THE ITO, Ward -2(3), BARODA V. SHRI ANANDRAO C. RAO, BARODA

ITA 1828/AHD/2003

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9225 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-07-2009
• Assessment Year: 1993-1994
• Appeal Filed On: 28-04-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SANOBA
• Assessee Lawyers: J P SHAH
• Keywords: Capital asset; Cost of acquisition; Capital Gains

Judgement Text

IN THE INCOME_TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI T.K.SHARMA AND SHRI D.C.AGRAWAL ITA NO.1828/AHD/2003 (ASSESSMENT YEAR : 1993-94) THE I.T.O.WARD 2(3), BARODA. VS. SHRI ANANDRAO C. RAO, A.2, VRAJDHAM SOCIETY, OLD PADRA ROAD, BARODA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.SANOBA, SR. D.R. RESPONDENT BY : SHRI J.P.SHAH, A.R. ( (( ( )/ )/)/ )/ ORDER PER AGRAWAL, AM: THIS APPEAL IS FILED BY THE REVENUE RAISING FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-II, BARODA HAS ERRED IN DELETING THE ADDITION MADE OF RS.18,31,870/- BEING L ONG TERM CAPITAL GAIN AS IN THE CASE OF DEVELOPMENT AND AGREEMENTS, THE YEAR OF CHARGEABILITY OF CAPITAL GAIN IS THE YEAR IN WHICH THE CONTRACT IS EXECUTED WHICH IN TH IS CASE IS 19.10.92. THIS HAS BEEN DECIDED IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT (2003) 180 CTR (BOM.) 107. 2. THE ONLY DISPUTE INVOLVED IN THIS APPEAL IS WHETHER CAPITAL GAINS ON LAND WOULD BE TAXABLE IN THE ASSESSMENT YEAR 1993-94 OR NOT. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEED INGS FOR ASSESSMENT YEAR 1997-98, THE ASSESSING OFFICER FOUND THAT TH E ASSESSEE HAS DECLARED A CAPITAL GAIN OF RS.20,95,073/- IN THAT Y EAR. HE WAS SHOWN TO HAVE SOLD A HOUSE FOR A SUM OF RS.4,75,000/- AND LAN D FOR RS.20,69,068/-. THE TOTAL SALE CONSIDERATION OF THE TWO IMMOVABLE PROPERTIES AMOUNTED TO RS.25,44,068/-. THUS, THE ASSESSEE SHOWED 2 ACTUAL GAIN OF RS.23,96,851/- AND AFTER INDEXING THE COST OF ACQUISITION OF RS.1,47,289/- AS ON 01.4.1981 AT RS.4,48,907/-, HE DECL ARED LONG-TERM CAPITAL GAIN OF RS.20,95,073/-. WHEN THE ASSESSING OFFICER EXAMINED THE TRANSACTION, HE NOTICED THAT THERE WAS REGISTERED AGREEM ENT BETWEEN THE ASSESSEE AND PURCHASER, NAMELY, M/S KALPNA ENTERPRISES ENTE RED ON 19.10.1992 WHEREBY A SUM OF RS.11,000/- WAS ADVANCED TO THE ASSESSEE. THE AGREEMENT SHOWED THAT LAND WAS SOLD TO M/S KA LPNA ENTERPRISES ON 19.10.1992 AS PER AGREEMENT AT THE RATE OF RS.20 PER SQ. FT.. LAND WAS GIVEN IN POSSESSION TO THE DEVELOPER ON T HE DATE OF AGREEMENT. THE DEVELOPER STARTED DEVELOPMENT OF THE LAND, MADE FLATS THEREON WHICH WAS BOOKED BY DIFFERENT CUSTOMERS AND POSSESSI ON THEREOF WAS ALSO GIVEN IN DUE COURSE. AFTER COMPLETION OF CONSTRU CTION OF THE FLATS, THE LAND WAS TRANSFERRED THROUGH A REGISTERED DEED TO M/S KALPNA ENTERPRISES AND THEREAFTER FLATS WERE TRANSFERRED TO DI FFERENT CLIENTS. IT WAS SUBMITTED TO THE ASSESSING OFFICER THAT ASSESSEE RECEIVED P ERMISSION FROM APPROPRIATE AUTHORITY UNDER URBAN LAND CEILING ACT IN APRIL, 1998 BUT AS THE FLATS WERE COMPLETED AND SOLD TO THE CUSTOMERS IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 1997-98 CAPITAL GAINS WAS DECLARED IN THAT YEAR. IT WAS ALSO CLAIMED BY THE ASSESSEE THAT ASSESSEE H AS NOT TRANSFERRED HIS RIGHT ON THE SAID LAND AND THAT ENTIRE MONEY WAS NOT PAID BY THE DEVELOPER TO THE ASSESSEE AND, THEREFORE PROVISIO NS OF SEC. 53A OF THE TRANSFER OF PROPERTY ACT AND THE PROVISIONS OF SEC. 2 (47)(V) OF THE INCOME TAX ACT WOULD NOT BE APPLICABLE. THE ASSESSING OFF ICER DID NOT AGREE BUT HE ASSESSED THE CAPITAL GAIN IN THE ASSESSMENT YE AR 1997-98 ON PROTECTIVE BASIS AND INITIATED RE-ASSESSMENT PROCEEDINGS FOR THE PRESENT ASSESSMENT YEAR I.E. 1993-94. AFTER GIVING OPPOR TUNITY OF BEING HEARD, THE ASSESSING OFFICER TAXED THE CAPITAL GAINS IN T HE ASSESSMENT YEAR 1993-94. 3. THE LD. CIT(A) DELETED THE ADDITION ON THE GROUN D THAT 3 (I) CLAUSES IN THE AGREEMENT SHOW THAT THE POSSESSION OF THE PROPERTIES WAS AGREED TO BE GIVEN TO THE DEVELOPER ON LY UPON PAYMENT OF THE LAST INSTALMENT AND TILL SUCH TIME THE ASSESSEE HAS RIGHT TO REVOKE THE CONTRACT. (II) THE ASSESSEE HAS NOT GIVEN ABSOLUTE RIGHT BUT IT IS A CASE O F MERE CONFERRING RIGHT TO THE DEVELOPER TO ENTER UPO N AND CARRY ON DEVELOPMENT ACTIVITIES IN THE SAID PROPERTY. THE L D. CIT(A) REFERRED TO THE DECISION OF THE I.T.A.T. MUMBAI BENCH IN THE CASE OF DCIT V. ASIAN DISTRIBUTORS LTD. (2001) 70 TTJ 89. (III) IT IS NOT A CASE OF TRANSFER WITHIN THE MEANING OF SEC. 2 (47)(V) OF THE I.T.ACT OR SEC. 53 OF THE TRANSFER OF PROPERTY ACT. (IV) THE TRANSACTION IS ONLY AN AGREEMENT GRANTING LICENSE TO THE DEVELOPER WITHIN THE MEANING OF SEC. 52 OF EASEMENT ACT . THE LD. CIT(A) RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SHANTIVAN CORPORATION V. SUB REGISTRAR & ORS. (1990) 90 CTR (GUJ.) 196. (V) TRANSFER IS ONLY A PART OF POSSESSION AND NOT A COMPLETE T RANSFER IN THE YEAR UNDER CONSIDERATION. 4. AGAINST THIS, THE LD. D.R. SUBMITTED THAT THE REASO NING ADVANCED BY THE LD. CIT(A) ARE FALLACIOUS. IT IS BECAUSE THE AGREEME NT BETWEEN ASSESSEE AND DEVELOPER DOES NOT SHOW THAT IT IS ONLY A LI CENSE. IT IS ACQUIRING RIGHT TO DEVELOP THE PROPERTY AND ALSO TAK ING OVER COMPLETE POSSESSION OF THE PROPERTY. THE AGREEMENT IS NOT REVOCABL E. THE LD. D.R. FURTHER SUBMITTED THAT THE DEFINITION OF TRANSFER U/S 2(47)(V) IS WIDE ENOUGH TO INCLUDE CASES OF THIS NATURE WHERE POSSESSION IS HA NDED OVER TO THE DEVELOPER THOUGH REGISTRATION OF THE TRANSFER DEED TAKES PLACE SUBSEQUENTLY. 5. AGAINST THIS, THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE 4 ASSESSEE COULD NOT HAVE SOLD THE LAND BECAUSE THIS LAND IS COVERED UNDER URBAN LAND CEILING ACT. THE LAND SHOULD BE TRANSFERRED ONLY AFTER CONSTRUCTING THE FLATS THEREON FOR WEAKER SECTION OF THE SOCIETY AS PER SCHEME FRAMED UNDER THE ACT. FURTHER, THE ASSESSEE HAS NOT RECEIVED FULL CONSIDERATION OF TRANSFER SO MADE. IT HAS RECEIVED ONLY A SUM OF RS. 11,000/-, THEREFORE, IT COULD NOT BE SAID THAT TRANSF EREE HAS FULFILLED HIS OBLIGATIONS. HE SUBMITTED THAT IF A LAND IS COVERED UN DER URBAN LAND CEILING ACT THEN SAME COULD NOT BE SUBJECTED TO TRANSFER UNLESS CONDITIONS LAID DOWN UNDER THAT ACT ARE FULFILLED. WHAT IS DONE BY THE ASSESSEE IS ONLY A GRANT OF LICENSE TO THE DEVELOPER. THE LD. A.R . REFERRED TO CLAUSES 10,11, AND 18 OF THE DEVELOPMENT AGREEMENT AND INFE RRED THEREFROM THAT TRANSFER WOULD BE COMPLETE ONLY WHEN FLATS ARE COMPLETE AND READY FOR TRANSFER TO THE FLAT OWNERS. 6. IN REJOINDER THE LD. D.R. SUBMITTED THAT URBAN LA ND CEILING ACT WILL NOT PREVAIL OVER INCOME TAX ACT. THE RESTRICTIONS FOR A CTUAL TRANSFER OF LAND UNDER THE URBAN LAND CEILING ACT CANNOT OVERRIDE THE PROVISIONS OF SEC. 2(47)(V) ACCORDING TO WHICH TRANSFER OF THE LAND WOU LD BE COMPLETE IF THE POSSESSION IS HANDED OVER BY THE ASSESSEE TO THE DEVELOP ER, AS PER AGREEMENT. HE SUBMITTED THAT PROVISIONS OF SEC. 2(47)(V) CANNOT BE MADE OTIOSE MERELY BY DEFERRING THE DATE OF REGISTRATION O F TRANSFER DEED EITHER AS PER ASSESSEES WILL OR DUE TO DELAY IN FULFILLMENT OF CERTAIN CONDITIONS UNDER OTHER STATUTES EVEN THOUGH POSSESSION IS HANDED OVER TO THE DEVELOPER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PE RUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT ASSESSEE ENTERED INTO DEVELOPMENT AGREEMENT OF LAND ON 19.10.1992 WITH S HRI KANTIBHAI PATEL A PARTNER OF M/S KALPNA ENTERPRISES A PARTNERSHIP FIRM WHO IS THE DEVELOPER. AS PER CLAUSES OF THIS AGREEMENT, THE COST OF T HE LAND WAS 5 HANDED OVER TO THE DEVELOPER WAS SET OUT @ RS.20 PER SQ . FT.. A SUM OF RS. 11,000/- WAS PAID TO THE ASSESSEE IN CASH. AS PER PARA 3 PAGE 1 OF THE AGREEMENT THE ASSESSEE HAD OBTAINED A PERMISSION FROM BARODA MUNICIPAL CORPORATION ON 03.3.1992 TO CONSTRUCT RESIDEN TIAL HOUSES FOR LOWER MIDDLE CLASS PERSONS. APPROPRIATE PAPERS WERE SENT TO THE COLLECTOR FOR TRANSFERRING THE LAND INTO NON-AGRICULTURE. AS PER CLAUSE 18, THE DEVELOPER WAS GIVEN POSSESSION OF THE PROPERTY OF LAND F OR COMPLETING THE CONSTRUCTION OF THE HOUSES AS PER SCHEME. AS PER CLAUSE 3, THE RIGHTS WERE GIVEN TO THE DEVELOPER TO APPOINT ARCHITECT AND ENGINEER TO MAKE NECESSARY CONTRACT FOR CONSTRUCTION ON THE LAND. AS PER CLAUSE 5 AND 6, THE ASSESSEE IS ONLY TO SIGN ON VARIOUS SCHEMES TO BE FRAMED BY THE DEVELOPER EITHER FOR CONSTRUCTING THE HOUSE OR FOR SELLI NG THEM TO VARIOUS MEMBERS OR FOR OBTAINING LOAN FROM FINANCIAL INSTITUT IONS. AS PER CLAUSE 8, THE DEVELOPER WILL TAKE THE PROFIT OUT OF THE CONSTR UCTION AND THE ASSESSEE WILL ONLY TAKE THE AMOUNT AS PER AGREED RATES. AS PER CLAUSE 8, THE OWNER WILL NOT OBSTRUCT IN THE WORK OF DEVELOPER. AS PER CLA USE 9, RIGHTS WERE GIVEN TO THE DEVELOPER TO RECEIVE MONEY FROM THE MEM BERS PURCHASING THE HOUSES OR FOR ADDITIONAL WORK LIKE LIGHT, WATER, DRAINAGE ETC. AS PER CLAUSE 14, THE DEVELOPER WILL GIVE THE DOCUMENTS IN THE NAME OF REGISTERED MEMBERS AFTER COMPLETION OF THE CONSTRUCTION. AS PER CLAUSE 19, A RIGHT IS GIVEN TO THE DEVELOPER TO GIVE HIS WOR K ON SUB CONTRACT BASIS. AS PER CLAUSE 18, THE POSSESSION OF THE LAND IS GIVEN TO THE DEVELOPER AND RIGHT OF THE ASSESSEE IS LIMITED TO TAKE T HE MONEY @ RS.20 PER SQ. FT. THERE IS NO STIPULATION AS TO HOW AND WHEN THE MONEY WOULD BE PAID BY THE DEVELOPER TO THE ASSESSEE, THEREFORE, T HERE IS NO QUESTION OF HOLDING THAT THERE WAS ANY VIOLATION OF PAYMENT SC HEDULE. 8. NOW, WE REFER TO SEC. 2(47)(V) OF THE ACT AS UNDER: (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN P ART 6 PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. THIS SUB SECTION WAS INTRODUCED BY THE FINANCE ACT 1987 WIT H EFFECT FROM 1-4-1988. WHILE INTRODUCING AMENDMENT IN SEC. 2(47) F OLLOWING EXPLANATORY NOTES WERE PROVIDED: CIR. 495 22/9/1987 FROM THE FILE 31/29/87-PPI(1987 ) 168IT. BB [SECTIONS 3(A) AND 41 OF THE FINANCE ACT, 1987] DEFINITION OF 'TRANSFER' WIDENED TO INCLUDE CERTAIN TR ANSACTIONS: 11.1 THE EXISTING DEFINITION OF THE WORD 'TRANSFER' I N SECTION 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCURING TO A PURCHASER, BY WAY OF BECOMING A MEMBER OF OR ACQUIRING SHARES IN A CO- OPERATIVE SOCIETY, COMPANY, OR ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT WHEREBY SUCH PERSON A CQUIRES ANY RIGHT IN ANY BUILDING WHICH IS EITHER BEING CONSTR UCTED OR WHICH IS TO BE CONSTRUCTED. TRANSACTIONS OF THE NATURE REFERRED TO ABOVE ARE NOT REQUIRED TO BE REGISTERED UNDER THE REGISTRAT ION ACT, 1908. SUCH ARRANGEMENTS CONFER THE PRIVILEGES OF OWNERSHIP WIT HOUT TRANSFER OF TITLE IN THE BUILDING AND ARE A COMMON MO DE OF ACQUIRING FLATS PARTICULARLY IN MULTI-STOREYED CONSTRUCTIONS IN BIG CITIES. THE DEFINITION ALSO DOES NOT COVER CASES WHERE POSSESSION IS ALL OWED TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT , OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF P ROPERTY ACT, 1882. NEW SUB-CLAUSES (V) & (VI) HAVE BEEN INSERTED IN SE CTION 2(47) TO PREVENT AVOIDANCE OF CAPITAL GAINS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. 9. THUS, A PERUSAL OF THE ENGLISH TRANSLATION OF THE D EVELOPMENT AGREEMENT CLEARLY SHOWED STIPULATIONS CONTRARY TO THE CO NTENTION OF LD. A.R.. IT IS NOT A CASE OF MERE GIVING LICENSE TO THE D EVELOPER TO ENTER INTO THE LAND FOR CONSTRUCTION BUT TRANSFER OF POSSESSION OF T HE LAND IN SUCH MANNER SO AS TO ATTRACT SECTION 2(47)(V) OF THE ACT READ WITH SEC. 53A OF THE TRANSFER OF PROPERTY ACT. A COMBINED READING OF TH E CLAUSES OF THE AGREEMENT CLEARLY INDICATED THAT ASSESSEE GAVE POSSESSION AND RECEIVED PART OF THE CONSIDERATION AND OBTAINED RIGHT TO RECEI VE THE BALANCE. THERE 7 WAS A PART PERFORMANCE BY THE ASSESSEE AS WELL AS BY THE DE VELOPER. THUS, SECTION 53A OF THE TRANSFER OF PROPERTY ACT GOT AT TRACTED AND THERE WAS A TRANSFER WITHIN THE MEANING OF SEC. 2(47)(V). THE AGREEMENT CLEARLY SHOWED THAT TILL THE COMPLETION OF THE PROJECT, RIGHTS WERE GIVEN TO THE DEVELOPER TO BOOK THE MEMBERS AND EXECUTE DEED OF FLATS IN FAVOUR OF THE MEMBERS/FLAT OWNERS. THE ASSESSEE HAS BEEN COMPLETED EXCLUDED FROM THE LAND UNDER VARIOUS CLAUSES OF THE DEVELOPMENT AGREEMENT. THE ASSESSEE CANNOT CHOOSE BUYERS OF THE FLATS. WHAT ASSESSEE HAS TO BE DO IS ONLY TO SIGN ON THE DOCUMENTS AS REQUIRED BY THE DEVELO PER. THE ASSESSEE HAS NO CONTROL TO RECEIVE MONEY FROM THE MEMBERS/ FLAT OWNERS WHICH WOULD ONLY GO TO THE DEVELOPER. UNDER THESE CIRCU MSTANCES, THE INGREDIENTS OF 2(47(V) ARE CLEARLY SATISFIED AND CAPITA L GAINS WOULD ARISE ONLY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YE AR 1993-94 BEING RELEVANT DATE OF TRANSFER I.E. 19.10.1992. SO FAR AS JUDGMENTS REFERRED TO THE LD. CIT(A) IN HIS ORDERS ARE CONCERNED AND ALSO RELI ED ON BY THE LD. A.R. OF THE ASSESSEE, ARE BETWEEN ASSESSEE AND DEVELOPER ON DIFFERENT SET OF FACTS. IN ASIAN DISTRIBUTORS CASE(SUPRA) AGREEMENT CLEARLY INDICATED THAT A LICENSE WAS GIVEN TO THE DEVELOPER. IN SHANTIVAN CORPORATION CASE(SUPRA) THERE WAS ONLY A PART POSSESSION WH ICH ARE NOT THE FACTS IN THE PRESENT CASE. ARGUMENTS OF THE LD. A.R. IN THE PRESENT CASE BEFORE US THAT FULL PAYMENT WAS NOT RECEIVED BY TH E ASSESSEE IS NOT RELEVANT BECAUSE IT WAS NOT PROVIDED IN THE AGREEMENT BETWEEN THE ASSESSEE AND THE DEVELOPER. THERE IS NOTHING ON RECORD TO SHOW THAT THE DEVELOPER DEFAULTED IN MAKING THE PAYMENT. IN FACT, NO SCHEDULE OF PAYMENT IS PROVIDED IN THE DEVELOPMENT AGREEMENT. TH EREFORE, THE QUESTION OF HOLDING THAT THE DEVELOPER HAS DEFAULTED IN MAKING THE PAYMENT WILL NOT ARISE. IN JASMIT SARKARIA CASE (2007) 294 ITR 196 (AAR) IT IS HELD THAT POSSESSION OF THE PROPERTY NEED NOT BE SOLE OR EXCLUSIVE POSSESSIVE AND A POSSESSION ENABLING EXERCISE OF GENERAL CONTR OL OF PROPERTY TO MAKE USE OF IT IS ENOUGH FOR INVOKING SEC. 2(47)(V). FURTHER, 8 THERE IS NOTHING ON RECORD TO SHOW THAT ASSESSEE HAS ANY RE VOCABLE POWER OF TAKING BACK THE PROPERTY. ON THE OTHER HAND, DEV ELOPMENT AGREEMENT SHOWED THAT WHAT ASSESSEE HAS GIVEN TO THE DEVELOPER IS IR REVOCABLE POWER OF POSSESSION SUBJECT TO MERE FORMALITIES OF REGISTER ING THE TRANSFER DEED AS AND WHEN IT IS CONVENIENT. 10. THE LD. A.R. HAS REFERRED TO THE DECISION OF I.T.A .T. MUMBAI J BENCH IN GENERAL GLASS CO. (P) LTD. VS. DY.CIT (2007) 108 TTJ (MUM.) 854 FOR THE PROPOSITION THAT IF PURCHASER DOES NOT FULF ILL HIS OBLIGATION THEN TRANSFER WILL NOT BE COMPLETE AND CAPITAL GAINS TAX COU LD NOT BE LEVIED ON THE BASIS OF ALLEGED PART PERFORMANCE. THE FACTS IN THA T CASE WERE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF LAND ON 12.5.1995 FOR A TOTAL CONSIDERATION OF RS.5.30 CRORES AND RECEIVED A SUM OF RS. 30 LACS AS ADVANCE AND BALANCE WAS AGREED TO BE PAID IN INSTALM ENTS. OUT OF THE BALANCE, AN AMOUNT OF RS.2.80 CRORES WAS PAYABLE IN THE FINANCIAL YEAR 1995-96 AND THE TRANSFEREE PAID ONLY A SUM OF RS. 73,9 2,380/- DURING THE FINANCIAL YEAR. THUS, THERE WAS A FAILURE ON THE PART OF THE TRANSFEREE TO PERFORM HIS PART OF THE CONTRACT. IT WAS HELD BY THE I.T.A.T. MUMBAI BENCH IN THE ABOVE CASE THAT SUCH A CONTRACT DID NOT CONSTI TUTE A TRANSFER WITHIN THE MEANING OF SEC. 2(47)(V) READ WITH SEC. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 AND HENCE, NO CHARGEABLE CAPITAL GAI NS WOULD ACCRUE IN THE ASSESSMENT YEAR 1996-97. THUS, IN THIS CASE THE TRAN SFEREE WAS UNABLE TO PERFORM HIS OBLIGATIONS AS PER AGREEMENT. B UT, IN THE PRESENT CASE, THE AGREEMENT, A COPY OF WHICH WAS GIVEN TO US AL ONG WITH THE ENGLISH TRANSLATION, DID NOT INDICATE ANY SCHEDULE OF PA YMENT TO BE MADE BY TRANSFEREE I.E. M/S KALPNA ENTERPRISES. THE ONLY A MOUNT THE TRANSFEREE WAS REQUIRED TO PAY TO THE ASSESSEE WAS RS.11,000/- WHICH WAS APPARENTLY PAID AS THERE IS NO DISPUTE. IT IS ONLY STIPU LATED IN CLAUSE 2 THAT BALANCE WAS TO BE GIVEN IN INSTALMENTS BEFORE MAK ING A SALE DEED. THERE IS NO INDICATION AS TO WHAT WERE THE INSTALMENTS AND WHEN THE 9 TRANSFEREE WAS REQUIRED TO MAKE THE PAYMENT SO THAT IT COULD BE INFERRED THAT THERE WAS A FAILURE ON THE PART OF THE TRANSFERE E IN FULFILLING HIS PART OF PERFORMANCE AS PER AGREEMENT. NO FACTS ARE PRODUCED B EFORE US TO SHOW THAT THERE WAS FAILURE OF THIS TYPE ON THE PART O F THE TRANSFEREE AND HENCE, THE FACTS BEING DIFFERENT, RATIO OF THIS DECISIO N WOULD NOT BE APPLICABLE. THE LD.A.R. THEN REFERRED TO THE DECISION IN DALJIT SINGH AHLUWALIA V. UNION OF INDIA & ANR. 175 CTR (P&H)229 BEING A JUDGMENT GIVEN BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE MA TTER OF PURCHASE OF IMMOVABLE PROPERTY BY APPROPRIATE AUTHORITY U/S 2 69UD. IN OUR CONSIDERED VIEW, THIS DECISION WOULD NOT BE APPLICABLE A S IT IS RENDERED IN RESPECT OF ISSUE ARISING IN DIFFERENT CHAPTER OF I.T.ACT A ND THERE IS NO DIRECT BEARING OF ANY RATIO/OBITER DICTA ON THE FACTS OF PRESENT CASE. THE LD. A.R. THEN REFERRED TO A DECISION OF I.T.A.T. MUM BAI IN DY.CIT V. ASHIAN DISTRIBUTORS LTD. (2001) 70 TTJ 88 FOR THE PROPOSITION THAT IF DEVELOPER FAILED TO MAKE THE PAYMENT OF LAST INSTALMENT THEN IT WILL NOT TANTAMOUNT TO TRANSFER. IN THAT CASE, THE AGREEMENT PROVIDED THAT TRANSFEREE COULD REVOKE THE AGREEMENT IF THE DEVELOPER DID NOT MAKE THE PAYMENT AS PER INSTALMENTS. IN THE PRESENT CASE, NO SUCH STIPULATION IS PR OVIDED IN THE AGREEMENT AND NO SUCH RIGHT OF REVOCATION IS GIVEN TO T HE PRESENT ASSESSEE, THEREFORE, THE DECISION OF THIS CASE WILL NOT BE A PPLICABLE. ANOTHER JUDGMENT REFERRED TO BY THE LD. A.R. IS IN T HE CASE OF SANJAY KUMAR AND ANOTHER V. STATE OF U.P. AND OTHERS (1995) 6 SCC 99 FOR THE PROPOSITION THAT A SALE WOULD BE VOID IF IT IS IN CONT RAVENTION OF THE CEILING ACT. IN OUR VIEW, THIS AUTHORITY CANNOT BE APPLIED ON THE FACTS OF THE PRESENT CASE. PROCEEDINGS FOR TRANSFER OF THE LAND ARE GO ING ON APPARENTLY IN ACCORDANCE WITH THE PROVISIONS OF LAND CEILING ACT. TH E ASSESSEE HAS TAKEN PERMISSION FROM APPROPRIATE AUTHORITY FOR CONST RUCTION OF HOUSES AND THEREAFTER ENTERED INTO AN AGREEMENT WITH M/S KA LPNA ENTERPRISES, THE DEVELOPER. THERE IS NO MOVE BY EITHER OF THE PAR TIES OR BY THE THIRD PERSON TO DECLARE THE AGREEMENT VOID. NO SUCH DECLARATIO N HAS TAKEN 10 PLACE AND NO VIOLATION OF ANY PROVISION OF LAND CEILI NG ACT HAS BEEN EXPLAINED OR JUSTIFIED. FINALLY, THE LD. A.R. REFERR ED TO A DECISION GIVEN BY I.T.A.T. E BENCH DELHI IN PRAMOD KUMAR GUPTA V. IT O (1991) 41 TTJ (DEL.) 83 FOR THE PROPOSITION THAT IF NO PRIOR APPRO VAL IS TAKEN UNDER THE PROVISIONS OF URBAN LAND CEILING ACT THEN TRANSFER WOUL D BE VOID AB INITIO. THIS JUDGMENT WAS RENDERED PRIOR TO THE AMENDMENT IN SECTION 2(47) WITH EFFECT FROM 1-4-1988 AND NO CASE OF FAILURE OF P RIOR APPROVAL HAS BEEN MADE OUT TO TAKE A CASE OUT OF SEC. 2(47)(V). UNL ESS IT IS SHOWN THAT AND PROVISION OF URBAN LAND CEILING ACT INCORPO RATE ANY NON- ABSTANTO CLAUSE THEREBY EVEN HANDING OF LEGAL POSSESSION TO THE TRANSFEREE WOULD NOT TANTAMOUNT TO TRANSFER AND AS ENV ISAGED IN SEC. 2(47)(V), THE PROVISIONS OF THAT ACT CANNOT BE APPLIED TO NULLIFY THE PROVISIONS OF SEC. 2(47)(V). ON THE OTHER HAND, AS OBSERV ED ABOVE, THE ASSESSEE AND THE TRANSFEREE ARE PROCEEDING IN ACCORDANCE WI TH URBAN LAND CEILING ACT AND HAVE OBTAINED APPROVAL FOR CONST RUCTION OF THE HOUSES FOR PARTICULAR SECTION OF THE SOCIETY AND HENCE, THE QUESTION OF HOLDING THAT IT IS A CASE FOR NON APPROVAL UNDER THE U RBAN LAND CEILING ACT DOES NOT ARISE. IN THE PRESENT CASE, THERE IS A LEGAL HAN DING OVER OF THE POSSESSION AS PER TERMS OF THE AGREEMENT. IT IS ONLY THE R EGISTRATION OF THE PURCHASE DEED WHICH IS DEFERRED. THE ACT OF REGISTRAT ION OF PURCHASE DEED IS A POSTERIOR ACT AFTER HANDING OVER OF THE PHYSI CAL AS WELL AS LEGAL POSSESSION AS PER AGREEMENT. THE RESTRICTIONS AS EXPLAINED B Y THE LD. A.R. IMPOSED BY URBAN LAND CEILING ACT RELATE TO CONSTRUCTIO N OF THE HOUSES FOR LOWER MIDDLE CLASS PERSONS ON THAT LAND. THIS WILL O NLY DEFER THE REGISTRATION OF THE PURCHASE DEED TILL THE COMPLETION O F THE CONSTRUCTION OF THE HOUSES AND WILL NOT OPERATE TO MAKE THE PROVISIONS OF SEC. 2(47)(V) INEFFECTIVE OR OTIOSE. 11. UNDER THE SET OF SIMILAR FACTS, I.T.A.T. AHMEDABAD C BENCH IN ITA NO.1441/AHD/2002 IN THE CASE OF SHRI JAYANTILAL C. D ESAI V. DCIT DECIDED 11 ON 30.6.2009, THE TRIBUNAL HELD THAT CAPITAL GAINS WO ULD ARISE IN THE YEAR WHEN POSSESSION OF THE LAND WAS HANDED OVER TO THE DEVEL OPER. 12. AS A RESULT, WE HOLD THAT THE LD. CIT(A) WAS NOT J USTIFIED IN DELETING THE ADDITION. THE ORDER OF THE LD. CIT)(A) IS SET ASID E AND THAT OF THE ASSESSING OFFICER IS RESTORED ON THIS COUNT. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28.8. 2009. SD/- (T.K.SHARMA) JUDICIAL MEMBER SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED: 28.8.2009 PSP* COPY TO : (1) THE ASSESSEE (2) THE ASSESSING OFFICER (3) THE CIT(A) CONCERNED, (4) THE CIT, CONCERNED, (5) THE DR, ITAT, AHMEDABAD, (6) GUARD FILE. BY ORDER ASSTT. REGISTRAR / D EPUTY REGISTRAR ITAT, AHMEDABAD BENCHES AHMEDABAD.