ACIT, CHENNAI V. M/s. Srinar Communication Pvt. Ltd., Srikundram

ITA 1822/CHNY/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9246 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 04-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-10-2010
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Capital asset; Advance ruling
• Section: 2(14); 27; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! . ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER I.T.A.NOS.1289 /MDS./2011 & 1822 /MDS./2010 ( / ASSESSMENT YEARS :2008-09 & 2007-08) & C.O. NOS.133/MDS./2011 & 164/MDS./2010 ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(4), AAYAKAR BHAV AN, NEW BLOCK, CHENNAI 600 034. VS. M/S.SRINAR COMMUNICATION PVT. LTD., 96,SRIKUNDRAM VILLAGE, TIRUPORUR, 7 TH FLOOR, 121 M.G.ROAD, CHENGALPAT ROAD, SRIKUNDRAM 603 108. PAN AAFCS 5215 H ( %& / APPELLANT ) ( '(%& / RESPONDENT / CROSS OBJECTOR ) ./ I.T.A.NO.247 /MDS./2015 ( / ASSESSMENT YEAR :2010-11) M/S.SRINAR COMMUNICATION PVT. LTD., 96,SRIKUNDRAM VILLAGE, TIRUPORUR, 7 TH FLOOR, 121 M.G.ROAD, CHENGALPAT ROAD, SRIKUNDRAM 603 108. VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(4), AAYAKAR BHAV AN, NEW BLOCK, CHENNAI 600 034. PAN AAFCS 5215 H ( %& / APPELLANT ) ( '(%& / RESPONDENT / ) ASSESSEE BY : MR.G.BASKAR,ADVOCATE REVENUE BY : MR.R.MOHAN,CIT, D.R M/S.SRINAR COMMUNICATION P LTD. 2 / DATE OF HEARING : 04.02.2016 /DATE OF PRONOUNCEMENT : 27.04.2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS AND TWO CROSS OBJECTIONS FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY FOR THE ASSES SMENT YEARS 2008-09 & 2007-08 , ANOTHER APPEAL NO. ITA NO.247/MDS./2015 BY THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 ARE DIRECT ED AGAINST THE DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF IN COME TAX(A)-V, CHENNAI. SINCE ISSUES INVOLVED IN ALL THESE REVENUE S/ASSESSEES APPEALS & CROSS OBJECTIONS ARE COMMON IN NATURE, TH ESE APPEALS & C.O.S ARE CLUBBED TOGETHER, HEARD TOGETHER, DISPOSE D OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP ITA NO.1822/MDS./2010 & C.O NO. 164/MDS./10 (A.Y.2007-08) 2.1 THE REVENUE HAS RAISED THE GROUNDS REGARDING DELETION OF ADDITION OF ` 19.14 CRORES BY LD.CIT(A) ON ACCOUNT OF TRANSFER OF PROPERTY U/S.2(47)(V) OF THE ACT. THE ASSESSEE FIL ED THE CROSS OBJECTIONS IN SUPPORT OF THE ORDER OF THE LD.CIT(A) . M/S.SRINAR COMMUNICATION P LTD. 3 2.2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF RF CO-AXI AL CONNECTORS & MICROWAVE COMPONENTS ANETNNAS. DURING THE YEAR UND ER SCRUTINY, IT WAS FOUND FROM THE BALANCE SHEET THAT IT HAS RECEIV ED AN ADVANCE FROM SALE OF PROPERTY TO THE TUNE OF RS.5,96,75,000 /-. ON VERIFICATION OF THE DETAILS FURNISHED, IT IS FOUND THAT THE ASSE SSEE HAS TRANSFERRED ITS PROPERTY MEASURING 2.86 ACRES OF LAND SITUATED AT SHOLINGANALLUR VILLAGE ACQUIRED BY WAY OF SLUMP SALE FROM ITS HOLD ING COMPANY M/S.SRINAR ELECTRONICS PVT. LTD ON 23.11.2001 FOR A CONSIDERATION OF ` 2,35,00,000/- BY A MEMORANDUM OF AGREEMENT DATED 02 .02.2007 TO ONE M/S.VISHRANTHI SABARI CONSTRUCTIONS, A REGISTER ED PARTNERSHIP FIRM BY EXECUTING AND REGISTERING AN IRREVOCABLE GE NERAL POWER OF ATTORNEY IN FAVOUR OF THE SECOND PARTY, WITH AN AGR EEMENT THAT THE SECOND PARTY SHOULD CONSTRUCT A RESIDENTIAL APARTME NT BUILDIGN COMPLEX UNDER FLAT SYSTEM OVER THE LAND BELONGING T O THE ASSESSEE COMPANY AFTER DEMOLISHING THE SUPERSTRUCTURE THEREO N. BEFORE ENTERING INTO THIS AGREEMENT, THE PARTIES TO THE TR ANSACTION HAVE ENTERED INTO AN AGREEMENT FOR JOINT DEVELOPMENT ON 01.06.2006 WHICH WAS WITHDRAWN AND CANCELLED FOR THE REASON BE ST KNOWN TO THE M/S.SRINAR COMMUNICATION P LTD. 4 ASSESSEE AND FRESH AGREEMENT WAS ENTERED INTO ON 02 .02.2007. AS PER THIS AGREEMENT, VACANT POSSESSION OF THE SCHEDU LED PROPERTY WAS HANDED OVER TO THE SECOND PARTY BY THE ASSESSEE ON 01.03.2007. ACCORDING TO THE EARLIER AGREEMENT DATED 01.06.2006 , A SUM OF ` 6 CRORES WAS TO BE GIVEN TO THE ASSESSEE IN 01.06.200 6 AND A FURTHER SUM OF ` 3.5 CRORES WAS GIVEN WITHIN 90 DAYS OF SIGNING THE MOA AS A PART OF PERFORMANCE SECURITY DEPOSIT. IN ADDITION TO THE ABOVE PAYMENTS, THE TRANSFEREE SHOULD ALSO GIVE AN AMOUNT OF ` 2.5 CRORES THUS AGGREGATING TO A TOTAL CONSIDERATION OF ` 12 CRORES. IT IS UNDERSTOOD FROM CL.8 OF THE AGREEMENT, THAT THE FUL L VALUE OF CONSIDERATION FOR WHICH THE TRANSACTION WAS ACCEPTE D TO BE CARRIED ON BETWEEN BOTH THE PARTIES IS ` 22 CRORES. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO EXECUTED ANOTHER MEMORANDUM OF AG REEMENT ON 10.8.07 WITH THE SAME BUILDER M/S.VISHRANTHI SABARI . THE REASON BEHIND SIGNING THIS AGREEMENT AGAIN IS NOT KNOWN. 2.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO ASKED THE ASSESSEE AS TO WHY THE TRANSACTION SHOULD NOT B E TREATED AS TRANSFER WITHIN THE MEANING OF SEC.2(47) OF THE ACT AND BRING TO CAPITAL GAINS TAX THE ENTIRE VALUE OF CONSIDERATION OF ` 22 CRORES FOR M/S.SRINAR COMMUNICATION P LTD. 5 WHICH THE TRANSACTION WAS ACCEPTED UPON BETWEEN THE TWO PARTIES. IN RESPONSE, THE ASSESSEE IN ITS SUBMISSION DATED 22.1 0.2009 AS UNDER: IN THIS CONNECTION WE WISH TO BRING TO YOUR KIND N OTICE THAT THE MEMORANDUM OF AGREEMENT DATED 2 ND FEBRUARY 2007, IN TERMS OF WHICH THE ABOVE SAID RS.5 CRORES WAS RECEIVED, IS N O LONGER RELEVANT AS IT WAS SUPERSEDED BY ANOTHER AGREEMENT DATED 7TH AUGUST 2007. AFTER A SERIES OF DELIBERATIONS IN THEIR BOARD MEET INGS AND SEVERAL ROUNDS OF TALKS WITH M/S. VISHRANTHI SABARI, THE AS SESSEE STEPPED OUT OF THE JOINT VENTURE PROPOSAL (MEMORANDUM OF AGREEM ENT DATED 2TD FEBRUARY 2007). DURING SUCH DISCUSSIONS AND DELIBER ATIONS CONCERNS WERE EXPRESSED ABOUT THE POSSIBILITY OF GETTING THE CMDA APPROVAL, PLANNING PERMIT AND OTHER STATUTORY APPROVALS AND T HE FEASIBILITY OF COMPLETING A PROJECT ON A TIMELY BASIS. AND IT WAS UNANIMOUSLY AGREED TO EXECUTE THE PROJECT BY EITHER OF THE PART IES INDIVIDUALLY AND NOT JOINTLY. NOTICING THE INBUILT UNCERTAINTIES AND DOWNTREND IN THE REAL ESTATE MARKET M/S. VISHRANTHI SABARI EXPRESSED THEI R DISINCLINATION TO GO AHEAD WITH JV. FOLLOWING THESE DEVELOPMENTS AND ALSO IN VIEW OF THE ASSESSEES DECISION TO DIVERSIFY BUSINESS BY FO RAYING INTO THE REAL ESTATE SECTOR, A DEVELOPER OF RESIDENTIAL PROPERT IES, THE INSISTENCE ON THE RECOVERY OF THE BALANCE AMOUNT IS NOT GERMAN E. WITH A VIEW TO ACCELERATING THE PROGRESS TO THE CONSTRUCTION WORK AND EXPEDITIOUS MARKETING OF FLATS, THE ASSESSE, AS AN ENABLING MEA SURE PROVIDED THE REPRESENTATIVES OF M/S. VISHRANTHI SABARI, THE REQU IRED POWER OF M/S.SRINAR COMMUNICATION P LTD. 6 ATTORNEY (POA). THE POA AUTHORIZES THE POWER AGENT S TO APPLY FOR BUILDING PERMIT AND VARIOUS STATUTORY APPROVALS, EN TER INTO AGREEMENTS FOR SALE OF LAND AND CONSTRUCTION OF FLATS WITH THE PROSPECTIVE BUYERS, RECEIVE MONEYS FROM THE PROSPECTIVE BUYERS AND DEPO SIT IN THE DESIGNATED BANK ACCOUNT AND MEET ALL PAYMENTS RELAT ING CONSTRUCTION ACTIVITIES, ALL IN THE NAME OF AND BEHALF OF THE AS SESSEE. THE POA ALSO FIXES RESPONSIBILITIES FOR COMPLIANCE WITH STATUTOR Y REQUIREMENTS AND OBSERVANCE OF ALL PROCEDURAL FORMALITIES IN CONNECT ION WITH CONSTRUCTION AND HANDING OVER COMPLETED FLATS TO PU RCHASERS OF FLATS. ALL THESE ASSIGNMENTS HAVE TO BE CARRIED OUT BY THE POWER AGENTS IN THE NAME OF SRINAR COMMUNICATIONS ARANYA PROJECT AND ACCOUNT FOR THE SAME IN THE MANNER SPECIFIED IN THE POA. TH E SALE OF LAND AND SUPERSTRUCTURE IS DONE ALL IN THE NAME OF THE ASSES SEE ITSELF. FROM THE FACTS OBTAINING IN THE INSTANT CASE, THERE IS NOT E VEN A SLIGHTEST MODICUM OF DOUBT THAT IT IS A PURE DEVELOPMENT PROJ ECT UNDERTAKEN BY THE ASSESSEE ITSELF, OF COURSE WITH HELP FROM PERSO NS EXPERIENCED IN THE RELEVANT FIELD OF BUSINESS. THE PROPOSAL OF EX ECUTION OF THE PROJECT ON THEIR OWN BY THE ASSESSEE WAS AGREED TO BY M/S. VISHRANTHI SABARI WHO UNDERTOOK THE RESPONSIBILITY TO SEE THROUGH THE CONSTRUCTION ACTIVITIES INCLUDING MARKETING OF FLATS. FOR ASSIGN ING THE JOB TO THEM, IN TERMS OF THE LATER AGREEMENT M/S. VISHRANTHI AGREED FOR A SECURITY DEPOSIT OF RS.12 CRORES. HENCE THE ADVANCE ORIGINAL LY PAID BY M/S. VISHRANTHI SABARI WAS NOT RETURNED AND RETAINED TOW ARDS SECURITY DEPOSIT. M/S.SRINAR COMMUNICATION P LTD. 7 2.4 ACCORDING TO THE AO, THERE IS A TRANSFER IN TE RMS OF SEC.2(47)(V) OF THE ACT. HENCE, THE AO BROUGHT AN AMOUNT OF ` 19.14 CRORES ON TRANSFER OF PROPERTY AS LONG TERM CAPITAL GAINS. A GAINST THIS, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) OBSERVED THAT:- 2.4 AFTER THE EXIT OF THE SECOND PARTY FROM THE P ROJECT, THE APPELLANT ENTERED INTO AN AGREEMENT WITH THE THIRD PARTY (M/S .VISHARANTHI SABARI) ON 10.08.2007 TO SUPERIVISE THE CONSTRUCTIO N OF THE HOUSING COMPLEX FOR AND BEHALF OF THE APPELLANT WHO HAD INT ENDED TO CARRY OUT PROJECT AS ONE OF THE DIVISIONS NAMED SRINAR COMMU NICATIONS PRIVATE LIMITED ARANYA PORJECT AND PUT IN OPERATION A SEP ARATE BANK ACCOUNT FOR THIS PURPOSE.THE APPELLANT ALSO EXECUTED A GENE RAL POWER ATTORNEY AS PER CLAUSE 15 OF THIS AGREEMENT ON THE SAME DATE (10.08.2007). 2.5 THUS IT IS ESTABLISHED THAT THE AGREEMENT WHICH IS NOW BEING ACTED UPON IS THE ONE WITH M/S. VISHRANTHI SABARI DATED 1 0.08.2007 AND NOT THE EARLIER AGREEMENT WITH M/S. VISHRANTHI SABARI C ONSTRUCTIONS DATED 02.02.2007 WHICH HAS NO RELEVANCE FOR THE AY 2007-0 8. 3. WITH THESE FACTS AND IN THE LIGHT OF THE REASONS GIVEN BY THE ASSESSING OFFICER FOR THE ADDITION OF RS.19.14 CROR ES AS CAPITAL GAINS ACCRUING TO THE APPELLANT IN THE ASSESSMENT FOR 200 7-08, THE DECISION IN THIS CASE HINGES AROUND WHETHER, IF AT ALL, THER E IS ANY CAPITAL GAIN ASSESSABLE FOR THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR 2007-08. THE AMOUNT COLLECTABLE FROM THE SALE OF LA ND AND FLATS AND BALANCE IN BANK ACCOUNT ACCRUING TO THE SUPERVISOR ARE MATTERS TO BE CONSIDERED IN THE ASSESSMENT FOR 2008-09 AND NOT IN THIS AY 2007-08. M/S.SRINAR COMMUNICATION P LTD. 8 3.1 AN ANALYSIS OF FACTS REVEAL THAT THE APPELLANT CHANGED THE AGREEMENT AND THE PARTIES ACCORDING TO THEIR BUSINE SS CONVENIENCE AND THE EXIGENCIES OF TIME. HOWEVER THE CHRONOLOGY AND SEQUENCE OF EVENT DISCLOSE THE FACT THAT ALL EARLIER STATEMENTS ENTERED INTO BY THE APPELLANT FOR THE EXECUTION OF THE PROJECT STAND WI THDRAWN AND ARE, HENCE, NON-EST EXCEPTING THE LAST TWO AGREEMENTS DA TED 01.08.2007ANDLO.08.2007, 1THE LATER BEING THE ACTUA L OPERATING AGREEMENT WHICH RELATE TO THE PREVIOUS YEAR RELEVAN T TO THE ASSESSMENT YEAR 2008-09. WHILE EXAMINING THE REASON S ADDUCED AND CASES CITED BY THE ASSESSING OFFICER, I FIND THERE IS NO POSSIBILITY FOR ANY TRANSFER HAVING TAKEN PLACE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08. THE DEFINITION OF TRA NSFER AS PER CLAUSE OF (V) OF SECTION 2(47) WHICH INCLUDES ANY T RANSACTION INVOLVING THE ALLOWING OF POSSESSION OF ANY IMMOVABLE PROPERT Y TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, IS NOT EXTENDABLE TO THE PRESENT CASE. AND CONSEQUENTLY THE FIVE CONDITI ONS STIPULATED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 A RE NOT FULFILLED. THE PARTIES TO THE AGREEMENT MUTUALLY AGREED NOT TO GO AHEAD WITH THE AGREEMENT DATED 02.02.2007 EXCEPT TO ALLOW RETENTIO N OF INITIAL ADVANCE TOWARDS PERFORMANCE SECURITY DEPOSIT WHIC H THE APPELLANT SHOWED IN THEIR BOOKS AS A LIABILITY. THE CASE LAWS CITED ARE FOUND TO BE AT VARIANCE TO THE APPELLANT CASE. 3.2 IN VIEW OF THE DISCUSSIONS HEREINABOVE THE ADD ITION ON ACCOUNT OF CAPITAL GAINS IN THE ASSESSMENT FOR ASSESSMENT Y EAR 2007-08 CANNOT BE SUSTAINED IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. I THEREFORE, DIRECT THE AO TO DELETE THE ADDI TION OF RS.19.14 CRORES. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. M/S.SRINAR COMMUNICATION P LTD. 9 2.5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IN THE PRESENT CASE, THE ASSESSEE ENTERED INTO MEMORANDUM OF AGREEMENT ON 02.02.2007 WITH M/S.VISHRANTHI SABA RI CONSTRUCTIONS DATED 02.02.2007, ALSO EXECUTED IRRECOVERABLE POWER OF ATTORNEY IN FAVOUR OF THE SECOND PARTY WITH AN AGREEMENT THAT T HE SECOND PARTY SHOULD CONSTRUCT THE RESIDENTIAL APARTMENT BUILDING COMPLEX ON THE SAID LAND BELONGING TO THE ASSESSEE AFTER DEMOLISHI NG THE SUPER CONSTRUCTION THEREON. THEY ALSO ENTERED INTO A JOIN T DEVELOPMENT AGREEMENT ON 01.06.2006, WHICH WAS CANCELLED LATER. AFTER THAT MEMORANDUM OF UNDERSTANDING DATED 02.02.2007 CITED SUPRA ENTERED. AS PER THIS AGREEMENT, THE VACANT PORTION OF THE SCHEDULED PROPERTY WAS HANDED OVER TO THE SECOND PARTY BY THE ASSESSEE ON 01.03.2007. ACCORDING TO THE EARLIER JOINT DEVELO PMENT AGREEMENT ON 01.06.2006, THE ASSESSEE HAS RECEIVED ` 6 CRORES. FURTHER, A SUM OF ` 3.5 CRORES WAS GIVEN WITHIN 90 DAYS OF THE SIGNING OF MEMORANDUM OF AGREEMENT, AS A PART OF PERFORMANCE OF SECURITY DEPOSIT. IN ADDITION TO THE ABOVE PAYMENT, THE SEC OND PARTY SHALL GIVE AN AMOUNT OF ` 2.5 CRORES. THUS TOTALING OF ` 12 CRORES CONSIDERATION IS TO BE PAYABLE TO THE ASSESSEE. TH US, AS PER CLAUSE- 8 OF THE MEMORANDUM OF AGREEMENT, THE ASSESSEE HAS TO BE M/S.SRINAR COMMUNICATION P LTD. 10 RECEIVED ` 22 CRORES. IN ADDITION TO THIS, THE ASSESSEE EXECUT ED ANOTHER MEMORANDUM OF AGREEMENT ON 10.08.2007 WITH THE SAME BUILDER. ACCORDING TO THE ASSESSEE, THE MEMORANDUM OF AGREEMENT DATED 02.02.2007 WAS NOR SURVIVING IN VIEW OF THE A GREEMENT DATED 10.08.2007 AND ACCORDING TO THE ASSESSEE, IT IS EXE CUTING THE PROJECT SOLELY. HOWEVER, THE CONDITIONS SHOW THAT IT IS A JOINT DEVELOPMENT AGREEMENT, FOR CLARITY CERTAIN IMPORTANT CLAUSES OF AGREEMENT ARE PRODUCED AS FOLLOWS:- CLAUSE 15 : TITLE DEED THE FIRST PARTY AGREES TO HAND OVER THE ORIGINAL TI TLE DEEDS PERTAINING TO THE SCHEDULE PROPERTY TO THE SECOND PARTY WITHIN 30 DAYS FROM THIS DATE THE FIRST PARTY AGREES TO PRODUCE ANY OTHER DO CUMENT/ INFORMATION AS REQUIRED BY THE SECOND PARTY TO ESTA BLISH CLEAR TITLE OF THE FIRST PARTY TO THE SCHEDULE PROPERTY IMMEDIATEL Y ON REQUEST BY THE SECOND PARTY TO THE FIRST PARTY FOR SUCH ADDITI ONAL DOCUMENTS/INFORMATION, WITHOUT FAIL. THE SECOND PAR TY SHALL HAND OVER THE ORIGINAL TITLE DEEDS TO THE FIRST PARTY OR TO THE ASSOCIATION TO BE FORMED BY THE CO-OWNERS OF THE LAND IN THE SCHED ULE PROPERTY, ON COMPLETION OF THE PROJECT CLAUSE 17 : FIRST PARTYS OBLIGATIONS M/S.SRINAR COMMUNICATION P LTD. 11 A) THE FIRST PARTY AGREE TO EXTEND FUU COOPERATION TO THE SECOND PARTY BY SIGNING NECESSARY PAPERS LIKE THE APPLICAT IONS, BUILDING PLANS, AFFIDAVITS, INDEMNITY, DECLARATION, ETC., FO R THE PURPOSE OF GETTING SANCTION FOR (A) PLAN FOR DEMOLISHING BUILD INGS, (B) PLANS FOR CONSTRUCTION OF NEW BUILDING/S. (C) WATER AND SEWER AGE CONNECTIONS, (D) ELECTRICITY SERVICE CONNECTIONS FOR THE PROPOSE D APARTMENTS BUILDINGS AND (E) TEMPORARY ELECTRICITY SUPPLY FOR CONSTRUCTION PURPOSE, ETC. THE EXPENSES IN THIS CONNECTION SHALL BE TO THE COST OF THE PROJECT B) THE FIRST PARTY SHALL NOT CREATE ANY MORTGAGE, C HARGE OR ENCUMBRANCE OVER THE SCHEDULE PROPERTY OR DI ANY AC T OR DEED OF WHATSOEVER NATURE, WHICH WILL BE DETRIMENTAL TO THE INTEREST OF THE SECOND PARTY, DURING THE SUBSISTENCE OR THIS AGREEM ENT, TO RAISE A MAXIMUM AMOUNT OF RS.12,00,00,000/- (RUPEES TWELVE CRORES ONLY) TO MEET COST OF CONSTRUCTION OF THE PROPOSED RESIDE NTIAL BUILDING COMPLEX. C) SO LONG AS THE SECOND PARTY PROCEEDS AS PER THE TERMS OF THIS AGREEMENT AND ALSO THE PLAN AGREED TO BETWEEN THE P ARTIES., THE FIRST PARTY OR ANYBODY CLAIMING THROUGH THE FIRST PARTY S HALL NOT DISTURB OR HINDER THE CONSTRUCTION WORK IN ANY MANNER WHATSOEV ER. THE FIRST M/S.SRINAR COMMUNICATION P LTD. 12 PARTY SHALL BE ENTITLED TO INSPECT THE WORKSITE TO KNOW THE PROGRESS OF CONSTRUCTION AT ALL REASONABLE TIME WITHOUT IN ANY WAY OBSTRUCTING THE PROGRESS OF CONSTRUCTION OR GETTING HURT IN THE PRO CESS OF INSPECTION DUE TO FALLING OF ANY BUILDING MATERIAL OR THE TOOL S BEING USED IN CONSTRUCTION. D) IN CASE THE ALLOTTEE/S REQUEST/S FOR ANY ADDITIO N OR ALTERATIONS TO THE APARTMENT/S EARMARKED FOR THE ALLOTTEE/S, THE SAME SHALL BE DULY CARRIED OUT SUBJECT TO TECHNICAL FEASIBILITY, AT EX TRA COST TO THE ACCOUNT OF THE PURCHASERS, HOWEVER, THE SECOND PARTY RESERV ES THEIR RIGHT TO REJECT SUCH REQUEST WITHOUT ASSIGNING ANY REASONS. E) THE ALLOTTEES SHALL USE THE APARTMENTS ALLOTTED TO THEM ONLY FOR RESIDENTIAL PURPOSE. F) THE FIRST PARTY DO HEREBY GRANT PERMISSION TO TH E SECOND PARTY TO CARRY ON THE PRELIMINARY INVESTIGATION WORKS SUCH A S SOIL TEST, WATER TEST, SURVEY OF THE LAND, ETC., AT ANY TIME HEREAFT ER AFTER INTIMATION TO THE FIRST PARTY. G) THE FIRST PARTY OR ANYONE CLAIMING THROUGH/UNDE R THE FIRST PARTY SHALL NOT INTERFERE WITH THE POSSESSION AND ENJOYME NT OF THE APARTMENTS IN THE RESIDENTIAL BUILDING COMPLEX TO B E CONSTRUCTED BY THE SECOND PARTY FOR THE ALLOTTEES. M/S.SRINAR COMMUNICATION P LTD. 13 CLAUSE 18(F) THE SECOND PARTY SHALL DISPLAY ITS NAME BOARD WITH TELEPHONE NUMBERS IN THE SCHEDULE PROPERTY AFTER TAKING DELIV ERY OF THE POSSESSION OF SCHEDULE PROPERTY AND TO ADVERTISE TH E SALE OF APARTMENTS, TO NEGOTIATE FOR SALE, TO ENTER INTO AG REEMENTS FOR SALE OF THE UNDIVIDED SHARE IN THE LAND DESCRIBED IN THE SC HEDULE POPERTY AND ALSO CONSTRUCTION AGREEMENT/S FOR CONSTRUCTION OF APARTMENTS WITH ITS NOMINEES. CLAUSE 25 : NAME OF THE BUILDING THE NAME OF THE PROPOSED RESIDENTIAL BUILDING COMPL EX IS ARANYA. THE SAID NAME OF THE RESIDENTIAL BUILDIN G COMPLEX SHALL ALWAYS REMAIN THE SAME AND THE LOGO OF THE SECOND P ARTY SHALL BE DISPLAYED AT ANY PROMINENT PLACE/S ON THE PROPOSED BUILDING COMPLEX. THE SAME SHALL NOT BE DISMANTLED OR REMOVE D BY ANYONE UNDER ANY CIRCUMSTANCES. GOING THROUGH THE ABOVE CLAUSES OF AGREEMENT CLEARL Y SHOWS THAT THE ASSESSEE HAS GIVEN THE POSSESSION OF THE PROPERTY AND ALSO RECEIVED A PART OF CONSIDERATION AS DISCUSSED EARLIER AND IT IS A TRANSFER IN TERMS OF SEC.2(47)(V) OF THE ACT. M/S.SRINAR COMMUNICATION P LTD. 14 2.6 FURTHER, THE CO-ORDINATE BENCH OF CHENNAI TRIB UNAL HAS CONSIDERED SIMILAR ISSUE IN THE CASE OF SHRI UTTAM KUMAR JAIN IN ITA NO. 2048/MDS/2012 ASSESSMENT YEAR : 2008-09 VIDE ORDER DATED 13.04.2016, HELD AS UNDER:- 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL, HYDERABAD BENCH IN THE CASE OF SRI POTLA NAGESWARA RAO V. DCIT IN ITA NO. 1519/HYD/2011 & OT HERS, HELD AS UNDER : 9. IN THE INSTANT CASE, ON 7.3.2003 AN AGREEMENT WAS ENTERED INTO BY THE ASSESSEE WITH M/S. BHAVYA CONSTRUCTIONS PVT. LTD., AND THE PLAN OF THE BUILDING WAS APPROVED ON 31.3.2 003. THESE DATES FALL IN THE PREVIOUS YEAR 2002-03, RELEVANT T O ASSESSMENT YEAR 2003-04. THUS, IN THIS CASE, THE LAND BEING CA PITAL ASSET WAS TRANSFERRED BY THE ASSESSEE TO THE DEVELOPER DU RING THE ASSESSMENT YEAR UNDER CONSIDERATION, VIZ. 2003-04, FOR CONSTRUCTION AND IT IS ENOUGH IF THE ASSESSEE HAS R ECEIVED THE RIGHT TO RECEIVE CONSIDERATION ON A LATER DATE, SO AS TO ATTRACT EXIGIBILITY TO TAX ON CAPITAL GAINS DURING THE YEAR UNDER APPEAL. MERE ACCRUAL OF THE CONSIDERATION, AS IT IS TO BE R ECEIVED IN THE SUBSEQUENT YEARS DOES NOT DEFER THE TAXABILITY OF T HE CAPITAL GAINS. THE ASSESSEE BEING OWNER OF THE CAPITAL ASSE T, HAVING PARTED WITH THE POSSESSION OF THE LAND UNDER A JOIN T DEVELOPMENT AGREEMENT, FOR CONSTRUCTION OF RESIDENT IAL FLATS/VILLAS AND HAVING HANDED OVER THE POSSESSION OF THE VACANT LAND TO THE DEVELOPER ON PROMISE TO BE HANDED OVER FOUR FLATS EQUIVALENT TO 40% OF THE VALUE OF THE PROPERTY TO B E CONSTRUCTED, IT WAS A CLEAR CASE OF TRANSFER BY EXC HANGE WITHIN THE MEANING OF S.2(47)(I) OF THE ACT. PROPERTY WAS HANDED OVER M/S.SRINAR COMMUNICATION P LTD. 15 IN PART PERFORMANCE UNDER S.53A OF THE TRANSFER OF PROPERTY ACT, AND IT COULD NOT BE SAID THAT THE TRANSACTION WAS WITHOUT CONSIDERATION. THE POSSESSION OF THE LAND HAVING BE EN HANDED OVER TO THE DEVELOPER IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE TRANSFER TAKES PLACE IN THE ASSE SSMENT YEAR UNDER CONSIDERATION ONLY, AND CONSEQUENTLY THE ASSE SSEE IS LIABLE TO BE ASSESSED TO TAX IN RELATION TO THE CAP ITAL GAINS IN THE YEAR UNDER CONSIDERATION ITSELF. FOR THIS PURPOSE, WE PLACE RELIANCE ON THE DECISION OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN SMT. MAYA SHENOY V/S. ACIT (2009)124 TT J(HYD) 692). WE ALSO FIND SUPPORT IN THIS BEHALF, FROM THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATUR BHUJ DWARKADDAS KAPADIA V/S. CIT (260 ITR 491), WHEREIN IT HAS BEEN HELD THAT S.2(47)(V) READ WITH S.45 INDICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSAC TIONS WERE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROP ERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. WE ALS O PLACE RELIANCE IN THIS BEHALF ON THE RULING OF AUTHORITY FOR ADVANCE RULINGS IN JASBIR SINGH SARKARIA IN RE (294 ITR 196 (AAR), TO THE FOLLOWING EFFECT - IN ORDER TO BE TRANSFER WI THIN THE MEANING OF CL. (V) OF S.2(47), THERE MUST BE A TRANSACTION UNDER WHICH THE POSSESSION OF IMMOVABLE PROPERTY IS ALLOWED TO BE T AKEN OR ALLOWED TO BE RETAINED. SECONDLY, SUCH TAKING OR RE TENTION OF POSSESSION AS IS WELL KNOWN IS A FACET OF THE EQUIT ABLE DOCTRINE OF PART PERFORMANCE OF CONTRACT FALLING WITHIN THE SCOPE OF S.53A OF THE TRANSFER OF PROPERTY ACT. THE LEGISLATURE AD VISEDLY REFERRED TO ANY TRANSACTION WITH A VIEW TO EMPHAS IZE THAT IT IS NOT THE FACTUM OF ENTERING INTO AGREEMENT OR FORMAT ION OF CONTRACT THAT MATTERS, BUT IT IS THE DISTINCT TRANS ACTION THAT GIVES RISE TO THE EVENT OFALLOWING THE CONTRACTEE TO ENTE R INTO POSSESSION THAT MATTERS. THAT TRANSACTION IS IDENTI FIABLE BY THE TERMS OF THE AGREEMENT ITSELF AND IT TAKES PLACE WI THIN THE M/S.SRINAR COMMUNICATION P LTD. 16 FRAMEWORK OF THE AGREEMENT. WE MAY ALSO REFER IN TH IS BEHALF TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V/S. DR.T.K.DAYALU (202 TAXMAN 531), WHEREIN IT HAS BEEN HELD THAT IT IS WELL SETTLED POSITION BY NOW THAT T HE DATE ON WHICH POSSESSION WAS HANDED OVER TO THE DEVELOPER IS RELE VANT FOR DETERMINATION OF THE YEAR IN WHICH THE CAPITAL GAIN S ARE ASSESSABLE TO TAX. IN THIS VIEW OF THE MATTER, WE F IND NO MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THERE IS NO TA XABILITY OF CAPITAL GAINS IN THE YEAR UNDER APPEAL. WE ACCORDIN GLY REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 2.7. FURTHER, IN THE CASE OF MADATHIL BROTHERS V. DCIT(301 ITR 345), THE MADRAS HIGH COURT OBSERVED AS UNDER : 30. A PERUSAL OF THE DOCUMENTS FILED BEFORE THIS CO URT SHOWS THAT ADMITTEDLY, THE APPELLANT-ASSESSEE WAS PUT IN POSSE SSION AND ENJOYMENT OF THE SUIT PROPERTY AS AGREEMENT HOLDER RIGHT FROM JANUARY 1, 1976. THE SUIT FOR SPECIFIC PERFORMANCE WAS FILE D BY THE APPELLANT- ASSESSEE HEREIN BEFORE THE ORIGINAL SIDE OF THIS CO URT AND IN TERMS OF THE COMPROMISE MEMO FILED IN THE SUIT, A DECREE WAS PASSED ON SEPTEMBER 30, 1983, IN FAVOUR OF THIS APPELLANT. IT IS NO DOUBT TRUE THAT AS PART OF THE SETTLEMENT TERMS, THE PARTIES AGREED TO REVISE THE SALE CONSIDERATION. HOWEVER, THE SAME WAS DONE WITH REFE RENCE TO THE CLAIM UNDER THE AGREEMENT. THE SALE DEED WAS EXECUT ED IN TERMS OF THE SETTLEMENT REACHED IN THE SUIT PROCEEDINGS. AS SUCH, THERE WAS NO NOVATION OF CONTRACT TO RESULT IN A FRESH AGREEMENT ENTERED INTO. 31. ON THE QUESTION AS TO WHETHER A POSSESSORY RIGH T UNDER THIS AGREEMENT, PER SE, CONFERS AN INTEREST TO CLAIM LON G-TERM CAPITAL GAINS, WE MAY HAVE TO LOOK AT THE DEFINITION PROVISIONS RE LATING TO 'CAPITAL ASSET' UNDER SECTION 2(14), 'SHORT-TERM CAPITAL ASS ET' UNDER SECTION 2(42A) AND 'TRANSFER' UNDER SECTION 2(47) OF THE IN COME-TAX ACT, 1961. THE RELEVANT PROVISIONS NECESSARY FOR THE PURPOSE O F OUR CONSIDERATION ARE AS FOLLOWS : 'SECTION 2.(14) 'CAPITAL ASSET' M/S.SRINAR COMMUNICATION P LTD. 17 'CAPITAL ASSET' MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFE SSION.' 'SECTION 2.(42A) 'SHORT-TERM CAPITAL ASSET' MEANS A CAPITAL ASSET HELD BY AN ASSESSEE FOR NOT MORE THAN THIRTY-SIX MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER.' 'SECTION 2.(47) 'TRANSFER' IN RELATION TO A CAPITAL ASSET, INCLUDES, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASS ET ; 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 BUSINE SS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT' ; OR THE FOLLOWING CLAUSE WAS INSERTED UNDER THE FINANCE ACT, 1987, WITH EFFECT FROM APRIL 1, 1988 : '(V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882).' 32. A CONJOINT READING OF THE PROVISIONS, AS THEY S TOOD AT THE MATERIAL ASSESSMENT YEAR, SHOW THAT 'CAPITAL ASSET' MEANS 'P ROPERTY OF ANY KIND HELD' BY THE ASSESSEE. IT MAY BE SEEN THAT THE INCOME-TAX ACT, 1961, DOES NOT CONTAIN THE DEFINITION OF 'PROPERTY' . IN THE DECISION REPORTED IN AHMED G. H. ARIFF V. CWT [1970] 76 ITR 471 (SC), IN THE CONTEXT OF THE WEALTH-TAX PROCEEDINGS WITH REFERENC E TO THE DEFINITION OF 'ASSETS' IN SECTION 2(E) TO 'INCLUDE PROPERTY OF ANY DESCRIPTION', THE APEX COURT HELD THAT 'PROPERTY' IS A TERM OF THE WI DEST IMPORT AND, SUBJECT TO ANY LIMITATION WHICH THE CONTEXT MAY REQ UIRE, IT SIGNIFIED EVERY POSSIBLE INTEREST THAT A PERSON CAN HOLD OR E NJOY. THE DEFINITION OF 'CAPITAL ASSET' UNDER THE INCOME-TAX ACT, REFERR ING TO 'PROPERTY OF ANY KIND' CARRIES NO WORDS OF LIMITATION. THE DEFIN ITION IS OF THE WIDE AMPLITUDE TO INCLUDE EVERY POSSIBLE INTEREST THAT A PERSON MAY HOLD AND ENJOY. THE MEANING ASCRIBED BY THE APEX COURT T O THE TERM 'PROPERTY' APPLIES WITH EQUAL FORCE TO THE UNDERSTA NDING OF 'CAPITAL ASSET' UNDER THE PROVISIONS OF THE INCOME-TAX ACT. 33. THE DEFINITION OF 'CAPITAL ASSET' REFERS TO PRO PERTY OF ANY KIND 'HELD' BY AN ASSESSEE. IN CONTRADISTINCTION TO THE WORD 'O WNER' OR 'OWNED' DEFINITION USES THE PHRASE 'HELD'. M/S.SRINAR COMMUNICATION P LTD. 18 34. TOUCHING ON THE MEANING OF THE TERM 'OWNER' IN THE CONTEXT OF ASSESSABILITY OF THE INCOME FROM PROPERTY UNDER SEC TION 22, IN THE DECISION REPORTED IN CIT V. PODAR CEMENT P. LTD. [1 997] 226 ITR 625, THE APEX COURT HELD THAT 'OWNER IS THE PERSON WHO I S ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT.' THE APE X COURT HELD THAT IN THE CONTEXT OF SECTION 9 OF THE 1922 ACT, THE OWNER MUST BE A PERSON 'WHO CAN EXERCISE THE RIGHTS OF OWNER NOT ON BEHALF OF THE OWNER, BUT IN HIS OWN RIGHT.' THE APEX COURT POINTED OUT TO TH E AMENDMENT TO SECTION 27 UNDER THE FINANCE BILL, 1987, TO GET OVE R AN OBVIOUS OMISSION TO THE MEANING OF THE WORD 'OWNER' UNDER S ECTION 22 THAT EVEN THOUGH IN COMMON LAW, 'OWNER' MEANS A PERSON W HO HAS GOT VALID TITLE LEGALLY CONVEYED TO HIM AFTER COMPLYING WITH THE REQUIREMENTS OF LAW UNDER THE TRANSFER OF PROPERTY ACT AND THE REGISTRATION ACT, HAVING REGARD TO THE GROUND REALI TIES AND THE OBJECT OF THE ACT, NAMELY, TO TAX INCOME, IN THE CONTEXT O F SECTION 22, THE OWNER IS THE PERSON WHO IS ENTITLED TO RECEIVE INCO ME FROM THE PROPERTY IN HIS OWN RIGHT. ADVERTING TO THE PROVISI ONS OF THE TRANSFER OF PROPERTY ACT UNDER SECTIONS 53A, 54 AND 55, THE APE X COURT HELD THAT LEGAL TITLE DOES NOT PASS UNLESS THERE IS A DEED OF CONVEYANCE DULY REGISTERED. REFERRING TO THE EFFECT OF SECTION 54, AND SECTION 22 OF THE INCOME-TAX ACT, THE APEX COURT SAID (PAGE 643) : 'T HAT, HOWEVER, WOULD NOT TAKE AWAY THE RIGHT OF THE ASSESSEE TO RE MAIN IN POSSESSION OF THE PROPERTY, TO REALISE AND RECEIVE THE RENTS A ND PROFITS THEREFROM AND TO APPROPRIATE THE ENTIRE INCOME FOR ITS OWN US E. THE SO-CALLED VENDOR IS NOT PERMITTED IN LAW TO DISPOSSESS OR TO QUESTION THE TITLE OF THE ASSESSEE (THE SO-CALLED VENDEE). IT WAS FOR THI S VERY PRACTICAL PURPOSE THAT THE DOCTRINE OF THE EQUITY OF PART PER FORMANCE WAS INTRODUCED IN THE TRANSFER OF PROPERTY ACT, 1882, B Y INSERTING SECTION 53A THEREIN. THE SECTION SPECIFICALLY ALLOWS THE DO CTRINE OF PART PERFORMANCE TO BE APPLIED TO THE AGREEMENTS WHICH, THOUGH REQUIRED TO BE REGISTERED, ARE NOT REGISTERED AND TO TRANSFE RS NOT COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY ANY LAW. THE SECT ION IS, THEREFORE, APPLICABLE TO CASES WHERE THE TRANSFER IS NOT COMPL ETED IN A MANNER REQUIRED BY LAW UNLESS SUCH A NON-COMPLIANCE WITH T HE PROCEDURE RESULTS IN THE TRANSFER BEING VOID.' AFFIRMING THE VIEW OF THE RAJASTHAN HIGH COURT, THE APEX COURT HELD THAT IN THE CONTEXT OF SECTION 22, WHERE THE TRANSFEROR HAD HANDED OVER POSSESSION OF THE PR OPERTY PURSUANT TO AN AGREEMENT FOR SALE, 'OWNER IS A PERSON WHO IS EN TITLED TO RECEIVE INCOME FROM THE PROPERTY.' THE APEX COURT HELD THAT THE AMENDMENT INTRODUCED BY THE FINANCE BILL, 1987, WAS DECLARATO RY/CLARIFICATORY IN NATURE AND HENCE, THESE PROVISIONS ARE RETROSPECTIV E IN OPERATION. 35. THE RAJASTHAN HIGH COURT HAD AN OCCASION TO CON SIDER A CASE SIMILAR TO THE ONE THAT WE HAVE ON HAND. APPLYING T HE AFORESAID DECISION OF THE APEX COURT TO THE CASE DEALING WITH A QUESTION OF CAPITAL GAINS WHERE POSSESSION WAS GIVEN TO AN AGRE EMENT HOLDER, IN M/S.SRINAR COMMUNICATION P LTD. 19 THE DECISION REPORTED IN CIT V. VISHNU TRADING AND INVESTMENT CO. [2003] 259 ITR 724, THE RAJASTHAN HIGH COURT HELD T HAT (726) : 'FOLLOWING THE VIEW TAKEN BY THEIR LORDSHIPS, WE AR E OF THE VIEW THAT FOR TAXING THE CAPITAL GAIN, REGISTRATION OF THE SA LE DEED IS NOT NECESSARY UNDER THE PROVISIONS OF THE INCOME-TAX AC T.' THE SAID DECISION OF THE RAJASTHAN HIGH COURT WAS AGAIN FOLL OWED IN THE DECISION REPORTED IN CIT V. RAJASTHAN MIRROR MANUFA CTURING CO. [2003] 260 ITR 503. 36. AGAIN, IN THE DECISION REPORTED IN M. SYAMALA R AO V. CIT [1998] 234 ITR 140, THE ANDHRA PRADESH HIGH COURT CONSIDER ED THE SITUATION, WHERE, UNDER THE AGREEMENT OF SALE ON MAY 1, 1962, THE ASSESSEE WAS PUT IN POSSESSION OF THE LAND. THE DOCUMENT OF SALE WAS REGISTERED ON JUNE 8, 1979. THE ASSESSEE SOLD THE L AND AFTER CONVERTING IT INTO PLOTS. THE SALE OF THESE LANDS W AS SOUGHT TO BE ASSESSED AS CAPITAL GAINS. ON A REFERENCE, THE ANDH RA PRADESH HIGH COURT HELD THAT THOUGH THE DOCUMENT WAS REGISTERED ON JUNE 8, 1979, IT RELATED BACK TO THE DATE ON WHICH THE AGREEMENT OF SALE WAS EXECUTED IN FAVOUR OF THE ASSESSEE BY THE VENDOR. H ENCE, THE ASSESSEE WAS DEEMED TO BE THE OWNER OF THE PROPERTY WITH EFFECT FROM 1962. THE ANDHRA PRADESH HIGH COURT POINTED OUT THA T THE ASSESSEE HAD HELD PROPERTY FOR MORE THAN 36 MONTHS ; HENCE, THE CAPITAL GAINS COULD NOT BE ASSESSED AS SHORT-TERM CAPITAL GAINS. 37. SIMILAR IS THE VIEW EXPRESSED BY THE PUNJAB AND HARYANA HIGH COURT ON THE SCOPE OF SECTION 2(42A) OF THE INCOME- TAX ACT, 1961, IN THE DECISION REPORTED IN CIT V. VED PARKASH AND SON S (HUF) [1994] 207 ITR 148 (P&H). THERE, THE ASSESSEE ENTERED INTO AN AGREEMENT FOR PURCHASE OF A FLAT IN THE YEAR 1970. HE WAS PUT IN POSSESSION OF THE FLAT IN THE SAME YEAR. THE ASSESSEE MADE A FINAL PA YMENT IN THE YEAR 1973, I.E., ON FEBRUARY 10, 1973. ON THE SAME DAY, HE SOLD THE PROPERTY AND CLAIMED THE GAIN ARISING THEREFROM AS LONG-TERM CAPITAL GAINS. THE PUNJAB AND HARYANA HIGH COURT TOOK THE V IEW THAT SECTION 2(42A) RELATING TO THE DEFINITION OF SHORT-TERM CAP ITAL GAINS ASSET REFERS TO A CAPITAL ASSET HELD BY AN ASSESSEE FOR NOT MORE THAN 36 MONTHS IMMEDIATELY PRECEDING THE DATE OF TRANSFER. THE HIG H COURT TOOK THE VIEW THAT 'AS IS CLEAR FROM A BARE READING OF SECTI ON 2(42) OF THE ACT, THE WORD 'OWNER' HAS DESIGNEDLY NOT BEEN USED BY TH E LEGISLATURE. THE WORD 'HOLD', AS PER THE DICTIONARY MEANING, MEANS T O POSSESS, BE THE OWNER, HOLDER OR TENANT OF (PROPERTY, STOCK, LAND . . . .). THUS, A PERSON CAN BE SAID TO BE HOLDING THE PROPERTY AS AN OWNER, AS A LESSEE, AS A MORTGAGEE OR ON ACCOUNT OF PART PERFORMANCE OF AN A GREEMENT, ETC. CONVERSELY, ALL SUCH OTHER PERSONS WHO MAY BE TERME D AS LESSEES, MORTGAGEES WITH POSSESSION OR PERSONS IN POSSESSION AS PART PERFORMANCE OF THE CONTRACT WOULD NOT IN STRICT PAR LANCE COME WITHIN THE PURVIEW OF 'OWNER'. AS PER THE SHORTER OXFORD D ICTIONARY, EDITION M/S.SRINAR COMMUNICATION P LTD. 20 1985, 'OWNER' MEANS ONE WHO OWNS OR HOLDS SOMETHING ; ONE WHO HAS THE RIGHT TO CLAIM TITLE TO A THING.' 38. THE HIGH COURT HELD THAT EVEN IF THE AMOUNT WAS NOT PAID IN FULL BY THE ASSESSEE IN TERMS OF THE AGREEMENT, IT COULD NO T BE CONSTRUED THAT THE ASSESSEE HAD NO RIGHT OR INTEREST IN THE PROPER TY. THE ASSESSEE WAS PUT IN POSSESSION AS EARLY AS 1970 AND WAS REMA INING IN OCCUPATION AS A MATTER OF RIGHT. THUS, FOR ALL PURP OSES, HE WAS A BENEFICIAL OWNER FROM THE START. IN THE CONTEXT OF THIS VIEW TAKEN, THE COURT HELD THAT THE CAPITAL GAIN WAS ASSESSABLE AS LONG-TERM CAPITAL GAIN. 39. WE FIND NO REASON TO DIFFER FROM THE VIEW TAKEN BY THE OTHER HIGH COURTS AS STATED ABOVE ON THE SCOPE OF SECTION 2(47 ) WITH REFERENCE TO THE LIABILITY UNDER SECTION 45. ALTHOUGH THE DECISI ON OF THE APEX COURT RELATED TO A CASE OF INCOME ASSESSABILITY AT THE HA NDS OF AN OCCUPIER WHO NEED NOT BE AN OWNER IN THE NORMAL CONNOTATION, YET, GIVEN THE SCOPE OF THE DEFINITION PROVISIONS UNDER SECTION 2( 14) AND SECTION 2(47) AND THE EFFECT OF THE AMENDMENT BROUGHT FORTH BY THE INSERTION OF CLAUSE (V) UNDER SECTION 2(47), WE AGREE WITH THE V IEW EXPRESSED BY OTHER HIGH COURTS. 40. LEARNED COUNSEL FOR THE RESPONDENT SUBMITTED TH AT IN THE CONTEXT OF THE DECISION OF THE APEX COURT REPORTED IN ALAPA TI VENKATARAMIAH V. CIT [1965] 57 ITR 185, REFERRED TO ABOVE, THE PERIO D OF HOLDING THE PROPERTY HAS TO BE RECKONED FROM THE DATE OF PASSIN G OF TITLE. 41. THIS DECISION WAS CONSIDERED BY THIS COURT IN T HE DECISION REPORTED IN MECCANE INDUSTRIES LTD. V. CIT [2002] 254 ITR 17 5, THAT TRANSFER MEANT EFFECTIVE CONVEYANCE OF CAPITAL ASSET TO THE TRANSFEREE. IT MAY BE NOTED THAT THE CASE REPORTED IN MECCANE INDUSTRI ES LTD. V. CIT [2002] 254 ITR 175 (MAD), RELATED TO THE ASSESSMENT YEAR 1968-69. THIS COURT HELD THAT THE DELIVERY OF POSSESSION OF IMMOVABLE PROPERTY COULD NOT, BY ITSELF, BE TREATED AS EQUIVALENT TO C ONVEYANCE OF THE IMMOVABLE PROPERTY. THIS COURT HELD THAT HAVING REG ARD TO THE LAW THAT PREVAILED IN THE ASSESSMENT YEAR CONCERNED, CAPITAL GAINS COULD BE REGARDED ONLY WHEN THE CONVEYANCE WAS EXECUTED AND NOT AT ANY EARLIER POINT OF TIME. 42. THE DECISION OF THIS COURT REPORTED IN MECCANE INDUSTRIES LTD. V. CIT [2002] 254 ITR 175, NO DOUBT, APPLIED THE LAW D ECLARED BY THE APEX COURT REPORTED IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185 THAT CAPITAL GAIN AROSE IN THE YEAR IN WHICH TH E DEED WAS REGISTERED. HOWEVER, IT MUST BE NOTED THAT THE DECI SION IS DISTINGUISHABLE AS THE SAME WAS WITH REFERENCE TO T HE CHARGEABILITY UNDER SECTION 45 WITH REFERENCE TO 'TRANSFER' AS DE FINED UNDER SECTION 2(47) AS IT THEN STOOD PRIOR TO THE AMENDMENT UNDER THE TAXATION LAWS M/S.SRINAR COMMUNICATION P LTD. 21 AMENDMENT ACT, 1984, WITH EFFECT FROM APRIL 1, 1985 . HENCE, IT DOES NOT COVER THE ISSUE ON HAND. 43. IN THE DECISION REPORTED IN ZUARI ESTATE DEVELO PMENT AND INVESTMENT CO. P. LTD. V. J. R. KANEKAR, DEPUTY CIT (ASSESSMENT) [2004] 271 ITR 269 (BOM), THE BOMBAY HIGH COURT CON SIDERED THE EFFECT OF SECTION 2(47) WHICH WAS AMENDED FROM MARC H 1, 1988. THE BOMBAY HIGH COURT HELD THAT FOR THE TRANSACTION TO AMOUNT TO 'TRANSFER' WITHIN THE MEANING OF SECTION 2(47), THE MINIMUM REQUIREMENTS ARE THAT THERE HAS TO BE AN AGREEMENT BETWEEN THE PARTIES SIGNED BY THE PARTIES ; IT SHOULD BE IN WRI TING ; IT SHOULD PERTAIN TO TRANSFER OF PROPERTY AND THE TRANSFEREE SHOULD H AVE TAKEN POSSESSION OF THE PROPERTY. REFERRING TO THE DECISI ON REPORTED IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185 (SC) WITH REFERENCE TO SECTION 12B OF THE ACT OF 1922, IT POINTED OUT T HAT 'TRANSFER' FOR THE PURPOSES OF THE INCOME-TAX ACT, 1961, REQUIRE FACTS OF CONVEYANCE OF THE CAPITAL ASSETS TO THE TRANSFEREE. DELIVERY OF P OSSESSION OF IMMOVABLE PROPERTY, BY ITSELF, COULD NOT BE TREATED AS EQUIVALENT TO CONVEYANCE OF THE IMMOVABLE PROPERTY. 44. THE DECISION OF THE SUPREME COURT REPORTED IN A LAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185, ON WHICH TH E TRIBUNAL BASED ITS DECISION AND RELIED ON BY THE REVENUE IS TO BE UNDERSTOOD WITH REFERENCE TO SECTION 12B OF THE INDIAN INCOME-TAX A CT, 1922, AND IN THE CONTEXT OF THE PROVISIONS AS THEY STOOD AT THE MATERIAL TIME. 45. THE PROVISIONS OF SECTION 12B OF THE INDIAN INC OME-TAX ACT, 1922, WHICH CORRESPONDS TO SECTION 45 OF THE 1961 ACT REL ATING TO CAPITAL GAINS LIABILITY BROUGHT TO CHARGE CAPITAL GAINS 'IN RESPECT OF ANY PROFITS OR GAINS ARISING FROM SALE, EXCHANGE, RELINQUISHMEN T OR TRANSFER OF A CAPITAL ASSET . . .'. THE 1922 ACT CONTAINED A DEFI NITION OF 'CAPITAL ASSET' UNDER SECTION 2(4A). HOWEVER, THERE WAS NO S PECIFIC PROVISION THEREIN CORRESPONDING TO SECTION 2(47) UNDER THE 19 61 ACT DEFINING 'TRANSFER'. THE PRESENT PROVISION UNDER SECTION 2(4 7) DEFINING 'TRANSFER' IS WIDER IN SCOPE AND IS AN INCLUSIVE DE FINITION. TOUCHING ON THE SCOPE OF SECTION 12B, THE APEX COURT HELD (PAGE 192 OF 57 ITR) : 'BEFORE SECTION 12B CAN BE ATTRACTED, TITLE MUST PA SS TO THE COMPANY BY ANY OF THE MODES MENTIONED IN SECTION 12B, I.E., SALE, EXCHANGE OR TRANSFER. IT IS TRUE THAT THE WORD 'TRANSFER' IS US ED IN ADDITION TO THE WORD 'SALE' BUT EVEN SO, IN THE CONTEXT TRANSFER MUST ME AN EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET TO THE TRANSFEREE. DELIVERY OF POSSESSION OF IMMOVABLE PROPERTY CANNOT BY ITSELF B E TREATED AS EQUIVALENT TO CONVEYANCE OF THE IMMOVABLE PROPERTY' . 46. A READING OF SECTION 45 AS IT STANDS TODAY, SHO WS THAT CAPITAL GAINS IS CHARGEABLE ON 'ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF THE CAPITAL ASSET . . .'. READ IN THE CONTEXT OF THE DE FINITIONS OF 'CAPITAL ASSET' AND 'TRANSFER' THE SECTION CARRIES NO WORDS OF LIMITATION TO READ M/S.SRINAR COMMUNICATION P LTD. 22 THAT A TRANSFER EFFECTED BY A PERSON BACKED UP WITH A TITLE PASSED ON UNDER A REGISTERED DEED ALONE COULD BE CONSIDERED A S RESULTING IN A PROFIT OR GAIN ASSESSABLE UNDER SECTION 45. ALL THA T THE PRESENT SECTION LOOKS AT IS THE TRANSFER OF A CAPITAL ASSET HELD AS UNDERSTOOD UNDER SECTION 2(14) AND UNDER SECTION 2(47). IN THE BACKG ROUND OF THE PROVISIONS AS THEY STAND TODAY, THE DECISION REPORT ED IN MECCANE INDUSTRIES LTD. V. CIT [2002] 254 ITR 175 (MAD) REL ATING TO THE ASSESSMENT YEAR 1968-69, OR FOR THAT MATTER, THE DE CISION OF THE SUPREME COURT REPORTED IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185, CAN HAVE NO RELEVANCE TO THE ISSUE IN THE MATTER OF UNDERSTANDING THE SCOPE OF SECTION 2(47) AND SECTIO N 45. AS ALREADY SEEN, THE CASE ON HAND HAS TO BE ANALYSED IN THE CO NTEXT OF THE PROVISIONS PREVAILING DURING THE RELEVANT POINT OF TIME. IN THE CIRCUMSTANCES, WE DO NOT AGREE WITH THE VIEW TAKEN BY THE TRIBUNAL, APPLYING THE DECISION OF THE APEX COURT IN THE DECI SION REPORTED IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185 AND THE DECISION OF THIS COURT REPORTED IN MECCANE INDUSTRIES LTD. V. C IT [2002] 254 ITR 175. 47. THE QUESTION THEN IS, WHAT WILL BE THE EFFECT O F THE AMENDMENT BROUGHT FORTH TO SECTION 2(47) BY THE INSERTION OF SUB-CLAUSE (V) TO SECTION 2(47) RELATING TO THE DEFINITION OF 'TRANSF ER' UNDER THE FINANCE ACT 1987, WITH EFFECT FROM APRIL 1, 1988. 48. THIS TAKES US ONCE AGAIN TO THE DECISION OF THE APEX COURT REPORTED IN CIT V. PODAR CEMENT P. LTD. [1997] 226 ITR 625. FURTHER, IN THE CASE OF SMT. D. KASTHURI & ANR. V. CIT (323 ITR 40) , THE MADRAS HIGH COURT HELD THAT FOR APPLICATION OF SEC.53A, RELEVAN T CONSIDERATION WOULD BE CLAUSES IN THE AGREEMENT BETWEEN PARTIES T O THE AGREEMENT AND THEIR PERFORMANCE IN TERMS OF THE AGREEMENT. S UBSEQUENT ACT OF ASSESSEE IN EXECUTING POWER OF ATTORNEY AND DEEDS E XECUTED BY THE POWER HOLDER ON BASIS OF SUCH POWER WOULD NOT IN AN Y WAY LATER THE STATUS OF THE PARTIES TO THE AGREEMENT, FOR APPLICA BILITY OF SEC.53A OF THE ACT AS HAS BEEN RIGHTLY HELD BY THE LEARNED SIN GLE JUDGE. THE ASSESSEE COULD NO LONGER ASSET POSSESSORY RIGHTS AG AINST THE FIRM O WHICH POSSESSION WAS ALREADY GIVEN PURSUANT TO THE AGREEMENT AND THAT TOO AFTER RECEIVING THE FULL SALE CONSIDERATIO N. 2.8. FURTHER, IN THE CASE OF CHATURBHUJ DWARALKDAS KAPADIA V. CIT (260 ITR 491(BOMBAY), WHEREIN IT WAS OBSERVED AS UNDER:- M/S.SRINAR COMMUNICATION P LTD. 23 THAT SECTION 2(47)(V) READ WITH SECTION 45 INDICAT ES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT E FFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS CASE, THE TEST HAD N OT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT T EST HAD NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QUESTIO N, READ AS A WHOLE, SHOWED THAT IT WAS A DEVELOPMENT AGREEMENT. ONCE UN DER CLAUSE 8 OF THE AGREEMENT A LIMITED POWER OF ATTORNEY WAS INTEN DED TO BE GIVEN TO THE DEVELOPER TO DEAL WITH THE PROPERTY, THEN THE D ATE OF THE CONTRACT, VIZ., AUGUST 18, 1994, WOULD BE THE RELEVANT DATE T O DECIDE THE DATE OF TRANSFER UNDER SECTION 2(47)(V) AND, IN WHICH EVENT , THE QUESTION OF SUBSTANTIAL PERFORMANCE OF THE CONTRACT THEREAFTER WOULD NOT ARISE. THIS POINT HAD NOT BEEN CONSIDERED BY ANY OF THE AU THORITIES BELOW. THE ASSESSEE HAD PAID THE CAPITAL GAINS TAX FOR THE ASSESSMENT YEAR 1999-2000. FROM MERE SUBSTANTIAL COMPLIANCE OF THE AGREEMENT, ONE COULD NOT INFER TRANSFER IN THE ACCOUNTING YEAR END ING MARCH 31, 1996. THERE WERE MISTAKES APPARENT ON THE FACE OF THE REC ORD, IN THE ORDER OF THE TRIBUNAL. ACCORDING TO THE TRIBUNAL, THE LET TER DATED FEBRUARY 18, 1999, SHOWED THAT THE BUILDER CAME INTO POSSESSION ON THE DAY NEXT TO MARCH 31, 1996, I.E., APRIL 1, 1997. THE DAY NEXT T O MARCH 31, 1996, WOULD BE APRIL 1, 1996, AND NOT APRIL 1, 1997, AND EVEN IF APRIL 1, 1997, WERE TAKEN AS A TYPING MISTAKE, IT COULD ONLY BE READ AS APRIL 1, 1996, AND IF APRIL 1, 1996, WAS THE DATE ON WHICH T HE DEVELOPER CAME INTO POSSESSION, THEN THE POSSESSION WAS RECEIVED B Y THE DEVELOPER DURING THE FINANCIAL YEAR 1996-97 CORRESPONDING TO THE ASSESSMENT YEAR 1997-98. THEREFORE, THIS FINDING OF THE TRIBUN AL WAS ERRONEOUS. TAKING INTO ACCOUNT THE TOTALITY OF THE CIRCUMSTANC ES THE TRIBUNAL WAS NOT JUSTIFIED IN CONCLUDING THAT THE APPELLANT HAD TRANSFERRED THE PROPERTY DURING THE PREVIOUS YEAR RELEVANT TO THE A SSESSMENT YEAR 1996-97 . M/S.SRINAR COMMUNICATION P LTD. 24 2.9. FURTHER, THE CO-ORDINATE BENCH OF CHENNAI TR IBUNAL HAS CONSIDERED SIMILAR ISSUE IN THE CASE OF DR.(SMT.) P .K.VASANTHI RANGARAJAN, VS. DCIT IN ITA NO.1753/MDS./2004 VIDE ORDER DATED 25 TH JULY, 2015. 2.9.1 ACCORDINGLY, WE ARE INCLINED TO REVERSE THE ORDER OF LD.CIT(A) AND RESTORE THE ORDER OF THE AO. SINCE WE ALLOW TH E APPEAL OF THE REVENUE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED. 3. NOW WE TAKE ITA NO.1289/MDS./2011 & C.O NO.133/ MDS./11 (A.Y.2008-09) 3.1 THE DEPARTMENT HAS FILED THE APPEAL REGARDING DELETION OF ADDITION OF ` 19.14 CRORES BY LD.CIT(A) OBSERVING THAT THERE IS N O TRANSFER OF PROPERTY IN TERMS OF SEC.2(47)(V) OF TH E ACT. THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS IN SUPPORT OF O RDER OF THE LD.CIT(A). 3.2 THE FACTS OF THE CASE ARE THAT THE ASSESSEE EN TERED INTO AN AGREEMENT FOR JOINT DEVELOPMENT ON 01.06.2006 WITH M/S.VISHRANTHI SABARI CONSTRUCTION FOR DEVELOPMENT OF THE PROPERTY . FURTHER, FRESH AGREEMENT HAD BEEN ENTERED ON 2.2.2007 WITH THE SAM E PARTY. AS PER THIS AGREEMENT, THE VACANT POSSESSION OF THE SCHEDU LED PROPERTY WAS M/S.SRINAR COMMUNICATION P LTD. 25 HANDED OVER TO THE SECOND PARTY AND THE PREVIOUS AG REEMENT HAD BEEN REFERRED IN CLAUSE 9. ANOTHER TRIPARTITE AGREE MENT DATED 01.08.2007 HAD BEEN ENTERED BY THE ASSESSEE WITH M/ SVISHRANTHI SABARI CONSTRUCTION AND M/S.VISHRANTHI SABARI IN W HICH VISHRANTHI SABARI CONSTRUCTION THE PARTY TO THE EARLIER AGREEM ENT HAS BEEN INCLUDED AS CONFIRMING PARTY AND IT HAS GIVEN UP I TS OBLIGATION AND RIGHTS WITH RESPECT TO DEVELOPMENT OF RESIDENTIAL C OMPLEX AND CONSENT WAS EXECUTED OF THE PROJECTS. MOREOVER, THE PARTIES WERE AGREED FOR THE TRANSFER OF THE AMOUNTS PAID BY THEM TOWARDS PE RFORMANCE SECURITY DEPOSIT. SUBSEQUENTLY, AN ANOTHER AGREEME NT DATED 10.08.2007 HAD BEEN ENTERED BETWEEN THE ASSESSEE CO MPANY AND WITH ANOTHER PARTY BY NAME VISHRANTHI SABARI. THE REFERENCE OF THE EARLIER AGREEMENT DATED 01.06.2006 IS MISSING IN TH IS AGREEMENT. 3.3 THE LD. ASSESSING OFFICER BASED ON THE AGREEMEN T DATED 2.2.2007 FOR ASSESSMENT YEAR 2007-08 ENTERED BETWEE N THE ASSESSEE COMPANY AND MIS VISHRANTHI SABARI CONSTRUC TIONS AN AMOUNT OF ` 22 CRORES WAS BROUGHT TO TAX AS CAPITAL GAINS IN TH E HANDS OF THE ASSESSEE COMPANY BY VIRTUE OF SALE OF PROPER TY MEASURING 2.86 CRORES OF LAND SITUATED AT SHOLINGA NALLUR VILLAGE .THIS WAS BASED ON THE IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE SECOND M/S.SRINAR COMMUNICATION P LTD. 26 PARTY WITH AN AGREEMENT WITH THE SECOND PARTY THAT SHOULD CONSTRUCT RESIDENTIAL APARTMENTS BUILDING COMPLEX. UNDER DEVE LOPED CONSTRUCTION BUILDING THE LAND BELONGING TO THE ASS ESSEE COMPANY. AFTER DEMOLISHING THE SUPERSTRUCTURE THEREON. THE A SSESSING OFFICER WAS OF THE OPINION THAT: (I ) THE RIGHTS OF THE ASSESSEE OVER THE PROPERTY CEAS ES TO EXIST SOON AFTER THE VACANT POSSESSION IS HANDED OVER TO ANOTH ER PERSON IN RETURN FOR A CONSIDERATION. IN OTHER WORDS, THE ASS ESSEE HAS RELINQUISHED ITS RIGHT OVER THE SAID PROPERTY FOR A CONSIDERATION OF ` 22 CORES AS PER THE AGREEMENT DATED 02.02.2007 A PART OF WHICH IS RECEIVED AT THE TIME OF EXECUTION OF THE FIRST AGRE EMENT DATED 01.06.2006 I.E. DURING THE PREVIOUS YEAR RELEVANT T O THE A.Y. UNDER CONSIDERATION. THERE IS NO DISPUTE THAT THE SSESSE E HAS HANDED OVER THE VACANT POSSESSION OF THE PROPERTY TO THE DEVELO PER AFTER RECEIVING A PART OF SALE CONSIDERATION. THIS AMOUNTS TO TRANS FER WITHIN THE MEANING OF SEC.2(47)(V) OF THE L.T. ACT WHICH READS AS UNDER: TRANSFER IN RELATION TO A CAPITAL ASSET INCLUDES S.2(47)(V): ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN P ART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SEC.53A OF TH E TRANSFER OF PROPERTY ACT, 1982 (4 OF 1882). M/S.SRINAR COMMUNICATION P LTD. 27 IT IS QUITE CLEAR FROM THE FACTS MENTIONED ABOVE TH AT THE TRANSACTION SQUARELY FALLS WITHIN THE SCOPE OF SEC.2(47)(V) OF THE ACT READ WITH EXPLANATION THERETO. IT CAN EVEN BE CONSIDERED AS C OVERED U/S.2(47)(VI) READ WITH EXPLANATION THERETO. TRANSF ER AS DEFINED IN THE ACT DOES NOT REQUIRE THAT THERE SHOULD BE A SALE. E VEN IF THE POSSESSION OF THE PROPERTY IS HANDED OVER FOR SOME CONSIDERATION, THEN THE TRANSACTION SHOULD BE TREATED AS TRANSFER WITHIN THE SCOPE AND MEANING OF SECTION 53A OF THE TRANSFER OF PROPE RTY ACT WHICH READS AS UNDER: S.53A: WHERE ANY PERSON CONTRACTS TO TRANSFER FO R CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON H IS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PA RT PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY P ART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT I N FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WI LLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT TH E CONTRACT, THOUGH REQUIRED TO BE REGISTERED, OR, WHERE THERE IS AN IN STRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MAN NER PRESCRIBED THEREFORE BY THE LAW FOR THE TIME BEING IN FORCE, T HE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM EN FORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTI NUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED UNDER THE TER MS OF THE CONTRACT: M/S.SRINAR COMMUNICATION P LTD. 28 PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT S OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. ( II) IT IS CLEAR FROM THE ABOVE THAT IN ORDER TO AT TRACT SEC.53A OF THE TRANSFER OF PROPERTY ACT, FOLLOWING CONDITIONS MUST BE FULFILLED: 1. THERE SHOULD BE A CONTRACT FOR CONSIDERATION; 2. THE CONTRACT SHOULD BE IN WRITING AND SIGNED BY THE TRANSFEFOR AND THE TRANSFEREE; 3. IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPE RTY; 4. POSSESSION OF THE PROPERTY SHOULD BE GIVEN TO TH E TRANSFEREE; AND 5. THE TRANSFEREE SHOULD BE READY AND WILLING TO PE RFORM HIS PART OF THE CONTRACT. (III) IN THE PRESENT CASE, ALL THE ABOVE CONDITION S ARE FULFILLED. THERE IS NO RIGHT LEFT TO THE TRANSFER TO OTHER THAN THE RIG HT TO RECEIVE THE CONSIDERATION FOR THE TRANSFER IN THE MANNER LAID D OWN IN THE CONTRACT. THUS, THE TRANSACTION ENTERED INTO BY THE PARTIES T HROUGH THE AGREEMENT IS A TRANSACTION AS ENVISAGED U/S.53A OF THE TRANSFER OF PROPERTY ACT. 3.4 ON FURTHER APPEAL FOR ASSESSMENT YEAR 2007-08, THE LD CIT(A) HAD PASSED AN ORDER THE RELEVANT PORTION IS REPRODU CED AS FOLLOWS: THE AR ALSO SUBMITTED THAT REMARKS OF THE ASSESSING OFFICER ON PAGE 3 UNDER PARA 2.5 WAS CONTRARY TO FACTS, AS THE ACTU AL POSSESSION OF LAND GIVEN IN TERMS OF THE SUBSISTING AND OPERATIVE AGREEMENT DATED M/S.SRINAR COMMUNICATION P LTD. 29 10.8.2007 WAS ON 1.8.2007 VIDE CLAUSE 10(A) OF THE AGREEMENT WHICH READ AS: THE FIRST PARTY I. E, THE APPELLANT HAS PUT THE SE COND PARTY MIS VISRANTHI SABARI IN POSSESSION OF THE SCHEDULED PRO PERTY FOR THE PURPOSE OF SUPERVISION OF THE CONSTRUCTION OF THE R ESIDENTIAL BUILDING COMPLEX, MONITORING THE RELATED ACTIVITIES MARKETING/SALES AND ALL OTHER CONNECTED ACTIVITIES ON 1.8.2007 WITH THESE FACTS AND IN THE LIGHT OF THE REASONS GI VEN BY ASSESSING OFFICER FOR THE ADDITION OF RS. 19.14 CRORES AS CAP ITAL GAINS ACCRUING TO THE APPELLANT IN THE ASSESSMENT FOR 2007-08, THE DE CISION IN THIS CASE HINGES AROUND WHETHER, IF AT ALL, THERE IS ANY CAPI TAL GAIN ASSESSABLE FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 007-08. AN ANALYSIS OF FACTS REVEAL THAT THE APPELLANT CHAN GED THE AGREEMENT AND THE PARTIES ACCORDING TO THEIR BUSINE SS CONVENIENCE AND THE EXIGENCIES OF TIME. HOWEVER, THE CHRONOLOGY AND SEQUENCE OF EVENT DISCLOSE THE FACT THAT ALL EARLIER AGREEMENTS ENTERED INTO BY THE APPELLANT FOR THE EXECUTION OF THE PROJECT STAND WI THDRAWN AND ARE, HENCE, NON-EST EXCEPTING THE LAST TWO AGREEMENTS DA TED 1.8.2007 AND 10.08.2007, THE LATER BEING THE ACTUAL OPERATING AG REEMENT WHICH RELATE TO THE PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR 2008-09. THE LD.CIT(A) AFTER EXAMINING THE REASONS ADDUCED A ND CASES CITED BY THE ASSESSING OFFICER, FOUND THAT THERE IS NO PO SSIBILITY FOR ANY TRANSFER HAVING TAKEN PLACE DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR 200 7-08. M/S.SRINAR COMMUNICATION P LTD. 30 3.5 CONSEQUENT TO THIS, THE LD. ASSESSING OFFICER FRAMED THE ASSESSMENT FOR NEXT ASSESSMENT YEAR 2008-09 ON PRO TECTIVE BASIS. ON APPEAL, THE LD.CIT(A) CANCELLED THE PROTECTIVE A SSESSMENT BY OBSERVING AS FOLLOWS:- AS REVEALED BY THE FACTS OBTAINING IN THE APPELLANT S CASE, THE TRANSACTION IS NOT LIMITED TO THE A.Y 2008-09 AND S TRETCHES BEYOND THE RELEVANT YEAR SINCE BOOKINGS TAKE PLACE AT A SLOW P HASE AND AS SUCH THERE IS NO ESCAPEMENT OF TAX AND THEREFORE, PROTEC TIVE ASSESSMENT IS NOT LEGALLY SUSTAINABLE. IN VIEW OF THE FACTUAL POS ITION AND THE LEGAL PROVISIONS IN THIS REGARD, I AM DIRECTING WITHDRAWA L OF THE PROTECTIVE ASSESSMENT AND TO BRING TO TAX ONLY SO MUCH OF CAPI TAL GAINS TO TAX AS IS RELATABLE TO THE NUMBER OF UDS REGISTERED IN THE RELEVANT ASSESSMENT YEAR. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 3.6 SINCE WE HAVE REVERSED THE ORDER OF THE LD.CI T(A) IN THE ASSESSMENT YEAR 2007-08 BY OBSERVING THAT THERE IS A TRANSFER IN TERMS OF SEC.2(47)(V) OF THE ACT IN THE ASSESSMENT YEAR 2007-08 AND ACCORDINGLY, WE ANNULLED THE PROTECTIVE ASSESSMENT FOR ASSESSMENT YEAR 2008-09. HOWEVER, WE OBSERVE THAT THE REASONS GIVEN BY THE LD.CIT(A) IS NOT PROPER FOR CANCELLING THE PROTECTI VE ASSESSMENT, INSTEAD IT SHOULD BE A REASON CONFIRMING THE SUBSTA NTIVE ASSESSMENT FOR ASSESSMENT YEAR 2007-08. ACCORDINGLY, THE APP EAL OF REVENUE FOR ASSESSMENT YEAR 2008-09 AND CONSEQUENT CROSS OB JECTIONS RAISED BY THE ASSESSEE ARE DISMISSED. M/S.SRINAR COMMUNICATION P LTD. 31 4. ITA NO.247/MDS./2015 (A.Y 2010-11) THIS APPEAL IS FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF CIT(A) -15,CHENNAI DATED 28.11.2014 FOR ASSESSME NT YEAR 2010-11. 4.1. THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT(A). THE LD.CIT(A) HAD ERRED IN UPHOLDING THE ADDITION OF R S.2,38,39,830/- TO THE INCOME FROM THE PROJECT ARANYA. 4.2. THE FACTS OF THE CASE ARE THAT THE AO OBSERVE D THAT ASSESSEE HAS COMPLETED THE PROJECT ARANYA AT 60% AND WORKE D OUT THE TOTAL COST OF THE PROJECT 33.50 CRORES. SINCE THE ASSESSE E HAS NOT PROVIDED THE PROJECTED REVENUE OR PROFIT ON THE BASIS OF WHI CH PERCENTAGE COMPLETION METHOD (PCM) IS WORKED OUT. HOWEVER, AS SEEN FROM THE STATEMENT MADE DURING THE ASSESSMENT YEAR 2009-10, THE ASSESSEE SAID THAT ESTIMATED PROFIT WAS ` 12,65,99,737/-. THUS, THE ASSESSEE HAS RECOGNIZED THE PROFIT OF 60% OF THE PROJECT AS PER THE PCM. ACCORDINGLY, THE AO 60% OF THE ESTIMATED PROFIT I.E . 60% OF ` 12,65,99,737/- WORKED OUT ` 3,28,14,652/- TO BE THE PROFIT OF THE M/S.SRINAR COMMUNICATION P LTD. 32 ASSESSEE. SINCE THE ASSESSEE HAS DECLARED ONLY ` 89,74,822/- DECLARED BY THE ASSESSEE, THE AO BROUGHT INTO TAX D IFFERENCE OF ` 2,38,39,830/- TO TAX. AGAINST THIS, THE ASSESSEE C ARRIED THE APPEAL TO THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) CONFIRME D THE ADDITION. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE PARTIES THAT THE ASSESSEE FOLLOWS PCM AND FIRST YEAR IS ASSESSMENT Y EAR 2009-10, WHICH IS NOT ACCEPTED BY THE DEPARTMENT AND THE ISS UE IS PENDING BEFORE THE LD.CIT(A) AND IT WAS PRAYED BY THE LD.A .R THAT THIS ISSUE MAY BE REMITTED TO THE FILE OF LD.CIT(A) TO DECIDE THIS APPEAL ALONG WITH THE APPEAL FOR ASSESSMENT YEAR 2009-10 FOR WHI CH LD.D.R HAS NOT PUT ANY OBJECTIONS. CONSIDERING THE PLEA OF THE LD .A.R, WE ARE OF THE OPINION THAT IT IS APPROPRIATE TO DECIDE THE APPEAL BY THE LD.CIT(A) ALONG WITH ASSESSMENT YEAR 2009-10 WHICH IS PENDI NG BEFORE LD.CIT(A). ACCORDINGLY, THE ISSUE IN DISPUTE IS REM ITTED TO THE FILE OF LD.CIT(A) FOR HIS CONSIDERATION. M/S.SRINAR COMMUNICATION P LTD. 33 5. IN THE RESULT, THE APPEAL OF REVENUE IN ITA NO. 1289/MDS./2011 & C.O NO.133/MDS./11 BY THE ASSESSEE ARE DISMISSED, AND THE APPEAL OF REVENUE IN ITA NO.1822/MDS./2010 IS ALLOW ED & C.O NO.164/MDS./10 BY THE ASSESSEE IS DISMISSED AND THE APPEAL IN ITA NO.247/MDS./2015 FILED BY THE ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 27 TH OF APRIL,2016 AT CHENNAI. SD/- SD/- ( . ) (G.PAVAN KUMAR) ( ( ) ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 27 TH APRIL,2016. K S SUNDARAM. $%& ' () *%) /COPY TO: 1. +, /APPELLANT 2. '-+, /RESPONDENT 3. . () /CIT(A) 4. . /CIT 5. )/0 ' 1 /DR 6. 02 3 /GF