Shri Ashwin M. Patel, HUF, Ahmedabad V. The Income Tax Officer, Ward-10(1), Ahmedabad

ITA 1876/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85666 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 02-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND SR DR
• Assessee Lawyers: S N DIVATIA
• Keywords: Capital asset; Deemed to accrue or arise in india
• Section: 133(6)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.1876/AHD/2013 / ASSTT. YEAR: 2010-11 ASHWIN M. PATEL, HUF PITRUASHISH, B-BLOCK UMANG PARIVAR B/H. LIC OFFICE, VASNA AHMEDABAD 380 007. PAN : AADHP 8812 N VS ITO, WARD-10(1) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE(S) BY : SHRI S.N. DIVATIA, AR REVENUE BY : SHRI ROOPCHAND, SR-DR / DATE OF HEARING : 30/01/2015 / DATE OF PRONOUNCEMENT: 19/02/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-XVI, AHMEDABAD DATED 30.5.2013 FOR ASSTT.YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1.1 THE ORDER PASSED U/S.250 ON 30-5-2013 FOR A.Y. 2010-11 BY CIT(A)-XVI, ABAD UPHOLDING THE ADDITION OF RS.1,07, 03,362 AS CAPITAL GAINS ARISING IN THIS YEAR INSTEAD OF A.Y. 2011-12 IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIO NS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO T HE IMPUGNED ADDITIONS. ITA NO.1876/AHD/2013 2 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THAT THE 'TRANSFER' U/S 2(47)(V) OF IT A CT R.W.S 53A OF TRANSFER OF PROPERTY ACT HAD TAKEN PLACE IN A.Y. 20 10-11 ON EXECUTION OF DEVELOPMENT AGREEMENT WITH M/S CHANCHA L CONSTRUCTION CO. AND NOT IN'A.Y. 2011-12 SO THAT TH E CAPITAL GAINS OF RS. 1,07,03,362 WAS CHARGEABLE IN A.Y. 2010-11. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THAT THE 'TRANSFER' U/S 2(47)(V) OF IT ACT R.W.S 53A OF TRANSFER OF PRO PERTY ACT HAD TAKEN PLACE IN A.Y. 2010-11 ON EXECUTION OF DEVELOP MENT AGREEMENT WITH M/S CHANCHAL CONSTRUCTION CO. SO THA T THE CAPITAL GAINS OF RS. 1,07,03,362 WAS CHARGEABLE IN A.Y. 201 0-11 INSTEAD OF A.Y. 2011-12. 2.3 THE LD CIT(A) HAS GRIEVOUSLY ERRED IN HOLDI NG THAT(A) THE APPELLANT HAD DIVESTED WITH OWNERSHIP ON HANDING OV ER THE POSSESSION, THOUGH IT WAS GIVEN AS A LICENSEE (B) T HE PAYMENTS RECEIVED FROM M/S CHANCHAL CONST CO WERE IN NATURE OF/ PART OF THE SALE CONSIDERATION THOUGH THE SAME WAS YET TO B E DETERMINED. THE LD CIT(A) HAS ERRED IN CONSTRUING THE TERMS OF THE DEVELOPMENT AGREEMENT AND RELYING UPON THE INAPPLIC ABLE CASE LAWS SO THAT THE OBSERVATIONS MADE AND CONCLUSIONS REACHED IN PARA-5.6 AND 5.8 ARE NOT ACCEPTED. 3. THE AO OBSERVED AS UNDER: 3. THE ASSESSEE DERIVES INCOME FROM RENT INCOME, I NTEREST INCOME AND AGRICULTURE INCOME SHOWN IN RETURN OF IN COME. IN BALANCE SHEET, THE ASSESSEE HAS SHOWS CAPITAL OF RS .92,44,450/- AND UN SECURED LOAN OF RS.2,58,00,000/- INCLUDED UN SECURED LOAN OF RS.2,12,00,000/- FROM CHANCHAL CONSTRUCTION. COP Y OF BALANCE SHEET IS PART OF THE ASSESSMENT ORDER. 4. AIR TRANSACTION OF ITS;, SHOWS THE INTEREST INC OME OF RS.6,62,987/-, OLTAS DETAILS OF RS.90,000/- AND INV ESTMENT ON 31/07/2009 IN RURAL ELECTRIFICATION CORPORATION LIM ITED OF RS.50,00,000/-. INTEREST INCOME AND OLTAS DETAILS I S VERIFIED FROM THE RECORDS. 5. IN RESPECT OF SOURCE OF .INVESTMENT IN RURAL ELE CTRIFICATION CORPORATION LIMITED OF RS.50,00,000/-, THE A.R. OF THE ASSESSEE HAS STATED THAT THE SAME IS INVESTED FROM THE UNSEC URED LOAN OF RS.2,12,00,000/- TAKEN FROM CHANCHAL CONSTRUCTION, SHOWN IN THE BALANCE SHEET UNDER THE HEAD OF UNSECURED LOAN. LET TER DTD.28/9/2012 WAS ISSUED FOR THE DETAILS I.E. NAME, COMPLETE POSTAL ADDRESS, PAN, COPY OF CONTRA-CONFIRMATION A/ C AND BANK ITA NO.1876/AHD/2013 3 DETAILS IN CASE OF ANY TRANSACTION IN RESPECT OF UN SECURED LOANS AND DEPOSITS. THE ASSESSEE HAS SUBMITTED THE DETAIL S/DOCUMENTS VIDE SUBMISSION DTD.13/10/2012 CONTAINING CONTRA-CO NFIRMATION ACCOUNT OF CHANCHAL CONSTRUCTION AND XEROX COPY OF INVESTMENT MADE IN REC BOND. THE COPY OF A/C. OF CHANCHAL CONS TRUCTION SHOWS THE AMOUNT GIVEN TO THE ASSESSEE AS UNDER: DATE : AMOUNT OPENING BALANCE 97,00,000/- 12/06/2009 40,00,000/- 06/10/2010 75,00,000/- 6. DURING THE DISCUSSION HELD ON 16/10/2012, THE A SSESSEE WAS ASKED TO CLARIFY AS YOU HAVE EARNED ONLY INTERE ST INCOME AND RENTAL INCOME, PLEASE CLARIFY THE PURPOSE OF TAKING UNSECURED LOAN IN HUGE AMOUNT. THE A.R. OF THE ASSESSEE STATED THA T THIS IS THE ADVANCE TAKEN ON ACCOUNT OF SALE CONSIDERATION FOR DEVELOPMENT AGREEMENT ENTERED WITH THE CHANCHAL CONSTRUCTION. F ROM THIS DISCUSSION, THE CRYSTAL CLEAR FACT HAS CAME TO NOTI CE THAT THIS IS THE ADVANCE TAKEN FOR LAND DEVELOPMENT AGREEMENT BU T NOT LOAN TAKEN IN THE NATURE OF UNSECURED LOAN. THEREFORE, T HE ASSESSEE HAS SHOWN THE TRANSACTION UNDER THE WRONG HEAD IN T HE BALANCE SHEET & THEREBY THE ASSESSEE HAS DIVERTED THE ADVAN CE OF HIS INCOME FROM LAND DEVELOPMENT TO UNSECURED LOAN AND THEREBY IT CAN BE SAID THAT THE ASSESSEE HAS DIVERTED HIS INCO ME, THE ASSESSEE HAS HIDDEN HIS INCOME AND THE ASSESSEE HAS CONCEALED HIS INCOME PARTICULARLY FOR THE YEAR UNDER CONSIDER ATION. HENCE, ONLY BY AIR TRANSACTION, THE ISSUE IS CAME INTO LIG HT, WHICH IS HIDDEN BY ASSESSEE BY SHOWING THE TRANSACTION AS UN SECURED LOAN. 7. FOR VERIFICATION OF THE TRANSACTION, INFORMATIO N U/S. 133(6) OF THE ACT WAS CALLED FOR VIDE LETTER DTD. 18/10/2012 FROM CHANCHAL CONSTRUCTION WHO SUBMITTED THE REPLY DTD. 06/1 1/2012 AND STATED THAT THE AMOUNTS PAID TO ASHWIN M PATEL (HUF) ARE AS ADVANCES FOR THE DEVELOPMENT OF LAND. 8. THE ASSESSEE HAS SUBMITTED THE RIGHT OF DEVELOP MENT AGREEMENT ON 18/10/2012 AS REQUIRED DURING THE HEAR ING HELD ON 16/10/2012. THE AR OF THE ASSESSEE WAS ASKED, WHY S HOULD NOT THE AMOUNT RECEIVED FROM THE CHANCHAL CONSTRUCTION FOR THE LAND GIVEN FOR DEVELOPMENT BE TREATED THE INCOME FOR THI S YEAR, AS THE RIGHT OF AGREEMENT IS MADE ON 01/04/2009 AND THE LA ND FOR WHICH RIGHT OF DEVELOPMENT IS GIVEN IS NOT SHOWN IN BALAN CE SHEET AS ASSET IN THE YEAR UNDER CONSIDERATION? ON BEING ASK ED THE A.R. OF THE ASSESSEE HAS STATED DURING THE HEARING ON 21/10 /2012 THAT THE SAME WAS RECEIVED IN F.Y. 2009-10 AS FINAL PAYM ENT WAS ITA NO.1876/AHD/2013 4 RECEIVED IN F.Y 10-11 THEREFORE THE SAME WAS OFFERE D FOR TAXATION IN A.Y.2011-12. THE COPY OF THE RETURN OF INCOME FO R A.Y.2011-12 WAS ALSO SUBMITTED BY THE ASSESSEE, WHICH SHOWS THE FINAL AMOUNT OF RS.2,26,96,000/-, INDEXED COST OF ACQUISI TION OF RS.78,66,717/-, INVESTMENT IN REC BOND OF RS.L,00,0 0,000/- AND OFFERED CAPITAL GAIN OF RS.48,29,283/- . 9. THE TERMS & CONDITIONS BETWEEN FIRST PART I.E. C HANCHAL CONSTRUCTION AND SECOND PART I.E. ASHWIN M PATEL (H UF) OF RIGHT OF DEVELOPMENT AGREEMENT ARE AS UNDER: I) THE SECOND PART GRANT EXCLUSIVE RIGHT OF THE SAI D LAND TO THE FIRST PART WHICH IS ABSOLUTELY SEIZED AND POSSE SSED OF OR OTHERWISE WELL AND SUFFICIENTLY ENTITLED BY THE SEC OND PART. IN PURSUANT, THE FIRST PART HAS PAID TO THE SECOND PART RS.65,00,000/- BEING THE CONSIDERATION GRANTING THE EXCLUSIVE RIGHTS OF DEVELOPMENT. II) IF THE 'FIRST PART' DESIRES TO MAKE CHANGES OR ADDITIONS IN THEPLANS PREPARED FOR CONSTRUCTION THE N THE FIRST PART SHALL OBTAIN SANCTION OF SUCH REVISED PLANS AT THEIR OWN COSTS AND EXPENSES AND 'SECOND PART' SHALL MAKE APPLICATIONS, REPLIES, DECLARATIONS AND AFFIDAVITS IN ALL SUCH PROCEEDINGS TO OBTAIN SANCTION FOR SUCH PLANS AT TH E COSTS BORNE BY THE 'FIRST PART'. EVEN NON-AGRICULTURAL PE RMISSION FOR LAND SHALL BE OBTAINED AT THE COSTS AND 10. AS REGARDS, NOTICE WAS ISSUED TO THE ASSESSEE O N 07/12/2012 AND REQUESTED TO SHOW CAUSE ON OR BEFORE 11/12/2012 AS TO WHY CAPITAL GAIN SHOULD NOT BE CHA RGED ON THE' CONSIDERATION, AS THE PARTICULAR AMOUNT HAS AC CRUED AS A RESULT OF TRANSFER OF CAPITAL ASSET, AND RECEIVED IN THIS YEAR. THE A.R. OF THE ASSESSEE WAS REQUESTED VIDE L ETTER DTD. 10/12/2012 TO GRANT PERIOD OF 15 DAYS TO FILE THE DETAILED REPLY. AS REQUIRED BY A.R. OF THE ASSESSE E SUFFICIENT TUNE WAS ALLOWED AND CASE ADJOURNED TO 26/12/2012. THE A.R. OF THE ASSESSEE ATTENDED ON 28/12/2012 ALONG WITH WRITTEN SUBMISSION DATED 24/12/2012 AND STATED AS UNDER: A. 1 PARA 4 OF AGREEMENT- THIS IS LAND DEV ELOPMENT AGREEMENT A.2. PARA-5 OF AGREEMENT- ASSESSEE HAS TAK EN SERVICES FOR DEVELOPMENT A.3 PARA 73&8 OF AGREEMENT- CHANCHAL CONSTRUCT ION CO. & ASSESSEE WOULD SIGN NECESSARY PAPERS/DOCUMENTS TO BE FILLED ITA NO.1876/AHD/2013 5 BEFORE ABAD MUNICIPAL CORPORATION. A.4 PARA 18 OF AGREEMENT - ASSESSEE HAS GIVEN P OSSESSION ONLY FOR DEVELOPMENT & THERE IS NO TRANSFER UNDER TRANSFER OF PROPERTY ACT. A.5 PARA. 25 OF AGREEMENT- THE LAND IS HANDED OVER AS LICENSEE TO CHANCHAL CONSTRUCTION CO. EXPLANATION B.1 NO SALE PRICE OR CONSIDERATION WAS AGREED U PON BETWEEN PARTIES WHILE EXECUTING DEVELOPMENT AGREEME NT. IT WAS MUTUALLY AGREED BY PARTIES THAT AS & WHEN THE 1 ST SALE DEED OF CONSTRUCTED PROPERTY WILL BE EXECUTED THE R ATE/VALUE DETERMINED BY LOCAL STAMP AUTHORITY SHALL BE THE SALE CONSIDERATION OF LAND. IT WAS SO AGREED TO PRO TECT- SAFEGUARD' ANY DELAY OR NON EXECUTION OF AGREEMENT BY DEVELOPER AFTER HAVING AGREED FOR DEVELOPMENT. B.2 SINCE DELAY IN EXECUTION OF DEVELOPMENT OF P ROJECT WOULD INCREASE THE PRICE IN VIEW OF THE BUOYANCY IN REAL ESTATE MARKET. THIS, CONDITION WAS AGREED UPON TO P ROTECT THE INTEREST OF LAND OWNER. ACCORDINGLY WHEN 1ST SA LE DEED WAS EXECUTED ON 28/09/2010, THE JANTRI PRICE OF RS 8000/- PER SQ METER WAS TAKEN AND AGGREGATE SALE CONSIDERA TION COMES TO BE RS.22696000/- WHICH ASSESSABLE IN A.Y. 2011- 12. THE COPY OF SALE DEED & JANTRI RATE ARE ENCLOSE D. AS PER 1 B.3 IN VIEW OF THE AFORESAID CONSENT/TERMS & CON DITIONS OF DEVELOPMENT AGREEMENT, YOU WILL APPRECIATE THAT NO TRANSFER U/S 2(47) HAS TAKEN PLACE IN A.Y. 2010-11. FURTHER, WE HAVE NEITHER DETERMINED THE ACTUAL SALE PRICE OR DELIVERED .POSSESSION AS OWNER TO THE DEVELOPER UND ER THIS DEVELOPMENT AGREEMENT SO THAT THERE IS NO TRANSFER OF LAND SO AS TO BE CHARGEABLE IN A.Y. 2010-11. IN OTHER WO RDS, IN ABSENCE OF ANY TRANSFER OF LAND IN THIS YEAR, NO CA PITAL GAIN HAS ACCRUED OR ARISEN IN A.Y. 10-11. THEREFORE SUM OF MONEY RECEIVED BY ASSESSEE FOR 08- 09 OF RS.97,00,000/- &F.Y. 09-10 OF RS.11150000/- WERE SH OWN. AND THE SAME WAS NOT RECEIVED TOWARDS SALE CONSIDER ATION SINCE SALE PRICE WAS NOT DETERMINED. ITA NO.1876/AHD/2013 6 B.5 NORMALLY JANTRI PRICE INCREASES & CHANCES O F REDUCTION IN JANTRI PRICE WOULD BE LESS THAN 1%. HE NCE DECIDING JANTRI PRICE AS BASE WOULD HAVE FOLLOWING ADVANTAGE TO OWNER OF LAND: A) CHANCES RECEIVING HIGHER SUM OF CONSIDERATION. B) TO PAY TAX ON ACTUAL AMOUNT RECEIVABLE (AND NOT TO RECEIVE LESS AMOUNT) & NOT TO PAY TAX ON (HIGHER) JANTRI VALUE. C) THE DEVELOPER WOULD TRY TO EXPEDITE THE WORK WITHOUT WASTING TIME. C. BROADLY SPEAKING THE LONG TERM CAPITAL GAI NS ON SALE OF LAND IS SUBJECT TO TAX @20% FLAT RATE AND, THERE FORE, NO QUESTION OF AVOIDING TAX. IN FACT FOR A.Y. 11-12 TO TAL TAX PAYABLE HAS BEEN PAID BY ASSESSEE. THUS IMPACT OF T HIS IS TAX NEUTRAL TAXING INCOME IN ONE YEAR & GIVING RELI EF IN OTHER YEAR WOULD BE PAPER EXERCISE. THIS VIEW SHOULD ALSO BE CONSIDERED. NOT BEING SATISFIED BY THE CONTENTION OF THE ASSESSEE, THE UNDERSIGNED IS BOUND TO ASSESS THE ISSUE AS PER SECTION 2(47)(V) OF THE ACT WHICH NARRATES: '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 OF THE TRANSFER OF PROPERTY ACT, 18.82 (4 OF 18:82) SECTION 53A OF THE TRANSFER OF PROPERTY ACT NARRATES AS FOLLOWING: WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIG NED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REA SONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THERE OF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTIN UES IN POSSESSION, IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT. AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. ITA NO.1876/AHD/2013 7 THEN, NOTWITHSTANDING THAT THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR, WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS, NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFORE, BY THE LAW, OR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL B E DEBARRED FROM ENFORCING AGAINST THE ,TRANSFEREE AN D PERSON CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROP ERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSS ESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE WHO HAS NO NOTICE OF THE CON TRACT OR OF THE PART PERFORMANCE THEREOF.' 10. RELIANCE IS PLACED ON THE DECISION OF ITAT HYDR ABAD BENCH B, ASSISTANT COMMISSIONER OF INCOME-TAX, CENT RAL CIRCLE-6, HYDRABAD V A.RAM REDDY REPORTED IN IT APP EALS NO.407 TO 409, 483 & 484(HYD.)OF 2011 THAT WHERE OW NER ENTERED INTO AN AGREEMENT FOR DEVELOPMENT OF PROPER TY AND DEVELOPER MADE SUBSTANTIAL PAYMENT, ENTERED INTO PR OPERTY AND TAKEN STEPS TO CONSTRUCT FLATS, THEN THERE WAS TRANSFER UNDER SECTION 2(47) OF THE ACT, COMPLETION OF 'TRAN SFER' OF AN IMMOVABLE PROPERTY AS PER 'GENERAL LAP IS NOT A REQUIREMENT FOR APPLICABILITY OF PROVISION OF SUB-C LAUSE(V) OF SECTION 2(47) AND CAPITAL GAIN WOULD BE TAXABLE IN YEAR IN WHICH SUCH TRANSACTION ARE ENTERED INTO EVEN IF TRA NSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UND ER GENERAL LAW. IN SUCH A SITUATION, FACT THAT LEGAL O WNERSHIP CONTINUES WITH OWNER WHICH IS TO BE TRANSFERRED TO DEVELOPER AT A FUTURE DISTANT DATE REALLY DOES, NOT AFFECT AP PLICABILITY OF SECTION 2(47)(V) OF THE ACT. HENCE, SECTION 45 O F THE ACT FOR CAPITAL GAIN IS CHARGEABLE IN ASSESSMENT YEAR - WHETHER TOTAL PROFITS MAY ACTUALLY BE RECEIVED IN ANY OTHER YEAR, BUT FOR THE PURPOSE OF SECTION 45, GAIN SHALL BE DEEMED INCOME OF YEAR OF TRANSFER OF CAPITAL ASSET. 11. SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT MUMBAI BENCH' B' MRS. BERTHA T. ALMEDIA. V. INCOME-TAX OFFICER, W ARD 24(1)(3) IN IT APPEAL N.6546 (MUM.) OF 2008 THAT WH ETHER EVEN IF LEGAL TITLE, HAS NOT PASSED TO TRANSFEREE, TRANSACTION SHALL STILL BE REGARDED AS TRANSFER WHERE PROPERTY IS HANDED OVER IN PART PERFORMANCE OF AGREEMENT AND ALSO WHET HER IF A PARTICULAR AMOUNT HAS ACCRUED TO ASSESSEE AS A R ESULT OF TRANSFER OF CAPITAL ASSET, THAT SHALL BE INCLUDED I N FULL VALUE ITA NO.1876/AHD/2013 8 OF CONSIDERATION, EVEN IF IT IS NOT REALIZED WITHI N YEAR OF TRANSFER. 12. THERE IS ANOTHER DECISION BY THE ITAT, AHMEDABA D, BENCH D, ASSISTANT COMMISSIONER OF INCOME-TAX, BA RODA CIRCLE, BARODA V JAIVIJAY SINGH K CHAUHAN, HELD THA T DURING RELEVANT ASSESSMENT YEAR, ASSESSEE ENTERED INTO AN AGREEMENT WITH A DEVELOPER FOR DEVELOPMENT OF LAND BELONGING TO HIM, ASSESSEE DISCLOSED A PART OF AMOU NT RECEIVED FROM BUILDER, ALMOST ENTIRE PAYMENT WAS AL SO RECEIVED BY ASSESSEE WHETHER ALL REQUIREMENTS OF SECTION 2(47)(V) OF THE ACT FULFILLED, HENCE IT WAS TO BE C ONCLUDED THAT PROPERTY IN. QUESTION HAD BEEN TRANSFERRED BY, THE ASSESSEE IN RELEVANT ASSESSMENT YEAR ITSELF AND SO ENTIRE CAPITAL GAIN TAX WAS PAYABLE BY THE ASSESSEE IN ASS ESSMENT YEAR IN QUESTION. 13. THE LEGENDARY DECISION ALSO DELIVERED BY HON'B LE HIGH COURT OF KARNATAKA IN THE FAVOUR OF REVENUE IN (201 2) 20 TAXMANN.COM 430(KAR.) COMMISSIONER OF INCOME-TAX V H. ANILKUMAR* N. KUMAR AND RAVI MALJMATH, JJ, IT APPEA L NO. 772 OF 2006 , HELD THAT AMOUNT RECEIVED BY ASSESSEE FOR GIVING UP RIGHT OF SPECIFIC PERFORMANCE CONSTITUTES CAPITAL GAIN. 14. THE ASSESSEE I.E. SECOND PART HAS GIVEN THE L AND FOR DEVELOPMENT AND GIVEN THE RIGHTS TO TAKE ALL THE DE CISION AS WELL AS THE 'FIRST PART' HAS TAKEN ALL THE RESPONSI BILITIES AND PAID ALL EXPENSES AND COSTS FOR THE TRANSACTION. AS WELL AS THE ASSESSEE HAS NOT SHOWN THE LAND AS HIS OWN ASSE T, IN THE ASSET SIDE OF THE BALANCE SHEET & THEREBY THE A SSESSEE HAS HIMSELF LEFT HIS OWNERSHIP OVER THE LAND IN THE YEAR UNDER CONSIDERATION, WHICH ITSELF PROVES THAT THE A SSESSEE HAS LEFT HIS OWNERSHIP, RIGHTS & RESPONSIBILITIES O VER THE LAND AND TRANSFERRED TO THE HANDS OF THE CHANCHAL CONSTR UCTION. THEREFORE, TRANSACTION ABSOLUTELY REGARDED AS THE T RANSFER OF CAPITAL ASSET WITHIN THE MEANING OF THE ACT IN THE YEAR UNDER CONSIDERATION, AS ALMOST 95% AMOUNT I.E. RS.2,12,00 ,000/- OUT OF FINAL AMOUNT OF RS. 2,26,96,000/- WAS RECEIV ED BY THE ASSESSEE IN F.Y.2009-10 & ONLY RS.14,00,000/- W AS RECEIVED IN F.Y.2010-11 FOR GIVING UP THE RIGHTS OF SPECIFIC PERFORMANCE CONSTITUTED CAPITAL GAIN. AMOUNT ACCRUE D WHETHER IT IS NOT REALIZED WITHIN THE YEAR OF TRANS FER, THE ENTIRE AMOUNT WOULD CLEARLY AMOUNT TO CHARGE OF CAP ITAL GAIN & THUS, ASSESSEE IS LIABLE TO PAY CAPITAL GAIN TAX ON ENTIRE AMOUNT IN THE ASSESSMENT YEAR, IN QUESTION. PENALTY ITA NO.1876/AHD/2013 9 PROCEEDINGS U/S.271(1)(C) OF THE ACT WAS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO BY OBSERVING AS UNDER: 5.8 A PERUSAL OF THE ABOVE DECISION OF THE HON'BLE TRIBUNAL WHICH HAS BEEN PASSED ON IDENTICAL FACTS CLEARLY INDICATE THAT TRANSFER OF PROPERTY U/S 2(47) IN THIS CASE SHALL BE DEEMED TO HAVE TAKEN PLACE ON 1-4-2009 WHEN THE DEVELOPMENT AGREEMENT WA S SIGNED BETWEEN THE APPELLANT AND THE CCC. IT IS FURTHER SE EN THAT HON'BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF ACIT VS J S CHAUHAN HAVE HELD THAT REQUIREMENTS OF SEC 2(47) WERE FULFILLED IF THE AMOUNTS WERE RECEIVED BY AN ASSESSEE BY WAY OF DEVELOPMENT AGREEMENT AND THAT THE TRANSFER OF PROPERTY WAS COMPLETE. HON 'BLE MUMBAI TRIBUNAL IN THE CASE OF MRS BARTHA T ALMEDIA VS ITO IT APPEAL NO 6546/MUM OF 2008 HAVE HELD THAT EVEN IF A LEGAL TIT LE HAVE NOT PASSED TO TRANSFEREE TRANSACTION SHALL BE REGARDED AS TRANSFER, THE MOMENT A PROPERTY IS HANDED OVER IN PART PERFORMANC E OF AN AGREEMENT. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS H ANILKUMAR 20 TAXMAN.COM 430 HAVE HELD THAT, AMOUNTS RECEIVED BY AN ASSESSEE FOR GIVING A RIGHT OF SPECIFIC PERFO RMANCE CONSTITUTES CAPITAL GAINS. AS FACTS OF THE PRESENT APPEAL HAVE BEEN FOUND TO BE IDENTICAL TO THOSE ADJUDICATED BY HON'B LE TRIBUNALS AND HIGH COURTS DISCUSSED SUPRA, IT IS HELD THAT TH E ACTION OF THE A O IN TREATING THE TRANSACTIONS ENTERED UPON BY THE APPELLANT BY VIRTUE OF DEVELOPMENT AGREEMENT DATED 1-4-2009, AS TRANSFER U/S. 2(47) AND THUS LIABLE FOR TAXATION UNDER THE HEAD C APITAL GAINS DURING A Y 2010-11 IS BASED UPON CORRECT UNDERSTAND ING OF LAW AND THE JUDICIAL PRONOUNCEMENT ON THE MATTER. CONSE QUENTLY, THE ADDITION OF RS. 1.07.03.362/- IS THEREFORE CONFIRME D AND THE GROUND OF APPEAL NO. 2.1. 2.2 & 3.1 ARE DISMISSED. 5. THE AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS , WHICH READS AS UNDER: THE ABOVE APPEAL IS DIRECTED AGAINST THE ORDER PASS ED U/S.250 ON 30.05.2013 BY CIT(A)-XVI, ABAD CONFIRMING THE ADDIT ION MADE TOWARDS CAPITAL GAINS OF RS.1,07,03,362/- BROUGHT T O TAX IN THIS YEAR INSTEAD OF THE SUCCEEDING YEAR BY AO. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE APPEL LANT IS AN HUF AND DERIVES INCOME FROM RENT, INTEREST AGRICULTURE. IT HAD FILED ITS RETURN OF INCOME FOR A.Y.2010-11 ON 16-07-2010 DECL ARING TOTAL INCOME OF RS.7,61,380 AND AGRL. INCOME OF RS.49,000 . ITA NO.1876/AHD/2013 10 2.2 DURING THE COURSE OF ASSTT. PROCEEDINGS, THE A O NOTICED THAT THE APPELLANT HAD SHOWN INVESTMENT IN RAC BOND WHIC H WAS CLAIMED TO BE FROM ADVANCE RECEIVED FROM CHANCHAL C ONSTN. TOWARDS DEVELOPMENT AGREEMENT OF LAND. IT WAS FURTH ER POINTED OUT THAT THE CAPITAL GAIN ARISING FROM THE SAID DEV ELOPMENT AGREEMENT WAS OFFERED TO TAX IN A.Y.2011-12. AFTER GOING THROUGH THE VARIOUS TERMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENT, THE AO CONCLUDED THAT THE DEVELOPMENT AGREEMENT WAS THE TRANSFER OF CAPITAL ASSET AND THE APPELLANT HAVING RECEIVED ALMOST 95% OF THE CONSIDERATION, IT WAS ASSESSABLE IN A.Y. 2010-11. 2.3 BEING AGGRIEVED, THE APPELLANT CHALLENGED THE IMPUGNED ADDITION BEFORE CIT(A) WHO HAS CONFIRMED THE SAME I N PARA 5.2 TO 5.8 OF THE IMPUGNED ORDER. 2.4 BEING AGGRIEVED BY THE SAID ORDER, THE APPELLA NT HAS CHALLENGED IT BEFORE HONBLE TRIBUNAL. THE APPELLAN T SUBMITS THAT THE IMPUGNED ADDITION IS WHOLLY UNJUSTIFIED BOTH ON FACTS AND IN LAW. AS REGARDS THE CONTENTION OF THE APPELLANT THA T THE TRANSFER OF THE IMMOVABLE PROPERTY HAD NOT TAKEN PLACE DURING T HE YEAR UNDER APPEAL BUT IN THE SUCCEEDING YEAR, THE APPELL ANT SUBMITS AS UNDER: AS PER AO/CIT(A) AS PER ASSESSEE 1. IN VIEW OF THE POSSESSION OF THE LAND HANDED OVER TO CCC AND AS PER TERMS OF DEVELOPMENT AGREEMENT REPRODUCED AT PARA 5.4 OF THE IMPUGNED ORDER OF CIT(A), CCC HAD BECOME REAL OWNER OF LAND. 2. SECTION 2(47) POSTULATES TRANSFER OF A CAPITAL ASSET IF THE SAME IS DONE WITH REFERENCE TO SECTION 53A OF T.P. ACT. 1. THE APPELLANT HAD NOT HANDED OVER LEGAL POSSESSION OF THE LAND TO THE DEVELOPERS BUT IT WAS FOR A LIMITED PURPOSE OF CARRYING OUT THE SCHEME OF CONSTRUCTION OF FLATS AS CLEARLY STATED IN CLAUSE 18 OF THE DEVELOPMENT AGREEMENT AND EVEN CONFIRMED BY CIT(A) AT PAGE 19 OF THE IMPUGNED ORDER. 2. THE PROVISIONS OF SECTION 53A OF T.P. ACT WERE NOT ATTRACTED TO THE FACTS OF THE PRESENT CASE BECAUSE (I) THE SECTION 53A REQUIRES THAT THERE SHOULD BE AN AGREEMENT IN THE NATURE OF TRANSFER BUT IN THE PRESENT CASE, IT IS A DEVELOPMENT AGREEMENT. (II) THE DEVELOPER WAS HANDED OVER A LICENSE TO DEVELOP THE LAND AND NO LEGAL POSSESSION WAS GIVEN TO IT. IT WAS MERELY A GRANT OF PERMISSIVE RIGHT TO BUILT ON THE PLOT ITA NO.1876/AHD/2013 11 OF LAND AS HELD IN CASE OF CIT VS. ATAM PRAKASH & SONS (175 TAXMAN 499) (DELHI) THE WORD 'POSSESSION' HAS A VARIETY OF USES AND A VARIETY OF MEANINGS, SO THAT IT DEPENDS UPON THE CONTEXT AND USE. IT DOES NOT INCLUDE THE OCCUPIER OF THE PROPERTY SINCE IT DOES NOT CREATE LEGAL OWNERSHIP. (II) THERE SHOULD BE WILLINGNESS ON PART OF BOTH THE PARTIES TO PERFORM HIS PART. BUT, IN THIS CASE, THERE WAS NO WILLINGNESS ON PART OF THE PURCHASER TO PAY THE PRICE ON 01.04.2009. IT HAD PAID ONLY RS.97 LACS DURING A.Y.2009-10 I.E. BEFORE EXECUTION OF DEVELOPMENT AGREEMENT. (III) THE CONSIDERATION OF THE PROPERTY TO BE TRANSFERRED SHOULD HAVE BEEN, DETERMINED AT THE TIME OF HANDING OVER THE POSSESSION BECAUSE THE PURCHASER COULD NOT OTHERWISE PERFORM HIS PART TO PAY THE PRICE. THE EXISTENCE OF CONSIDERATION IS THE ESSENCE OF THE CONTRACT. BUT, IN THIS CASE, THE SALE PRICE WAS NOT FIXED ON 01.04.2009 AND IT WAS TO BE DETERMINED WHEN FIRST SALE DEED WAS MADE (SEE CLAUSE ____). (IV) RELIANCE IS PLACED ON THE DECISIONS GIVEN IN SEPARATE COMPILATION. ITA NO.1876/AHD/2013 12 CIT(A) HEAVILY RELIED UPON THE DECISION IN CASE OF RAVINDRASING ARORA OF ITAT, HAYDRABAD BENCH (ITA NO. 355/HYD/2011 DATED 20.07.2012). 1. THE SUBSEQUENT DECISIONS GIVEN IN THE COMPILATION HAS CONSIDERED THE LATEST LEGAL POSITION ON THIS ISSUE. THE DECISION RELIED UPON BY CIT(A) ARE DISTINGUISHABLE ON FACTS. 2. THE FACTS OF THIS DECISION SHOW THAT THE CONDITIONS PROVIDED U/S.53A WERE FULFILLED, BUT IN THE PRESENT APPEAL, MANY OF THEM ARE NOT SATISFIED AS STATED ABOVE. 3. THIS DECISION LAYS DOWN THAT TO SUM UP THE OWNERS HAVE ENTERED INTO AN AGREEMENT FOR DEVELOPMENT OF THE PROPERTY AND CERTAIN RIGHTS WERE ASSIGNED TO THE DEVELOPER WHO IN TURN HAD MADE THE SUBSTANTIAL PAYMENT AND CONSEQUENTLY ENTERED INTO THE PROPERTY AND THEREAFTER IF THE TRANSFEREE HAS TAKEN STEPS IN RELATION TO CONSTRUCTION OF THE FLATS, THEN IT IS TO BE CONSIDERED AS TRANSFER U/S. 2(47)(V) OF THE I.T. ACT. BUT IN THE PRESENT CASE, THE APPELLANT HAD NOT RECEIVED SUBSTANTIAL CONSIDERATION AS ON 01.04.2009. IT WAS ONLY ABOUT 43 % OF THE TOTAL AMOUNT RECEIVED. 6. HE FURTHER RELIED ON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. YOGENDRA AMBALAL SARKAR & ORS., IN ITA NO.977/AHD/2011 & ORS. DATED 17.10.2014, WHEREIN, I T WAS HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE SHRI YOGENDRABHAI AM BALAL SARKAR WITH SIX CO-OWNERS ENTERED INTO A DEVELOPMENT AGREE MENT WITH M/S. DELUXE PUROHIT INFRASTRUCTURE PVT. LTD. ON 25. 05.2006 FOR DEVELOPMENT OF LAND IN SURVEY NO. 683/2, 683/1, 664 (PART), 660/1 (PART), AT VILLAGE CHANDKHEDA, DISTRICT AHMED ABAD, HAVING GROSS LAND AREA OF 5939.50 SQ. MTRS. SIMILARLY, TH E ASSESSEE WITH HIS BROTHER SHRI DILIP AMBALAL SARKAR ALSO ENTERED INTO A DEVELOPMENT AGREEMENT ON 02.02.2005 WITH M/S. SHUKA N ITA NO.1876/AHD/2013 13 DEVELOPERS FOR THE DEVELOPMENT OF LAND IN SURVEY NO . 625/5, VILLAGE CHANDKHEDA, DISTRICT AHMEDABAD. THE ASSESSE E OFFERED CAPITAL GAINS IN RESPECT OF ABOVE LANDS IN THE ASSE SSMENT YEAR 2007-08 TO ASSESSMENT YEAR 2009-10 IN PROPORTION OF THE AMOUNT RECEIVED AND SALE DEEDS EXECUTED IN THE RESPECTIVE YEARS. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS NOT RECEIVED A NY AMOUNT FROM THE DEVELOPER IN THE YEARS IN WHICH DEVELOPMEN T AGREEMENTS WERE ENTERED INTO. HOWEVER, ACCORDING TO THE ASSES SING OFFICER, THE TRANSFER OF THE AMOUNTS IN QUESTION TOOK PLACE IN THE YEAR IN WHICH DEVELOPMENT AGREEMENTS WERE EXECUTED IN VIEW OF THE PROVISIONS OF SECTION 2(47)(V) OF THE INCOME TAX AC T, 1961 AND ACCORDINGLY THE ASSESSING OFFICER BROUGHT THE ENTIR E CAPITAL GAINS TO TAX IN THE ASSESSMENT YEARS 2005-06 AND 2007-08 IN PLACE OF THE ASSESSEES OFFER IN THE ASSESSMENT YEAR 2007-08 TO ASSESSMENT YEAR 2009-10. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS 26,56,733/- IN THE ASSESSMENT YEAR 2 005-06 IN THE CASE OF YOGENDRABHAI AMBALAL SARKAR AND RS RS 26,56 ,733/- IN ASSESSMENT YEAR 2005-06 IN THE CASE OF DILIPBHAI AM BALAL SARKAR. 10. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) AGREED WITH THE CLAIM OF THE ASSESSEE FOR THE REASO NS QUOTED ABOVE IN HIS ORDER. 11. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE SUPP ORTED THE ORDER OF THE ASSESSING OFFICER AND CONTENDED THAT T HE AMOUNTS IN QUESTION WERE TRANSFERRED IN THE YEAR IN WHICH DEVE LOPMENT AGREEMENTS WERE ENTERED INTO WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT. ON THE OTHER HAND, THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 12. THE CRUX OF THE ARGUMENT OF THE ASSESSEE IS THA T THERE IS NO TRANSFER U/S. 2(47)(V) OF THE ACT DURING THE YEAR U NDER CONSIDERATION. THAT BEING SO, THERE CANNOT BE ANY C APITAL GAIN IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND NOTHING HAS HAPPENED WITH REGARD TO THE LAND PROPERTY IN THE AS SESSMENT YEAR UNDER CONSIDERATION. 13. WE THUS FIND THAT THE DISPUTE WHICH REQUIRES AD JUDICATION IS THAT WHETHER ON THE FACTS OF THE INSTANT CASE, A TR ANSFER WITHIN THE MEANING OF SECTION 2(47)(V) TOOK PLACE IN THE YEARS IN WHICH DEVELOPMENT AGREEMENTS WERE ENTERED INTO OR NOT. W E FIND THAT SECTION 2(47)(V) READS AS UNDER: ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSS ESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN P ART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN ITA NO.1876/AHD/2013 14 SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 ( 4 OF 1882); 14. FURTHER, SECTION 53A OF THE TRANSFER OF PROPERT Y ACT READS AS UNDER: SECTION 53A : PART PERFORMANCE-WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVAB LE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE TRANSFER CA N BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRAN SFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POS SESSION OF THE PROPERTY OR. ANY PART THEREOF, OR THE TRANSF EREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSIO N IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT I N FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT THEN, NOTWITHSTANDING THAT THE CONTRACT, THOUGH REQ UIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR, WHERE T HERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NO T BEEN COMPLETED IN THE MANNER PRESCRIBED THEREOF BY THE L AW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERS ON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE, TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANS FEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN THE RI GHT SPECIFICALLY PROVIDED BY THE TERMS OF THE CONTRACT; PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 15. A READING OF THE ABOVE PROVISIONS OF SECTION 53 A OF THE TRANSFER OF PROPERTY ACT SHOWS THAT THE FOLLOWING A RE THE ESSENTIAL ELEMENTS OF TRANSACTION TO BE COVERED BY THE AFORES AID PROVISIONS: (A) THERE SHOULD BE CONTRACT FOR CONSIDERATION; (B) IT SHOULD BE IN WRITING; (C) IT SHOULD BE SIGNED BY THE TRANSFEROR; (D) IT SHOULD PERTAIN TO THE TRANSFER OF IMMOVABLE PROPERTY; (E) THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF PROPERTY; (F) LASTLY, TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM THE CONTRACT. 16. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE IS THAT NOTHING HAPPENED IN THE YEAR IN WHICH DEVELOPMENT AGREEMENT WERE ITA NO.1876/AHD/2013 15 ENTERED INTO AND NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ALLEGED TRANSFEREE EITHER PERFORMED THEIR PART OF OBLIGATIONS UNDER THE AGREEMENT OR TH EY WERE WILLING TO PERFORM THEIR PART OF OBLIGATION DURING THE YEAR IN WHICH JOINT DEVELOPMENT AGREEMENT WERE ENTERED INTO. 17. WE FIND THAT THE HYDERBAD BENCH OF THE TRIBUNAL IN THE CASE OF FIBERS INFRATECH PRIVATE LTD. VS. ITO (2014) TAX CORP(LJ) 2498 (ITAT-HYDERABAD) HAS HELD AS UNDER: HANDING OVER OF THE POSSESSION OF PROPERTY IS ONLY ONE OF THE CONDITIONS OF THE TRANSFER OF PROPERTY ACT, BUT IT IS NOT THE SOLE AND ISOLATED CONDITION. WILLINGNESS TO P ERFORM HAS BEEN SPECIFICALLY RECOGNIZED AS ONE OF THE ESSENTIA L INGREDIENTS TO COVER A TRANSACTION BY THE SCOPE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. FURTHER, THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHRI ABVS PRAKASH VS. ACIT (2014) TAXCORP (LJ) 2700 (ITA T- HYDERABAD) HAS HELD AS UNDER: JDA-NO POSSESSION HANDED OVER TO THE DEVELOPER AND ALSO KEPT THE POSSESSION WITH THE ASSESSEE HIMSELF AND O NLY FOR THE LIMITED PURPOSE OF CARRYING ON CONSTRUCTION IN THE SCHEDULED PROPERTY BY THE DEVELOPER, PERMISSION WAS GIVEN TO THE DEVELOPER TO ENTER THE PROPERTY. IT CANNOT BE SAID THAT ABSOLUTE POSSESSION OF THE PROPERTY WAS GIVEN TO THE DEVELOPER, IN OTHER WORDS, ONLY SYMBOLIC POSSESSION HAS BEEN GIVEN TO THE DEVELOPER. FURTHER, THE ASSESSEE HAS NOT RECEIVED ANY CONSIDERATION WHATSOEVER VIDE THE JOIN T DEVELOPMENT AGREEMENT. BEING SO, IT CANNOT BE SAID THAT THERE IS A TRANSFER IN TERMS OF SECTION 2(47)(V) OF THE ACT. 18. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT NO CONSIDERATION WHETHER IN PART OR FULL WAS PAID BY THE DEVELOPER T O THE ASSESSEE IN THE YEAR IN WHICH THE JOINT DEVELOPMENT AGREEMEN TS WERE ENTERED INTO. FURTHER, NO MATERIAL HAS BEEN BROUGH T ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE TRANSFEREE W ERE WILLING TO PERFORM THEIR PART OF OBLIGATION UNDER THE AGREEMEN T DURING THE YEAR UNDER CONSIDERATION. IN ABSENCE OF ANY SUCH M ATERIAL, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFI RMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 7. THE DR SUPPORTED THE ORDERS OF THE LOWER AUTHORI TIES. ITA NO.1876/AHD/2013 16 8. WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, ACCORDING TO THE AO, THE ASSESSEE ENTERED INT O AN AGREEMENT WITH SHRI KULIN PANKAJBHAI PATEL, PARTNER OF FIRM, CHANC HAL CONSTRUCTION, AHMEDABAD ON 1.4.2009 AND HANDED OVER THE POSSESSIO N OF LAND MEASURING 2837 SQ.MTRS. SITUATED AT DIST. SUB. AHME DABAD TA. CITY MOJE VASNA TO THE SAID DEVELOPER. FURTHER, AS PER T HE AO, THE LAND WAS SOLD FOR RS.2,26,96,000/- AND MAXIMUM AMOUNT OF CON SIDERATION OF RS.2,12,00,000/- WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION I.E. ASSTT.YEAR 2010-11. THUS, EVEN THOUGH NO SALE DEED WAS EXECUTED DURING THE YEAR UNDER CONSIDERATION, BUT IN VIEW OF PROVISION OF SECTION 2(47)(V) OF THE IT ACT R.W.S. 53A OF THE TRANSFER O F PROPERTY ACT (TP ACT), THERE WAS A TRANSFER OF LAND ON 1.4.2009 GIVI NG RISE TO CAPITAL GAINS LIABLE TO TAX IN THE YEAR UNDER CONSIDERATION . ACCORDINGLY, THE AO COMPUTED LONG TERM CAPITAL OF THE ASSESSEE AT RS.1, 07,03,362/- AND ADDED TO THE INCOME OF THE ASSESSEE. 9. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO. 10. BEFORE US, THE AR OF THE ASSESSEE CONTENDED THA T THERE WAS NO CONSIDERATION AS PER THE AGREEMENT DATED 1.4.2009 E NTERED INTO WITH THE DEVELOPER AND THE ASSESSEE, AND THEREFORE, IT C ANNOT BE HELD THAT THERE WAS AN AGREEMENT AS REFERRED TO SECTION 53A O F THE TP ACT, AND THERE WAS NO TRANSFER OF LAND UNDER SECTION 2(47)(V ) OF THE IT ACT DURING THE YEAR UNDER CONSIDERATION. 11. THE AR FURTHER SUBMITTED THAT THE SALE CONSIDER ATION WAS AGREED IN THE SUBSEQUENT YEAR, AND ACCORDINGLY, THE ASSESS EE HAS SHOWN CAPITAL GAIN IN THE ASSTT.YEAR 2010-11 AS PER LAW. 12. WE FIND THAT THE RELEVANT CLAUSES OF THE DEVELO PMENT AGREEMENT DATED 1.4.2009 READS AS UNDER: ITA NO.1876/AHD/2013 17 4) A MEETING WAS HELD IN A'BAD BETWEEN FIRST PART Y WITH SECOND PARTY AND IN THE SAID MEETING AN ORAL AGREEM ENT AND UNDERSTANDING OF THE CONDITION OF DEVELOPING THE SA ID LAND HAS BEEN DISCUSSED BETWEEN THE PARTIES OF THE FIRST PAR T AND THE SECOND PART BUT NO WRITTEN AGREEMENT WAS MADE FOR T HE SAME AND IN FUTURE NO DISPUTE OR CONTROVERSY ARISEN BETWEEN FIRST PARTY AND SECOND PARTY, THE DEVELOPMENT AGREEMENT MADE ON DTD .1/4/09, FIXING THE TERMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENT BETWEEN THE PARTIES. 5) THE FIRST PARTY DEMAND FROM THE SECOND PARTY TO DEVELOP THE SAID LAND BY ENTERING INTO THE DEVELOPMENT AGRE EMENT AND THE SECOND PARTY HAVING NO EXPERIENCE FOR THE DEVEL OPMENT OF THE SAID LAND DECIDED TO TAKE SERVICE OF THE FIRST PART Y AND FIRST PARTY HAS GOT YEARS OF EXPERIENCE FOR THE DEVELOPMENT; OF LANDS, FIRST PARTY AND SECOND PARTY DECIDED TO DEVELOP THE SAID LAND UNDER THE FOLLOWING TERMS AND CONDITIONS HANDED OVER THE SAID LAND TO THE FIRST PARTY BY THE SECOND PARTY, BY THIS DEVELO PMENT AGREEMENT BETWEEN THE FIRST PARTY AND SECOND PARTY. .. 7) . THE SECOND PARTY BY THIS DEVELOPMENT AGREEMEN T TO DEVELOP THE SAID LAND THE FIRST PARTY PUT THE DEVEL OPMENT SCHEME AND PLAN OF THE SAID SCHEME PREPARED BY THE FIRST P ARTY, GIVE IT TO THE SECOND PARTY, THOSE PLAN TO BE SIGNED BY THE SE COND PARTY AND GIVE IT TO FIRST PARTY. THOSE SIGNATURES ARE TO BE APPROVED IN THE A'BAD MUNI.CORP. AS PER ITS PRESENTS BYELAWS BY THE FIRST PARTY AND AS PER THE PLAN OF THE SCHEME APPROVED BY THE A 'BAD MUNI.CORP. THE FIRST PARTY HAS TO FINISH CONSTRUCTI ON OF THE BUILDING AS PER THE APPROVED PLAN AND THE SECOND PARTY AGREE AND APPROVED IT. 8) .. THE SECOND PARTY UNDER THE TRANSACTION OF DEVELOPMENT AGREEMENT PREPARED THE PLAN FOR THE DEVELOPMENT OF THE SAID LAND BY PREPARING CONSTRUCTION PLAN MADE BY THE FIRST PA RTY AND THE FIRST PARTY CAN CHANGE OR ADD IN THOSE PLAN AS IT T HINKS FIT AND FIRST PARTY PREPARE RESIDENTIAL PLAN IN THIS SCHEME THE F IRST PARTY BY HIS OWN COST APPROVED THE SAID REVISED PLAN IN A'BAD MU NI CORP. AND THE SECOND PARTY HAS TO SIGN ON THE SAID PLAN A ND TO MAKE ALL PROCEEDINGS FOR APPROVING THE SAID PLAN I.E. APPLI CATION, REPLIES, DECLARATION AND AFFIDAVIT ETC MADE BY THE SECOND PA RTY AT THE EXPENSES OF THE FIRST PARTY AND AS PER THE SAID APP ROVED PLAN ALL THE PROCEEDINGS FOR GETTING THE PERMISSION UN DER THE NON ITA NO.1876/AHD/2013 18 AGRICULTURE LAND SECOND PARTY HAS TO SIGN, APPLICA TIONS, REPLIES, DECLARATION, AFFIDAVIT REQUIRED FOR THE SAME BUT T HE SAID PLAN AND PERMISSION OF NON AGRICULTURE WILL BE TAKEN BY THE FIRST PARTY AT THE COST OF FIRST PARTY AND AS PER THE CONSTRUCTION PLAN APPROVED BY THE A'BAD MUNI. CORP., THE FIRST PARTY MADE CONS TRUCTION ACCORDINGLY ON THE SAID LAND. THE FIRST PARTY HAS T O CONSTRUCT RESIDENTIAL FLAT AS PER THE SAID SCHEME AND GIVE IT TO THE MEMBERS OF THE SCHEME BY THE FIRST PARTY. .. .. 18) . IT IS TO BE CONSIDERED THAT THE DIRECT POSSE SSION OF THE SAID LAND BEARING F. P NO : 195 ADMEASURING 3297 SQ R MTR PAIKEE 2837 SQR MTR OF LAND OF THE SECOND PARTY HAS HANDED OVER THE DIRECT POSSESSION TO THE FIRST PARTY BY THIS AGREEM ENT FOR THE DEVELOPMENT OF THE SCHEME BUT IT IS TO BE CONSIDER THAT THE FIRST PARTY HAS NOT GIVEN POSSESION TO M/S. CHANCHAL CONS TRUCTION AS PER THE PROVISION UNDER THE TRANSFER OF PROPERTIES ACT. .. .. 25) .. BY THIS AGREEMENT THE SECOND PARTY HAS HAND ED OVER THE SAID LAND TO THE FIRST PARTY FOR CONSTRUCTION, ORGAINASING THE SCHEME AND DEVELOPING IT AND TODAY HANDED OVER THE DIRECT POSSESSION OF THE SAID LAND AS A LICENSEE TO THE FI RST PARTY FOR DEVELOPMENT AND THE POSSESION OF THE SAID LAND DIRE CTLY GIVEN TO THE FIRST PARTY AS A LICENSEE. IT MAY HAPPEN THAT T HE SAID LAND CAME IN DIRECT POSSESION WITH THE FIRST PARTY AS A LICENSEE AND UNTIL WHOLE THE DEVELOPMENT OF THE SCHEME HAS NOT B EEN COMPLETED OVER THE SAID LAND AND UNDER THE SCHEME T HE RESIDENTIAL TYPE OF PROPERTY AND OR UNIT HAS NOT BE EN CONSTRUCTED ON SAID LAND AND THE SAME HAS NOT BEEN GIVEN TO THE DIFFERENT PERSON AND TOTAL AMOUNT HAS NOT BEEN RECEIVE BY FIR ST PARTY FROM ALL THE MEMBERS TILL THEN IT MAY BE CONSIDERED THAT THE DIRECT POSSESION OF THE SAID LAND WITH FIRST PARTY AS LICE NSEE. 13. WE FIND THAT DR COULD NOT POINT OUT ANY CLAUSE IN THE AGREEMENT DATED 1.4.2009 WHEREIN THE ASSESSEE AGREED TO TRANS FER ITS LAND TO DEVELOPER FOR CONSIDERATION. 14. SECTION 2(47)(V) OF THE IT ACT READS AS UNDER: 'ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY ''IMMOVABLE PROPERTY TO BE TAKEN OR ITA NO.1876/AHD/2013 19 RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED, TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 18.82 (4 OF 18:82) 15. SECTION 53A OF THE TRANSFER PROPERTY ACT, REDS A UNDER: WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART 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 WILLING TO PERFORM HIS PART OF THE CONTRACT. THEN, NOTWITHSTANDING THAT THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR, WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS, NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFORE, BY THE LAW, OR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE ,TRANSFEREE AND PERSON CLAIMING UNDER HIM ANY RIGH T IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGH T EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF.' 16. ON READING OF THE ABOVE PROVISIONS, THIS TRIBUN AL VIDE ITS ORDER DATED 17.10.2014 IN ITA NO.977/AHD/2011, A.Y.2005-0 6, ITA NO.978/AHD/2011, A.Y.2007-08, CO NO.110/AHD/2011, A .Y.2005-06, ITA NO.979/AHD/2011, A.Y.2005-06, ITA NO.980/AHD/20 11, A.Y.2007- 08, CO NO.109/AHD/2011 FOR A.Y.2005-06 IN THE CASE OF SHRI YOGENDRA AMBALAL SARKAR AND SHRI DILIP AMBALAL SARKAR HAS HE LD THAT THE ITA NO.1876/AHD/2013 20 FOLLOWING ARE THE ESSENTIAL INGREDIENTS FOR ATTRACT ING THE PROVISION OF SECTION 53A OF THE TP ACT. (A) THERE SHOULD BE CONTRACT FOR CONSIDERATION; (B) IT SHOULD BE IN WRITING; (C) IT SHOULD BE SIGNED BY THE TRANSFEROR; (D) IT SHOULD PERTAIN TO THE TRANSFER OF IMMOVABLE PROPERTY; (E) THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF PROPERTY; (F) LASTLY, TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM THE CONTRACT. 17. WE FIND THAT THE AGREEMENT DATED 1.4.2009 DOES NOT SHOW THAT ANY PARTICULAR CONSIDERATION WAS FIXED FOR TRANSFER OF LAND BY THE ASSESSEE IN FAVOUR OF THE DEVELOPER. BOTH THE LOWE R AUTHORITIES COULD NOT CONTROVERT THE CONTENTION OF THE ASSESSEE THAT DEVELOPMENT AGREEMENT DOES NOT CONTAIN ANY PROVISION FOR CONSID ERATION IN RESPECT OF TRANSFER OF LAND BY THE ASSESSEE TO CHANCHAL CON STRUCTION. 18. THUS, WE FIND THAT THE AGREEMENT DATED 1.4.2009 DOES NOT SATISFY THE REQUIREMENT OF SECTION 53A OF THE TP ACT. SECT ION 53A OF THE TP ACT CATEGORICALLY PROVIDES AS WHEN ANY PERSON CONTRACT S TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY. THUS, AN AG REEMENT TO COME WITHIN THE MISCHIEF OF SECTION 53A OF THE TP ACT, T HE CONDITION PRECEDENT IS THAT THE TRANSFER OF IMMOVABLE PROPERTY SHOULD B E FOR CONSIDERATION. KEEPING IN VIEW THE ABOVE CLEAR PROVISION OF LAW, A S WE FIND IN THE INSTANT CASE THAT THE AGREEMENT WAS NOT FOR CONSIDE RATION OF RS.2,26,96,000/- AS HELD BY THE LOWER AUTHORITIES, AND THEREFORE, THE DEVELOPMENT AGREEMENT DATED 1.4.2009 DOES NOT FALL UNDER SECTION 53A OF THE TP ACT. CONSEQUENTLY, HANDING OVER OF THE POSSESSION OF THE LAND BY THE ASSESSEE TO THE DEVELOPER WAS NOT IN PU RSUANCE TO A CONTRACT TO TRANSFER AN IMMOVABLE PROPERTY FOR CONS IDERATION, AND THUS, THERE WAS NO TRANSFER WITHIN THE MEANING OF SECT ION 2(47)(V) OF THE IT ACT. NO MATERIAL COULD BE BROUGHT BEFORE US BY THE REVENUE TO SHOW THAT THE ANY OTHER AGREEMENT WAS ENTERED INTO BY TH E ASSESSEE WITH THE ITA NO.1876/AHD/2013 21 DEVELOPER DURING THE YEAR RELEVANT TO THE ASSESSMEN T YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE, WE FIND NO TR ANSFER OF LAND TOOK PLACE ON 1.4.2009, OR FOR THAT MATTER, DURING THE A SSTT.YEAR 2010-11. THEREFORE, THE ADDITION OF CAPITAL GAIN DURING THE ASSTT.YEAR 2010-11 IS NOT SUSTAINABLE, AND THEREFORE, WE DELETE THE CAPIT AL GAIN OF RS.1,07,03,362/- ADDED TO THE TOTAL INCOME OF THE A SSESSEE OF THE YEAR UNDER CONSIDERATION, AND ACCORDINGLY, THIS GROUND O F APPEAL OF THE ASSESSEE IS ALLOWED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON THURSDAY THE 19 TH FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 19/02/2015 $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A), AHMEDABAD 5. $%& '' , , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. $% + / BY ORDER, ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD