSESS MENT YEAR. THE DEVELOPER HAS NOT APPLIED FOR CONVERSION OF LAN D, MUNICIPAL SANCTION FOR DEVELOPMENT WAS NOT OBTAINED, BUILDING PLAN WAS NOT APPROVED BY THE COMPETENT AUTHORITY. THEREFORE, UNT IL PERMISSION IS GRANTED, A DEVELOPER CANNOT UNDERTAKE CONSTRUCTION. THE CIT(A) NOTED THAT AS A RESULT OF SUCH INACTION BY THE TRAN SFEREE NO CONSTRUCTION ACTIVITY HAS TAKEN PLACE EVEN AFTER LA PSE OF 5 YEARS FROM THE DATE OF ENTERING INTO DEVELOPMENT AGREEMENT ON 04/05/2007. HENCE, THERE IS A BREACH AND BREAKDOWN OF DEVELOPME NT AGREEMENT. FURTHER, THE CIT(A) NOTED THAT AO HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THERE IS DEVELOPMENT ACTIVITY IN THE P ROJECT DURING THE IMPUGNED AY AND THE DEVELOPER HAS INCURRED ANY COST OF CONSTRUCTION. ON ANALYSIS OF THE AFORESAID FACTS, THE CIT(A) INFERRED THAT THE DEVELOPER HAS NOT SHOWN ITS READINESS OR W ILLINGNESS TO PERFORM HIS PART OF THE CONTRACT UNDER THE DEVELOPM ENT AGREEMENT. FURTHER THE CIT(A) NOTED THAT AS PER THE DEVELOPMEN T AGREEMENT TIME IS THE ESSENCE OF THE CONTRACT AS THE PROPERTY IS T O BE DEVELOPED AND ASSESSEES SHARE IN THE BUILT UP AREA WAS SUPPOSED TO BE HANDED OVER WITHIN 36 MONTHS FROM THE DATE OF RECEIVING TH E SANCTION OF THE PLAN FROM HUDA AND MUNICIPALITY/ GRAMPANCHAYAT WITH A FURTHER GRACE PERIOD OF SIX MONTHS. THE CIT(A) NOTED THAT THE TR ANSFEREE NOT ONLY HAS FAILED TO PERFORM HIS OBLIGATION UNDER THE AGRE EMENT BUT WAS ALSO UNWILLING TO PERFORM HIS OBLIGATIONS IN THE IMPUGNE D AY. THE CIT(A) OPINED THAT HANDING OVER THE POSSESSION OF THE PROP ERTY IS ONLY ONE OF THE CONDITION UNDER SECTION 53A OF THE TP ACT, BUT IS NOT THE SOLE CONDITION. THE CIT(A) FURTHER WENT ON TO ANALYSE TH E IMPORT OF THE WORDS WILLING TO PERFORM AND NOTED THAT TO ASCER TAIN THE EXISTENCE OF WILLINGNESS ON THE PART OF THE TRANSFEREE ONE MUST NOT STOP AT ONE EVENT BUT WILLINGNESS IS TO BE JUDGED BY SERIES OF ACTIONS OF THE TRANSFEREE. IN THIS CONTEXT, THE CIT(A) NOTED THAT TO SHOW THAT THE 9 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS TRANSFEREE WAS WILLING TO PERFORM HIS PART OF THE C ONTRACT, HE MUST SURVEY THE LAND AND TO ATTRACT PURCHASERS PUT UP H OARDINGS, ESTABLISH SALES OFFICE AND CARRY OUT SITE DEVELOPMENT WORK, L AND SCAPING, SALES PROMOTION. EXECUTION OF CONSTRUCTION AND COMPLETION OF PROJECT ARE ALSO INCIDENTAL TO DEMONSTRATE THE WILLINGNESS OF T HE TRANSFEREE. ON ONE HAND THE POWER OF DEVELOPMENT AGREEMENT GRANTS, BUNDLE OF POSSESSIVE RIGHTS TO THE DEVELOPER, SIMULTANEOUSLY ON THE OTHER HAND TRANSFEREES GESTURE OF PAYMENT OF CONSIDERATION CO UPLED WITH DEVELOPMENT WORK CAN BE CONSTRUED TO BE A POSITIVE STEP TOWARDS WILLINGNESS TO FULFIL THE COMMITMENT. WHEN THE TRAN SFEREE BY ITS CONDUCT AND DEEDS DEMONSTRATES THAT IT IS UNWILLING TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT, THE DATE OF AGREEM ENT CEASES TO BE RELEVANT. IN SUCH SITUATION ONLY THE ACTUAL PERFOR MANCE OF TRANSFEREES OBLIGATION CAN GIVE RISE TO THE SITUATION ENVISAGED U/S 2(47)(V) READ WITH SECTION 53A OF THE TP ACT. THE CIT(A) WAS OF THE VIEW THAT AS THE FACTS AND MATERIALS ON RECORD CLEARLY INDICATE THE UNWILLINGNESS OF THE DEVELOPER TO PERFORM HIS PART OF THE CONTRACT, THE CONDITIONS OF SECTION 53A OF THE TP ACT ARE NOT FULFILLED. THE C IT(A) ALSO TOOK NOTE OF THE FACT THAT THE ASSESSEE ALONG WITH LAND OWNER S HAVE FILED A SUIT BEFORE THE FIRST ADDITIONAL DISTRICT JUDGE, RR DIST RICT, REGISTERED AS OS NO. 903/12, WHICH SHOWS THAT THE TRANSFEREE HAS NOT UNDERTAKEN ANY DEVELOPMENT WORK. HENCE, NO CAPITAL GAIN CAN B E SAID TO HAVE ARISEN ON THE DATE OF ENTERING INTO DEVELOPMENT AGR EEMENT AS INFERRED BY THE AO. ACCORDINGLY, THE CIT(A) HELD THAT THERE BEING NO TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) READ WITH SE CTION 53A OF THE TP ACT, THE SHORT TERM CAPITAL GAIN COMPUTED BY THE AO WILL NOT ARISE. WHILE COMING TO SUCH CONCLUSION THE CIT(A) RELIED U PON THE DECISION OF THE ITAT, HYDERABAD BENCH IN CASE OF K. RADHIKA VS. DCIT, 47 SOT 180. 8. FURTHER, THE LEARNED CIT(A) ALSO TAKING NOTE OF THE FACT THAT AS THE LAND AT THE TIME OF HANDING OVER TO THE DEVELOP ER WAS IN THE NATURE OF AGRICULTURAL LAND IT CANNOT BE CONSIDERED TO BE A CAPITAL 10 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE AC T. FOR THIS REASON ALSO, THERE CANNOT BE LEVY OF SHORT TERM CAPITAL GA IN EVEN ASSUMING THAT THERE IS TRANSFER OF LAND TO THE DEVELOPER. TH E CIT(A) ALSO NOTED THAT THOUGH THE FAIR MARKET VALUE WAS ADOPTED BY TH E AO AT RS. 1 CRORE PER ACRE BUT HE HAS NOT OBTAINED ANY INSTANCE OF SALE FOR ARRIVING AT IMAGINARY COST. THE CIT(A) RELYING UPO N THE RATIO OF THE DECISION OF B.C. SRINIVAS SHETTY, 128 ITR 294 HELD THAT ADOPTION OF FAIR MARKET VALUE CANNOT BE EQUATED WITH FULL VALUE OF CONSIDERATION AS THE HONBLE APEX COURT IN CASE OF BC SRINIVAS SH ETTY (SUPRA) HAS HELD THAT CHARGING SECTION AND COMPUTATION SECTION BEING AN INTEGRATED CODE IF ONE OF THE SECTION FAILS NO COMP UTATION CAN BE MADE. THE CIT(A) OBSERVED THAT AS THE FULL VALUE O F CONSIDERATION CANNOT BE ASCERTAINED WITH REFERENCE TO EITHER THE MARKET VALUE OR THE FUTURE VALUE THE COMPUTATION PROVISION FAILS, HENCE , THERE CANNOT BE ANY CHARGE TO CAPITAL GAIN. THE CIT(A) REFERRING TO A NUMBER OF JUDICIAL PRECEDENTS DELETED THE ADDITION MADE TOWAR DS SHORT TERM CAPITAL GAIN BY HOLDING AS UNDER: A) THERE WAS NO TRANSFER WITHIN THE MEANING OF EITH ER 2(47)(I) OR 2(47)(V). B) THIS IS A CASE IN WHICH PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT IS NOT APPLICABLE, AS THE BUILDER IS N OT WILLING AND READY TO PERFORM HIS PART OF THE CONTRACT. C) FOR THE REASONS STATED AT (A) & (B) ABOVE, THERE COULD BE NO TRANSFER WHICH IS SINE QUA NON FOR LEVY OF CAPITAL GAINS TAX. D) THE AO HAS ALSO NOT ADDRESSED TO THE BASIC ISSUE AS TO WHETHER THE LAND IS AGRICULTURAL OR NOT. HENCE, HE HAS NOT REACHED ANY CONCLUSION WHETHER THE LAND IS A CAPITA L ASSET, THE TRANSFER OF WHICH IS EXIGIBLE TO CAPITAL GAIN. E) THIS IS CASE IN WHICH FULL VALUE OF CONSIDERATION IS NOT ASCERTAINABLE AS THE SAME CANNOT BE EQUATED WITH FM V AS DECIDED BY THE APEX COURT. THEREFORE, ANOTHER ESSEN TIAL REQUIREMENT OF SECTION 48 FAILS. AS DECIDED BY THE APEX COURT, IF COMPUTATION SECTION FAILS, CHARGE ALSO FA ILS. HENCE, NO COMPUTATION IS POSSIBLE IN THE PRESENT CASE. THE SRO'S VALUE (PREVAILING RATE OF RS. 1 CRORE PER ACRE AS PER THE LANDS 11 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS SOLD BY SOME LAND OWNERS AT THIS AREA OF BOWRAMPET/DUNDIGAL MENTIONED ON PAGE 8 OF THE ASSESSMENT ORDER), AS ADOPTED BY THE AO CANNOT BE EQUATED WITH FULL VALUE OF CONSIDERATION, WHICH MEANS THE PRICE BARGAINED FOR AND PAID. THIS FIGURE IS HYPOTHETICAL AND ON ANY EVENT, THE SAME CANNOT BE F ULL VALUE OF CONSIDERATION. F) THE APPROACH OF THE AD RUNS CONTRARY TO THE THEORY OF REAL INCOME. IN THIS CASE, ON THE DATE OF ENTERING INTO DEVELOPMENT AGREEMENT, NO CONSIDERATION HAS EITHER ACCRUED OR RECEIVED BY THE APPELLANT FOR THE PURPOSE OF WORKING OUT THE GAIN. G) THE CASE IS FULLY SUPPORTED BY THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF RAGHURAM REDDY (SUPRA). THIS IS A DECISION WHICH COMPREHENSIVELY ADDRESSES TO ALL THE ISSUES IN RELATION TO ASSESSMENT OF CAPITAL GAIN IN CASE OF A DEVELOPMENT AGREEMENT. H) ALTHOUGH, THE CASE OF MAYA SHENOY WAS DECIDED LA TER, THE CASE OF RAGHURAM REDDY WHICH WAS DECIDED BY A COORD INATE BENCH WAS NOT DISTINGUISHED. IT IS A SETTLED PRINCI PLE THAT THE LATTER DECISION SHOULD NOT WEIGH OVER AN EARLIER DE CISION, IF THE EARLIER DECISION ADDRESSES TO ALL THE ISSUES. THE C ASE OF RAGHURAM REDDY FALLS IN THIS CATEGORY. I) WHILE DECIDING THE CASE, I HAVE KEPT IN MIND THE PRINCIPLES EVOLVED BY THE APEX COURT ON VARIOUS ISSUES LIKE TH E RELATIONSHIP BETWEEN THE CHARGING SECTION AND COMPU TATION SECTION, THE CONCEPT OF FULL VALUE OF CONSIDERATION AND ALSO THE THEORY OF REAL INCOME. 9. THE LEARNED DR REFLECTING THE POINT OF VIEW OF A O SUBMITTED THAT AS THE ASSESSEE HAS HANDED OVER POSSESSION OF THE P ROPERTY ON THE DATE OF ENTERING INTO DEVELOPMENT AGREEMENT THERE W AS TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT. 10. THE LEARNED AR ON THE OTHER HAND STRONGLY SUPPO RTING THE ORDER OF THE CIT(A) SUBMITTED THAT THOUGH THE ASSESSEE HA D ENTERED INTO THE DEVELOPMENT AGREEMENT IN THE PREVIOUS YEAR RELATING TO THE AY UNDER DISPUTE, BUT, AS THE DEVELOPER HAS NEITHER PERFORME D NOR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THE DEVELOPMENT A GREEMENT FAILS. THE 12 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS LEARNED AR REITERATING THE SUBMISSIONS MADE BEFORE THE CIT(A) CONTENDED THAT EVEN AS ON DATE THERE IS NO DEVELOPM ENT ACTIVITY BY THE DEVELOPER. THE CONVERSION OF THE LAND FROM AGRI CULTURAL TO NON- AGRICULTURAL HAS ALSO NOT TAKEN PLACE. IT WAS SUBM ITTED THAT FOR THIS VERY REASON THE ASSESSEE ALONG WITH LAND OWNERS HAV E FILED A SUIT IN THE CITY CIVIL COURT FOR CANCELLATION OF THE DEVELO PMENT AGREEMENT, WHICH IS PENDING. IN THESE CIRCUMSTANCES, IT CANNO T BE SAID THAT THERE IS TRANSFER OF PROPERTY GIVING RISE TO CAPITAL GAIN . THE LEARNED AR SUBMITTED THAT AS DEVELOPER IS TOTALLY UNWILLING TO PERFORM HIS PART OF CONTRACT, THE CONDITIONS OF SECTION 2(47)(V) READ W ITH SECTION 53A OF THE TP ACT, IS NOT FULFILLED. IN SUPPORT OF SUCH CO NTENTION THE LEARNED AR RELIED UPON A DECISION OF THE ITAT, HYDERABAD IN CASE OF SMT. K. RADHIKA AND OTHERS V. DCIT (SUPRA) AND A RECENT DEC ISION OF ITAT, HYDERABAD B BENCH IN CASE OF BINJUSARIA PROPERTIE S LTD VS. ACIT, DATED 04/04/2014. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD ALONG WITH THE ORDERS PASSE D BY THE REVENUE AUTHORITIES. WE HAVE ALSO CAREFULLY APPLIED OUR MI ND TO THE DECISIONS PLACED BEFORE US. IT IS CLEAR FROM THE ASSESSMENT O RDER THAT THE AO HAS COMPUTED CAPITAL GAIN IN THE IMPUGNED ASSESSMEN T YEAR SOLELY ON THE BASIS OF THE FACT THAT ASSESSEE HAS ENTERED INT O THE DEVELOPMENT AGREEMENT WITH THE DEVELOPER 04/05/2007 AND HANDED OVER POSSESSION OF THE PROPERTY. HE HAS ALSO PUT STRESS ON THE FACT THAT THE ASSESSEE HAS RECEIVED REFUNDABLE SECURITY DEPOSIT F ROM THE DEVELOPER @ RS. 13 LAKHS PER ACRE. HOWEVER, AS RIGHTLY HELD B Y THE LEARNED CIT(A) NEITHER ENTERING INTO THE DEVELOPMENT AGREEM ENT OR HANDING OVER OF THE POSSESSION OF PROPERTY ARE THE SOLE AND EXCLUSIVE CRITERIA TO CONSTRUE TRANSFER OF CAPITAL ASSET AS ENVISAGED U/S 2(47)(V) OF THE ACT. ON PLAIN READING OF SECTION 2(47)(V) WOULD MAK E IT CLEAR THAT IT REFERS TO HANDING OVER POSSESSION OF THE PROPERTY U NDER A DEVELOPMENT AGREEMENT TOWARDS PART PERFORMANCE OF C ONTRACT AS ENVISAGED U/S 53A OF THE TP ACT. HOWEVER, THE HANDI NG OVER OF 13 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS POSSESSION BY THE ASSESSEE TOWARDS PART PERFORMANCE OF CONTRACT WILL NOT AMOUNT TO TRANSFER UNLESS THE TRANSFEREE IS ALS O WILLING AND READY TO PERFORM HIS PART OF THE CONTRACT UNDER THE DEVEL OPMENT AGREEMENT. AS CAN BE SEEN FROM THE FACTS AND MATERIALS ON RECO RD, THE DEVELOPER APART FROM MAKING PAYMENT OF THE REFUNDABLE SECURIT Y DEPOSIT OF RS. 13 LAKHS PER ACRE HAS NOT TAKEN ANY STEP TOWARDS DE VELOPMENT OF THE PROPERTY. IN FACT THE MOST IMPORTANT ACT OF CONVERT ING THE NATURE OF LAND FROM AGRICULTURE TO NON AGRICULTURE HAS NOT BE EN PUT INTO MOTION. THE NATURE AND CHARACTER OF LAND REMAINS AS IT IS E VEN TODAY. THE DEVELOPER HAS NOT TAKEN ANY STEPS TO GET SANCTION/A PPROVAL OF PLAN, BUILDING CONSTRUCTION, ETC. FROM THE COMPETENT AUTH ORITIES. EVEN NOT A SINGLE DEVELOPMENT ACTIVITY LIKE LEVELING OF LAND, SALES PROMOTION, HAS BEEN INITIATED BY THE DEVELOPER. THESE FACTS, W HICH HAVE NOT BEEN CONTROVERTED BY THE DEPARTMENT, CLEARLY DEMONSTRATE UNWILLINGNESS ON THE PART OF THE DEVELOPER TO PERFORM HIS PART OF TH E CONTRACT. IT IS ALSO A MATTER REQUIRING CONSIDERATION THAT THE ASSESSEE ALONG WITH OTHER LAND OWNERS HAVE FILED A CIVIL SUIT FOR CANCELLATIO N OF THE DEVELOPMENT AGREEMENT, WHICH CLEARLY BRINGS OUT THE DISPUTE BET WEEN THE LAND OWNERS AND DEVELOPER AND ALSO THE FACT THAT DEVELOP ER HAS NOT ONLY FAILED TO PERFORM BUT IS ALSO UNWILLING TO PERFORM HIS PART OF THE CONTRACT. THEREFORE, WHEN THE DEVELOPER HAS NOT PER FORMED OR THERE IS UNWILLINGNESS TO PERFORM HIS PART OF THE CONTRACT, IT CANNOT BE CONCLUDED THAT THERE IS TRANSFER OF CAPITAL ASSET I N TERMS WITH SECTION 2(47(V) READ WITH SECTION 53A OF THE TP ACT ONLY BE CAUSE THE ASSESSEE HAS ENTERED INTO A DEVELOPMENT AGREEMENT O R EVEN HANDED OVER POSSESSION OF THE LAND TO THE DEVELOPER DURING THE PREVIOUS YEAR RELEVANT TO AY UNDER DISPUTE. AS RIGHTLY HELD BY T HE LD. CIT(A), HANDING OVER POSSESSION OF THE PROPERTY IS NOT THE SOLE CTRITERIA BUT ONE OF THE CRITERIA TO CONSTRUE TRANSFER U/S 53A OF THE T.P. ACT. THE ITAT HYDERABAD BENCH IN CASE OF SMT. K. RADHIKA VS. DCIT (SUPRA) HAS HELD AS UNDER: 48. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS SO EXPRESSED IN THIS COMMENTARY ON THE PROVISIONS OF T HE TRANSFER OF PROPERTY ACT. IT IS THUS CLEAR THAT 'WI LLINGNESS 14 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS TO PERFORM' FOR THE PURPOSES OF SECTION 53A IS SOME THING MORE THAN A STATEMENT OF INTENT; IT IS THE UNQUALIF IED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE VENDEE TO PERFORM ITS OBLIGATIONS. UNLESS THE PARTY HAS PERFO RMED OR IS WILLING TO PERFORM ITS OBLIGATIONS UNDER THE CON TRACT, AND IN THE SAME SEQUENCE IN WHICH THESE ARE TO BE PERFO RMED, IT CANNOT BE SAID THAT THE PROVISIONS OF SECTION 53 A OF THE TRANSFER OF PROPERTY ACT WILL COME INTO PLAY ON THE FACTS OF THAT CASE. IT IS ONLY ELEMENTARY THAT, UNLESS PROVI SIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT ARE SAT ISFIED ON THE FACTS OF A CASE, THE TRANSACTION IN QUESTION CANNOT FALL WITHIN THE SCOPE OF DEEMED TRANSFER UNDER SECT ION 2(47)(V) OF THE IT ACT. LET US THEREFORE CONSIDER W HETHER THE TRANSFEREE, ON THE FACTS OF THE PRESENT CASE, C AN BE SAID TO HAVE 'PERFORMED OR IS WILLING TO PERFORM' I TS OBLIGATIONS UNDER THE AGREEMENT. 49. EVEN A CURSORY LOOK AT THE ADMITTED FACTS OF TH E CASE WOULD SHOW THAT THE TRANSFEREE HAD NEITHER PERFORME D NOR WAS IT WILLING TO PERFORM ITS OBLIGATION UNDER THE AGREEMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATIO N. THE AGREEMENT BASED ON WHICH CAPITAL GAINS ARE SOUG HT TO BE TAXED IN THE PRESENT CASE IS AGREEMENT DATED 11.05.2005 BUT THIS AGREEMENT WAS NOT ADHERED TO BY THE TRANSFEREE. THE TRANSFEREE ORIGINALLY MADE A PAYMEN T OF RS.10 LAKHS ON 11.5.2005 AND ANOTHER PAYMENT OF RS. 90 LAKHS ON THE SAME DAY AS REFUNDABLE SECURITY DEPOSI T. HOWEVER, OUT OF THIS A SUM OF RS.50 LAKHS WAS SAID TO BE REFUNDED BY THE LANDLORD TO THE DEVELOPER ON 5.3.20 09. AS SUCH, THE ASSESSEE HAS RECEIVED ONLY A MEAGER AMOUN T AS REFUNDABLE SECURITY DEPOSIT WHICH CANNOT BE CONS TRUED AS RECEIPT OF PART OF SALE CONSIDERATION. ADMITTEDL Y, THERE IS NO PROGRESS IN THE DEVELOPMENT AGREEMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE MUNICIPAL SANCTION FOR DEVELOPMENT WAS OBTAINED NOT IN THIS ASSESSMENT YEAR AND IT WAS OBTAINED ONLY ON 17.09.2 006 FROM THE HYDERABAD URBAN DEVELOPMENT AUTHORITY. THE SANCTION OF THE BUILDING PLAN IS UTMOST IMPORTANT F OR THE IMPLEMENTATION OF THE AGREEMENT ENTERED BETWEEN THE PARTIES. WITHOUT SANCTION OF THE BUILDING PLAN, THE VERY GENESIS OF THE AGREEMENT FAILS. TO ENABLE THE EXECU TION OF THE AGREEMENT, FIRSTLY, PLAN IS TO BE APPROVED BY T HE COMPETENT AUTHORITY. IN FACT, THE BUILDING PLAN WAS NOT GOT APPROVED BY THE BUILDER IN THE ASSESSMENT YEAR UNDE R CONSIDERATION. UNTIL PERMISSION IS GRANTED, A DEVEL OPER CANNOT UNDERTAKE CONSTRUCTION. AS A RESULT OF THIS LAPSE BY THE TRANSFEREE, THE CONSTRUCTION WAS NOT TAKEN PLAC E IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THERE IS A BRE ACH AND BREAK DOWN OF DEVELOPMENT AGREEMENT IN THE 15 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS ASSESSMENT YEAR UNDER CONSIDERATION. NOTHING IS BRO UGHT ON RECORD BY AUTHORITIES TO SHOW THAT THERE WAS DEVELOPMENT ACTIVITY IN THE PROJECT DURING THE ASSE SSMENT YEAR UNDER CONSIDERATION AND COST OF CONSTRUCTION W AS INCURRED BY THE BUILDER/DEVELOPER. HENCE IT IS TO B E INFERRED THAT NO AMOUNT OF INVESTMENT BY THE DEVELO PER IN THE CONSTRUCTION ACTIVITY DURING THE ASSESSMENT YEA R IN THIS PROJECT AND IT WOULD AMOUNT TO NON-INCURRING O F REQUIRED COST OF ACQUISITION BY THE DEVELOPER. IN T HE ASSESSMENT YEAR UNDER CONSIDERATION, IT IS NOT POSS IBLE TO SAY WHETHER THE DEVELOPER PREPARED TO CARRY OUT THO SE PARTS OF THE AGREEMENT TO THEIR LOGICAL END. THE DE VELOPER IN THIS ASSESSMENT YEAR HAD NOT SHOWN ITS READINESS OR HAVING MADE PREPARATION FOR THE COMPLIANCE OF THE AGREEMENT. THE DEVELOPER HAS NOT TAKEN STEPS TO MAK E IT ELIGIBLE TO UNDERTAKE THE PERFORMANCE OF THE AGREEM ENT WHICH ARE THE PRIMARY INGREDIENT THAT MAKE A PERSON ELIGIBLE AND ENTITLED TO MAKE THE CONSTRUCTION. THE ACT AND CONDUCT OF THE DEVELOPER IN THIS ASSESSMENT YEAR SH OWS THAT IT HAD VIOLATED ESSENTIAL TERMS OF THE AGREEME NT WHICH TEND TO SUBVERT THE RELATIONSHIP ESTABLISHED BY THE DEVELOPMENT AGREEMENT. BEING SO, IT WAS CLEAR THAT IN THE YEAR UNDER CONSIDERATION, THERE WAS NO TRANSFER OF NOT ONLY THE FLATS AS SUPERSTRUCTURE BUT ALSO THE PROPO RTIONATE LAND BY THE ASSESSEE UNDER THE JOINT DEVELOPMENT AGREEMENT. AS PER CLAUSE NO. 12.11 AND 19.1 OF DEVELOPMENT AGREEMENT-CUM POWER OF ATTORNEY, TIME I S THE ESSENCE OF THE CONTRACT AND AS PER CLAUSE NO.12 .11 THE SAID PROPERTY IS TO BE DEVELOPED AND HAND OVER THE POSSESSION OF THE OWNERS ALLOCATION TO THE OWNERS AND OR THEIR NOMINEES WITHIN 24 MONTHS FROM THE DATE OF RECEIVING THE SANCTION OF THE PLAN FROM HUDA AND MUNICIPALITY/GRAM PANCHAYAT WITH A FURTHER GRACE PE RIOD OF 3 MONTHS. BUT THE FACT REMAINS THAT THE TRANSFER EE WAS NOT ONLY FAILED TO PERFORM ITS OBLIGATIONS UNDER TH E AGREEMENT, BUT ALSO UNWILLING TO PERFORM ITS OBLIGA TIONS IN THE ASSESSMENT YEAR UNDER CONSIDERATION. EVEN OTHERWISE, THE ASSESSING AUTHORITIES HAS NOT BROUGH T ON RECORD THE ACTUAL POSITION OF THE PROJECT EVEN AS O N THE DATE OF ASSESSMENT OR HE HAS NOT RECORDED THE FINDI NGS WHETHER THE DEVELOPER STARTED THE CONSTRUCTION WORK AT ANY TIME DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION OR ANY DEVELOPMENT HAS TAKEN PLACE IN THE PROJECT I N THE RELEVANT PERIOD. HE WENT ON TO PROCEED ON THE SOLE ISSUE WITH REGARD TO HANDING OVER THE POSSESSION OF THE PROPERTY TO THE DEVELOPER IN PART PERFORMANCE OF TH E DEVELOPMENT AGREEMENT-CUM-GENERAL POWER OF ATTORNEY . IN OUR OPINION, THE HANDING OVER OF THE POSSESSION OF THE PROPERTY IS ONLY ONE OF THE CONDITION U/S 53A OF TH E 16 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS TRANSFER OF PROPERTY ACT BUT IT IS NOT THE SOLE AND ISOLATED CONDITION. IT IS NECESSARY TO GO INTO WHETHER OR NO T THE TRANSFEREE WAS 'WILLING TO PERFORM' ITS OBLIGATION UNDER THESE CONSENT TERMS. WHEN TRANSFEREE, BY ITS CONDUC T AND BY ITS DEEDS, DEMONSTRATES THAT IT IS UNWILLING TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT IN THIS ASSESSM ENT YEAR, THE DATE OF AGREEMENT CEASES TO BE RELEVANT. IN SUCH A SITUATION, IT IS ONLY THE ACTUAL PERFORMANCE OF TRANSFEREE'S OBLIGATIONS WHICH CAN GIVE RISE TO THE SITUATION ENVISAGED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. ON THESE FACTS, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSFEREE WAS WILLING TO PERFORM ITS OBLIGATIO NS IN THE FINANCIAL YEAR IN WHICH THE CAPITAL GAINS ARE SOUGH T TO BE TAXED BY THE REVENUE. WE HOLD THAT THIS CONDITION L AID DOWN UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS NOT SATISFIED IN THIS ASSESSMENT YEAR. ONCE WE COME TO THE CONCLUSION THAT THE TRANSFEREE WAS NOT 'WILL ING TO PERFORM', AS STIPULATED BY AND WITHIN MEANINGS ASSI GNED TO THIS EXPRESSION UNDER SECTION 53A OF THE TRANSFE R OF PROPERTY ACT, ITS CONTRACTUAL OBLIGATIONS IN THIS P REVIOUS YEAR RELEVANT TO THE PRESENT ASSESSMENT YEAR, IT IS ONLY A COROLLARY TO THIS FINDING THAT THE DEVELOPMENT AGRE EMENT DT. 11.5.2005 BASED ON WHICH THE IMPUGNED TAXABILIT Y OF CAPITAL GAIN IS IMPOSED BY THE AO AND UPHELD BY THE CIT(A), CANNOT BE SAID TO BE A 'CONTRACT OF THE NAT URE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT' AND, ACCORDINGLY, PROVISIONS OF SECTION 2(47)(V) CA NNOT BE INVOKED ON THE FACTS OF THIS CASE CHATURBHUJ DWARKA DAS KAPADIA V. CIT'S CASE (SUPRA) UNDOUBTEDLY LAYS DOWN A PROPOSITION WHICH, MORE OFTEN THAN NOT, FAVOURS THE REVENUE, BUT, ON THE FACTS OF THIS CASE, THE SAID J UDGMENT SUPPORTS THE CASE OF THE ASSESSEE INASMUCH AS 'WILLINGNESS TO PERFORM' HAS BEEN SPECIFICALLY RECO GNIZED AS ONE OF THE ESSENTIAL INGREDIENTS TO COVER A TRAN SACTION BY THE SCOPE OF SECTION 53A OF THE TRANSFER OF PROP ERTY ACT. REVENUE DOES NOT GET ANY ASSISTANCE FROM THIS JUDICIAL PRECEDENT. THE VERY FOUNDATION OF REVENUE' S CASE IS THUS DEVOID OF LEGALLY SUSTAINABLE BASIS. 50. THAT IS CLEARLY AN ERRONEOUS ASSUMPTION, AND AN THE PROVISIONS OF DEEMED TRANSFER UNDER SECTION 2(47)(V ) COULD NOT HAVE BEEN INVOKED ON THE FACTS OF THE PRE SENT CASE AND FOR THE ASSESSMENT YEAR IN DISPUTE BEFORE US. IN THE PRESENT CASE, THE SITUATION IS THAT THE ASSESSE E HAS RECEIVED ONLY A MEAGER AMOUNT' OUT OF TOTAL CONSIDERATION, THE TRANSFEREE IS AVOIDING ADHERING TO THE AGREEMENT AND THERE IS NO EVIDENCE BROUGHT ON RECOR D BY THE REVENUE AUTHORITIES TO SHOW THAT THERE WAS ACTU AL CONSTRUCTION HAS BEEN TAKEN PLACE AT THE IMPUGNED 17 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS PROPERTY IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO THERE IS NO EVIDENCE TO SHOW THAT THE RIGHT TO RECEIVE THE SALE CONSIDERATION WAS ACTUALLY ACCRUED TO THE ASSESSEE. WITHOUT ACCRUAL OF THE CONSIDERATION TO T HE ASSESSEE, THE ASSESSEE IS NOT EXPECTED TO PAY CAPIT AL GAINS ON THE ENTIRE AGREED SALES CONSIDERATION. WHE N TIME IS ESSENCE OF THE CONTRACT, AND THE TIME SCHED ULE IS NOT ADHERED TO, IT CANNOT BE SAID THAT SUCH A CONTR ACT CONFERS ANY RIGHTS ON THE VENDOR/LANDLORD TO SEEK REDRESSAL UNDER SECTION 53A OF THE TRANSFER OF PROP ERTY ACT. THIS AGREEMENT CANNOT, THEREFORE, BE SAID TO B E IN THE NATURE OF A CONTRACT REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. IT CANNOT, THEREFORE, BE SAID THAT THE PROVISIONS OF SECTION 2(47)(V) WILL APPLY IN TH E SITUATION BEFORE US. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS DISCUSSED ABOV E, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE DES ERVES TO SUCCEED ON REASON THAT THE CAPITAL GAINS COULD N OT HAVE BEEN TAXED IN THE IN THIS ASSESSMENT YEAR IN A PPEAL BEFORE US. THE OTHER GROUNDS RAISED BY THE ASSESSEE S IN THEIR APPEALS HAVE BECOME IRRELEVANT AT THIS POINT OF TIME AS WE HAVE HELD THAT PROVISIONS OF SECTION 2(47)(V) WILL NOT APPLY TO THE ASSESSEES IN THE ASSESSMENT YEAR U NDER CONSIDERATION. . 12. THE COORDINATE BENCH AGAIN IN CASE OF M/S BINJU SARIA PROPERTIES (SUPRA) FOLLOWING ANOTHER DECISION OF SAME COORDINA TE BENCH HELD AS UNDER: 12. IT IS AN UNDISPUTED FACT THAT AS ON DATE, TH ERE WAS NO DEVELOPMENTAL ACTIVITY ON THE LAND WHICH IS SUBJECT MATTER OF DEVELOPMENT AGREEMENT. THE PROCESS OF CONSTRUCTION HAS NOT BEEN EVEN INITIATED AND NO APPROVAL FOR THE CONSTRUCTION OF THE BUILDING IS OBTAINED. THUS, THE SALE CONSIDERATION IN THE FORM OF DEVELOPED AREA HAS NOT BEEN RECEIVED. MERE RECEIPT OF REFUND ABLE DEPOSIT CANNOT BE TERMED AS RECEIPT OF CONSIDERATION. FURTH ER, AS SUBMITTED , THE ASSESSING OFFICER CALCULATED THE CAPITAL GAIN ON THE ENTIRE LAND, EVEN THOUGH THE ASSESSEE HAS RETAINED 38% SHA RE TO ITSELF. THE VALUATION WAS ALSO DISPUTED. THERE IS, THEREFO RE, NO ACCRUAL OF INCOME IN FAVOUR OF THE ASSESSEE AS PER S.48 OF THE ACT. DUE TO LAPSE ON THE PART OF THE TRANSFEREE, THE CONSTRUCTI ON HAS NOT TAKEN PLACE IN THE YEAR UNDER CONSIDERATION, AND IT HAS N OT COMMENCED EVEN NOW. IN THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE, WHEREIN WHILE THE ASSESSEE HAS FULFILLED ITS PART O F THE OBLIGATION UNDER THE DEVELOPMENT AGREEMENT, THE DEVELOPER HAS NOT DONE ANYTHING TO DISCHARGE THE OBLIGATIONS CAST ON IT UN DER THE DEVELOP AGREEMENT, THE CAPITAL GAINS CANNOT BE BROUGHT TO T AX IN THE YEAR UNDER APPEAL, MERELY ON THE BASIS OF SIGNING OF THE DEVELOPMENT 18 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS AGREEMENT DURING THIS YEAR. WE ARE SUPPORTED IN TH IS BEHALF BY THE DECISION OF THE TRIBUNAL DATED 3 RD JANUARY, 2014 IN THE CASE OF FIBARS INFRATECH PVT. LTD. (SUPRA), WHEREIN IT WAS HELD AS FOLLOWS- 59. ON THESE FACTS, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSFEREE WAS WILLING TO PERFORM ITS OBLIGATIONS I N THE FINANCIAL YEAR IN WHICH THE CAPITAL GAINS ARE SOUGH T TO BE TAXED BY THE REVENUE. WE HOLD THAT THIS CONDITION L AID DOWN UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS NOT SATISFIED IN THIS ASSESSMENT YEAR. ONCE WE COME TO THE CONCLUSION THAT THE TRANSFEREE'S 'WILLING TO PERFORM' THE CONTRACT IS ASCERTAINABLE IN THE ASSESSMENT YEA R, AS STIPULATED BY AND WITHIN THE MEANINGS ASSIGNED TO T HIS EXPRESSION UNDER SECTION 53A OF THE TRANSFER OF PRO PERTY ACT, ITS CONTRACTUAL OBLIGATIONS IN THIS PREVIOUS Y EAR RELEVANT TO THE PRESENT ASSESSMENT YEAR, IT IS ONLY A COROLLARY TO THIS FINDING THAT THE DEVELOPMENT AGRE EMENT DT. 15.12.2006, BASED ON WHICH THE IMPUGNED TAXABIL ITY OF CAPITAL GAIN IS IMPOSED BY THE AO AND UPHELD BY THE CIT(A), CANNOT BE SAID TO BE A 'CONTRACT OF THE NAT URE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT' AND, ACCORDINGLY, PROVISIONS OF SECTION 2(47)(V) CA NNOT BE INVOKED ON THE FACTS OF THIS CASE. THE JUDGEMENT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V. CIT (SUPRA) UNDOUBTEDLY LAYS DOWN A PROPOSITION WHICH, MORE OFT EN THAT NOT, FAVOURS THE REVENUE, BUT, ON THE FACTS OF THIS CASE, THE SAID JUDGMENT SUPPORTS THE CASE OF THE ASSESSEE INASMUCH AS 'WILLINGNESS TO PERFORM' HAS B EEN SPECIFICALLY RECOGNIZED AS ONE OF THE ESSENTIAL ING REDIENTS TO COVER A TRANSACTION BY THE SCOPE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE REVENUE DOES NOT GET ANY ASSISTANCE FROM THIS JUDICIAL PRECEDENT. THE VERY FOUNDATION OF REVENUE'S CASE IS THUS DEVOID OF LEGA LLY SUSTAINABLE BASIS. 60. THAT IS CLEARLY AN ERRONEOUS ASSUMPTION, AS THE PROVISIONS OF DEEMED TRANSFER UNDER SECTION 2(47)(V ) COULD NOT HAVE BEEN INVOKED ON THE FACTS OF THE PRE SENT CASE AND FOR THE ASSESSMENT YEAR IN DISPUTE BEFORE US. IN THE PRESENT CASE, THE SITUATION IS THAT THE ASSESSE E HAS NOT RECEIVED ANY CONSIDERATION, AND THERE IS NO EVI DENCE BROUGHT ON RECORD BY THE REVENUE AUTHORITIES TO SHO W THAT THERE WAS ACTUAL CONSTRUCTION TAKEN PLACE AT THE IMPUGNED PROPERTY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO THERE IS NO EVIDENCE TO SHOW THAT THE RIGHT TO RECEIVE THE SALE CONSIDERATION WAS ACTUALLY ACCRUED TO THE ASSESSEE. WITHOUT ACCRUAL OF THE CONSIDERATION TO THE ASSESSE E, THE ASSESSEE IS NOT EXPECTED TO PAY CAPITAL GAINS ON TH E 19 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS ENTIRE AGREED SALES CONSIDERATION. WHEN TIME IS ESS ENCE OF THE CONTRACT, AND THE TIME SCHEDULE IS 30 MONTHS TO COMPLETE CONSTRUCTION WITH ADDITIONAL GRACE PERIOD OF 6 MONTHS, IT CANNOT BE SAID THAT SUCH A CONTRACT CONF ERS ANY RIGHTS ON THE VENDOR/LANDLORD TO SEEK REDRESSAL UND ER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS AGREEMENT CANNOT, THEREFORE, BE SAID TO BE IN THE N ATURE OF A CONTRACT REFERRED TO IN SECTION 53A OF THE TRA NSFER OF PROPERTY ACT. IT CANNOT, THEREFORE, BE SAID THAT TH E PROVISIONS OF SECTION 2(47)(V) WILL APPLY IN THE SI TUATION BEFORE US. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE DESERVES TO SUCCE ED ON THE REASON THAT THE CAPITAL GAINS COULD NOT HAVE BEEN TAXED IN THE IN THIS ASSESSMENT YEAR IN APPEAL BEFO RE US. 13. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND HOLD THAT THE CAPITAL GAINS ON THE PROPERTY IN QUESTION CANNOT BE BROUGHT TO TAX IN THE YEAR UNDER APPEAL, AND CONSEQUENTLY DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A ). ASSESSEES GROUNDS ON THIS ISSUE ARE ALLOWED. 13. ON GOING THROUGH THE AFORESAID DECISIONS OF THE COORDINATE BENCH, THE RATIO WHICH EMERGES IS UNLESS THERE IS W ILLINGNESS ON THE PART OF THE DEVELOPER TO PERFORM HIS PART OF THE CO NTRACT, THERE CANNOT BE A TRANSFER OF CAPITAL ASSET AS ENVISAGED U/S 2 (47)(V) READ WITH SECTION 53A OF THE TP ACT. THE RATIO LAID DOWN AS A BOVE SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE AS THE DEP ARTMENT HAS FAILED TO CONTROVERT THE FINDING OF THE LEARNED CIT(A) BY BRINGING MATERIAL ON RECORD TO SHOW THAT THE DEVELOPER HAS TAKEN ANY STE PS TOWARDS DEVELOPMENT ACTIVITY. FURTHER, WE MAY OBSERVE, THOU GH THE AO REFERRING TO THE DEVELOPMENT AGREEMENT HAS INFERRED THAT POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE DEVELOPER, H OWEVER, ON GOING THROUGH THE PLEADINGS AND PRAYER OF THE PLAINTIFFS IN THE PLAINT FILED IN CIVIL COURT, A COPY OF WHICH IS AT PAGE 51 OF ASSES SEES PAPER BOOK, IT APPEARS ASSESSEE ALONG WITH OTHERS ARE STILL HAVING PHYSICAL POSSESSION OVER THE PROPERTY. BE THAT AS IT MAY, AF TER CAREFUL CONSIDERATION OF FACTS AND MATERIALS ON RECORD, WE ARE OF THE VIEW, CIT(A)S ORDER BEING WELL FOUNDED AND WELL REASONED NEEDS TO BE 20 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS UPHELD. ANOTHER CRUCIAL ASPECT WHICH NEEDS TO BE C OMMENTED UPON IS THE CIT(A) HAS ALSO HELD THAT THE TRANSACTION WILL NOT ATTRACT CAPITAL GAIN AS THE ASSET TRANSFERRED BEING AN AGRICULTURAL LAND IS NOT A CAPITAL ASSET AS DEFINED U/S 2(14) OF THE ACT. THIS FINDING OF THE LEARNED CIT(A) REMAINS UNCHALLENGED AND UNCONTROVER TED BY THE DEPARTMENT. FOR THIS REASON ALSO, SHORT TERM CAPIT AL GAIN COMPUTED BY THE AO CANNOT BE SUSTAINED. IN VIEW OF THE AFOR ESAID, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 14. SO FAR AS THE GROUND RAISED BY THE DEPARTMENT C HALLENGING THE VIEW OF CIT(A) TO THE EFFECT THAT THERE CANNOT BE A NY CAPITAL GAIN IN ABSENCE OF VALUE OF CONSIDERATION RECEIVED OR ACCRU ED, WE ARE OF THE VIEW, THE SAME IS NOT REQUIRED TO BE ADJUDICATED AS IT IS OF MERE ACADEMIC INTEREST IN VIEW OF OUR FINDING THAT THERE IS NO TRANSFER OF CAPITAL ASSET BY THE ASSESSEE IN THE IMPUGNED ASSES SMENT YEAR. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) BY D ISMISSING THE GROUNDS RAISED. 15. BEFORE PARTING WE THOUGHT IT NECESSARY TO CLARI FY, THE ISSUE WHETHER THERE IS TRANSFER OF CAPITAL ASSET UNDER A DEVELOPMENT AGREEMENT, AS CONTEMPLATED U/S 2(47)(V) READ WITH S ECTION 53A OF THE T.P. ACT, HAS TO BE DECIDED KEEPING IN VIEW THE FAC TS INVOLVED IN EACH CASE. RATIO LAID DOWN IN A PARTICULAR CASE CANNOT B E APPLIED UNIFORMLY TO ALL CASES WITHOUT CONSIDERING THE FACTUAL ASPECT . 16. THE FACTS AND GROUNDS BEING SIMILAR, THE DECISION A BOVE WILL EQUALLY APPLY TO OTHER APPEALS AS WELL. 17. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. 21 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS ITA NO. 1703/H/12 APPEAL BY ASSESSEE 18. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE I S IN RESPECT OF ADDITION OF RS. 19,86,664 MADE AS UNEXPLAINED CASH CREDIT BY THE AO AND CONFIRMED BY THE CIT(A). 19. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDING THE AO ON EXAMINING THE RECORD NOTICED THAT THE ASSESSEE A ND HIS WIFE HAVE SHOWN SUBSTANTIAL UNSECURED LOAN FOR THE FY 2003-04 TO 2008-09 CLAIMED TO HAVE BEEN RECEIVED FROM HIS FAMILY MEMBE RS VIZ., BROTHER- IN-LAW, MOTHER-IN-LAW ETC. THE TOTAL UNSECURED LOAN CLAIMED TO HAVE BEEN RECEIVED DURING THE FY 2007-08 CORRESPONDING T O THE AY 2008- 09 WAS RS. 19,86,664. WHILE EXPLAINING THE SOURCE O F SUCH CREDIT, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE LOAN WAS RECEIVED FROM HIS NRI SISTER-IN-LAW SMT. K. HARITHA AND HER HUSBAND O UT OF THEIR ACCUMULATED SAVING. THE AO NOTED THAT FUNDS WERE AP PARENTLY TRANSFERRED FROM THE ACCOUNTS OF THE NRI COUPLE TO THE ASSESSEE AND THESE FUNDS WERE USED BY ASSESSEE AND HIS WIFE TOWA RDS INVESTMENT IN PURCHASE OF AGRICULTURAL LAND DURING THE AY UNDE R CONSIDERATION. HOWEVER, AS MENTIONED BY THE AO, INSPITE OF AVAILIN G SUFFICIENT OPPORTUNITY, THE ASSESSEE COULD NOT PRODUCE SUPPORT ING EVIDENCE SUCH AS BANK ACCOUNT COPY, SALARY/INCOME PROOF TO S UBSTANTIATE THE LOAN. ACCORDINGLY, THE AO BY TREATING THE UNSECURE D LOAN OF RS. 19,86,664 AS UNEXPLAINED CASH CREDIT AND ADDED IT T O THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, ASS ESSEE PREFERRED APPEAL BEFORE THE CIT(A). 20. THE CIT(A) CONFIRMED THE ADDITION WITH THE FOLL OWING OBSERVATIONS: 3.1 I HAVE GONE THROUGH THE ISSUE AND I FIND THAT T HE AO HAS EXAMINED THE ISSUE IN DETAIL IN THE ASSESSMENT ORDE R. IT IS CLEARLY OBSERVED IN THE ASSESSMENT ORDER THAT THE S OURCES OF THE NRI COUPLE WITH PROPER EVIDENCE COULD NOT BE MA DE 22 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS AVAILABLE IN SUPPORT OF THE CLAIM. THE APPELLANT HA S FAILED TO FURNISH ANY JUSTIFICATION IN SUPPORT OF THE CLAIM M ADE BY HIM IN COURSE OF THE APPELLATE PROCEEDINGS ALSO. ACCORDING LY, I HOLD THAT THE ADDITION MADE BY THE AO WAS JUSTIFIED. THI S EFFECTIVE GROUND OF APPEAL IS DISMISSED. 21. THE LEARNED AR SUBMITTED BEFORE US THAT THE ASS ESSEE HAS DISCHARGED THE PRIMARY BURDEN CAST UPON HIM BY DISC LOSING THE IDENTITY OF THE CREDITOR, HER CREDITWORTHINESS. FUR THER, THE TRANSACTION HAVING BEEN ROUTED THROUGH BANKING CHANNELS, THE GE NUINENESS ALSO CANNOT BE DOUBTED. THE LEARNED AR SUBMITTED THAT T HOUGH THE ASSESSEE PRODUCED ALL SUPPORTING EVIDENCE, CONFIRMA TION LETTERS, BANK ACCOUNT STATEMENTS AND OTHER RELEVANT DETAILS WITH REGARD TO THE RECEIPT OF LOAN, BUT, THE AO AS WELL AS THE CIT(A) WITHOUT CONSIDERING THEM HAVE TREATED THE LOAN RECEIVED AS UNEXPLAINED CASH CREDIT. THE LEARNED AR SUBMITTED THAT SIMILAR LOAN RECEIVED FRO M THE VERY SAME PERSON VIZ., SMT. K. HARITHA, WHO HAPPENS TO BE THE SISTER-IN-LAW OF ASSESSEE, IN AYS 2006-07 AND 2007-08 UNDER SIMILAR FACTS AND CIRCUMSTANCES HAVE BEEN ACCEPTED BY THE CIT(A) AND ADDITIONS MADE BY THE AO HAVE BEEN DELETED. IN THIS CONTEXT, HE P LACED BEFORE US, ORDERS DATED 27/11/2013 PASSED BY THE CIT(A)-VII, H YDERABAD FOR THE AYS 2006-07 AND 2007-08. THE LEARNED AR SUBMITTED THAT AS THE FACTS AND MATERIALS PLACED BY THE ASSESSEE WERE PR OPERLY CONSIDERED BY THE DEPARTMENTAL AUTHORITIES THE MATTER MAY BE R EMITTED BACK TO THE FILE OF THE AO FOR VERIFYING AFRESH. 22. THE LEARNED DR, ON THE OTHER HAND, THOUGH SUPPO RTED THE ORDER OF THE CIT(A) AND AO, BUT, HE ALSO EXPRESSED THE VI EW THAT THE ISSUE CAN BE EXAMINED AFRESH BY THE AO. 23. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES, PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE MATERIALS ON RECORD. AS CAN BE SEEN FROM THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY THE CIT(A) THE ASSESSEE IN FACT HAS NOT ONLY ESTABLISHE D THE IDENTITY OF THE CREDITOR, BUT, HAS ALSO SUBMITTED CONFIRMATION LETTERS IN SUPPORT OF 23 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS THE LOAN RECEIVED. FURTHER, THE AO HAS ALSO OBSERV ED THAT FUNDS WERE TRANSFERRED FROM THE ACCOUNTS OF THE CREDITOR TO TH E ASSESSEE. IF THAT IS THE CASE, THEN THE AO CANNOT DISBELIEVE THE LOAN UNLESS THERE IS STRONG EVIDENCE BEFORE HIM TO SUGGEST THAT IT IS ON LY THE ASSESSEES MONEY, WHICH WAS ROUTED THROUGH THE BANK ACCOUNT O F THE CREDITOR. FURTHER, ON A PERUSAL OF THE ORDER PASSED BY THE CI T(A) FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 IT APPEARS SIM ILAR LOAN RECEIVED FROM THE SAME CREDITOR WAS ACCEPTED BY THE CIT(A) AFTER EXAMINING THE BANK STATEMENTS AND OTHER EVIDENCES P RODUCED BY THE ASSESSEE. THEREFORE, IF THE ASSESSEE IS ABLE TO PRO VE THE CREDIT BY PRODUCING SIMILAR EVIDENCE AS IS THE CASE IN AY 20 06-07 AND 2007- 08, THEN, THERE WILL BE NO REASON TO TREAT THE LOAN AS UNEXPLAINED CASH CREDIT AT THE HANDS OF THE ASSESSEE. IN THE AFORES AID VIEW OF THE MATTER, WE ARE INCLINED TO REMIT THIS ISSUE TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER EXAMINING ALL FACTS AND MATER IALS BROUGHT ON RECORD AND ONLY AFTER AFFORDING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. 24. IN THE RESULT, ASSESSEES APPEAL IS CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. 25. TO SUM UP, ALL APPEALS OF THE REVENUE ARE DISMI SSED AND APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . PRONOUNCED IN THE OPEN COURT ON 28/08/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTI JIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 28 TH AUGUST, 2014 KV 24 ITA NO. 1788/HYD/2012 AND OTHERS BHAVYA CONSTRUCTIONS PVT LTD AND OTHERS COPY TO:- . 1. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 5, HYD, 8 TH FLOOR, AAYAKAR BHAVAN, L.B. STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. 2. SRI R. SRINIVASA RAO, H.NO. 1-7-502/11, JAMISTANPUR, MUSHEERABAD, HYDERABAD. 3. SRI M.S. RAGHAVA REDDY, 7-1-216, F.NO. 206, ANJANI TOWERS, BALKAMPET, AMEERPET, HYDERABAD 4. BHAVYA CONSTRUCTIONS PVT. LTD., PADMAVATHI MANSION, PLOT NO. 23, AMEERPET, HYDERABAD 5. R. VIJAYA LAKSHMI, 26, SRI VENKATESWARA COLONY, BANJARA HILLS, HYDERABAD 6. SHRI S. SRINIVASA RAO, H.NO. 1-7-502/11, JAMISTANPUR, MUSHEERABAD, HYDERABAD 7. SRI T. GOPICHAND, NO. 8-3-1103, FLAT NO. 403, PL OT NO. 106, JYOTHI ESTAES, SRI NAGAR COLONY, HYDERABAD 8. SHRI G.C. SUBBA NAIDU, 5-79, PEOPLES HOSPITALS, M.G. ROAD, PATANCHERU, HYDERABAD 9. SRI P. SHIVA KUMAR, FLAT NO. 202, TEMPLE VIEW RESIDENCY, H.NO. 6-2-10, LAKDIKAPOOL, HYDERABAD 10. CIT(A)-VII, HYDERABAD 11. CIT (CENTRAL), HYDERABAD 12. THE DR, ITAT, HYDERABAD