Addison & Company Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2198/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7840 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 06-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 24-11-2015
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital asset; Depreciation; Additional depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2198/MDS/2015 / ASSESSMENT YEAR : 2010-11 M/S ADDISON & COMPANY LTD 803, ANNA SALAI CHENNAI 600 002 VS. THE DY. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE I(1) CHENNAI [PAN AAACA 5199 H ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 06 - 01 - 2016 ! / DATE OF PRONOUNCEMENT : 04 - 03 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, CHENNA I, DATED 9.9.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLO WANCE OF 50% OF ADDITIONAL DEPRECIATION CLAIM BY THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION. ITA NO.2198/15 :- 2 -: 3. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED 50% OF THE ADDITIONAL DEPRECIATION WHICH WA S NOT ALLOWED IN THE EARLIER YEAR. ACCORDING TO THE LD. COUNSEL, FO R THE ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER ALLOWED 10% OF THE A DDITIONAL DEPRECIATION SINCE THE MACHINERY WAS USED LESS THAN SIX MONTHS. THE ASSESSEE HAS CLAIMED THE BALANCE 10% DURING THE YEA R UNDER CONSIDERATION. HOWEVER, THE ASSESSING OFFICER DISA LLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THERE IS NO PROVIS ION IN THE INCOME- TAX ACT, 1961 FOR ALLOWING THE BALANCE 10% OF THE A DDITIONAL DEPRECIATION DURING THE YEAR UNDER CONSIDERATION. THE CIT(A) ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE LD. COUNSEL PLACED HIS RELIANCE ON THE DECISION OF THE COCHIN BENCH IN THE CASE OF APOLLO TYRES LTD VS ACIT (2014) 64 SOT 203. 4. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DEPART MENTAL REPRESENTATIVE SUBMITTED THAT SEC. 32(1)(IIA) OF TH E ACT PROVIDES FOR ADDITIONAL DEPRECIATION @ 20%. THIS SEC. DOES NOT PROVIDE FOR CARRY FORWARD OF THE DEPRECIATION IN THE SUBSEQUENT YEAR, THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSES SING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT ITA NO.2198/15 :- 3 -: THE ASSESSEE HAS INSTALLED THE MACHINERY DURING THE EARLIER ASSESSMENT YEAR AND THE MACHINERY INSTALLED IS ENTITLED FOR AD DITIONAL DEPRECIATION. HOWEVER, THE ASSESSING OFFICER RESTRICTED ADDITIONA L DEPRECIATION @ 10% SINCE THE MACHINERY WAS USED BY THE ASSESSEE F OR LESS THAN 180 DAYS. THE QUESTION ARISES FOR CONSIDERATION IS WHE THER THE BALANCE 10% OF THE ADDITIONAL DEPRECIATION CAN BE ALLOWED D URING THE YEAR UNDER CONSIDERATION OR NOT. THIS ISSUE WAS EXAMINED BY THE COCHIN BENCH OF THIS TRIBUNAL IN APOLLO TYRES LTD. V. ACIT (SUPRA). THE COCHIN BENCH FOUND THAT THE ADDITIONAL DEPRECIATION CAN BE ALLOWED IN THE NEXT YEAR IN CASE THE SAME CANNOT BE ALLOWED IN THE EARLIER YEAR. IN FACT, THE COCHIN BENCH HAS OBSERVED AS FOLLOWS:- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON REC ORD. SECTION 32(1)(IIA) READS AS FOLLOWS: '32(1)(IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II): PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESP ECT OF ITA NO.2198/15 :- 4 -: (A ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHER PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREMISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE; OR (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; OR (D) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF ANY ONE PREVIOUS YEAR.' 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT, WHICH READS AS FOLLOWS: 'PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO CLAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA), AS THE C ASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSE OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ONE HUNDRED AN D EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UN DER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULAT ED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLA USE (I) OR CLAUSE (II) OR CLAUSE (IIA) AS THE CASE MAY BE.' ITA NO.2198/15 :- 5 -: 11. A BARE READING OF THIS SECTION 32(1)(IIA) CLEARLY SAYS THAT IN CASE A NEW MACHINERY OR PLANT WAS ACQUIRED AND INSTALLED AFTER 31-03-2005 BY AN ASSESSEE, WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCE O F ARTICLE OR THING, THEN, A SUM EQUAL TO 20% OF THE ACT UAL COST OF THE MACHINERY AND PLANT SHALL BE ALLOWED AS A DEDUCTION. IT IS NOT IN DISPUTE THAT THE ASSESSEE H AS ACQUIRED AND INSTALLED THE MACHINERY AFTER 31-03- 2005. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURE OF ARTICLE OR THING. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION WHICH IS EQUIVALENT TO 20% OF THE ACTUAL COST OF SUCH MACHINERY. THE DISPUTE IS THE YEAR IN WHICH THE DEPRECIATION HAS TO BE ALLOWED. THE ASSES SEE HAS ALREADY CLAIMED 10% OF THE DEPRECIATION IN THE EARLIER ASSESSMENT YEAR SINCE THE MACHINERY WAS USE D FOR LESS THAN 180 DAYS AND CLAIMING THE BALANCE 10% IN THE YEAR UNDER CONSIDERATION. SECTION 32(1)(IIA) DOES NOT SAY THAT THE YEAR IN WHICH THE ADDITIONAL DEPRECIATION HAS TO BE ALLOWED. IT SIMPLY SAYS THAT THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION EQ UAL TO 20% OF THE COST OF THE MACHINERY PROVIDED THE MACHINERY OR PLANT IS ACQUIRED AND INSTALLED AFTER 31- 03-2005. PROVISO TO SECTION 32(1)(IIA) SAYS THAT IF THE MACHINERY WAS ACQUIRED BY THE ASSESSING DURING THE PREVIOUS YEAR AND HAS PUT TO USE FOR THE PURPOSE OF BUSINESS LESS THAN 180 DAYS, THE DEDUCTION SHALL BE RESTRICTED TO 50% OF THE AMOUNT CALCULATED AT THE PRESCRIBED RATE. THEREFORE, IF THE MACHINERY IS PUT TO USE IN ANY PARTICULAR YEAR, THE ASSESSEE IS ENTITLE D FOR 50% OF THE PRESCRIBED RATE OF ADDITIONAL DEPRECIATION . THE INCOME-TAX ACT IS SILENT ABOUT THE ALLOWANCE OF THE BALANCE 10% ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR. TAKING ADVANTAGE OF THIS POSITION, THE ASSESSEE NOW CLAIMS THAT THE YEAR IN WHICH THE MACHINERY WAS PUT TO USE THE ASSESSEE IS ENTITLED F OR 50% ADDITIONAL DEPRECIATION SINCE THE MACHINERY WAS PUT TO USE FOR LESS THAN 180 DAYS AND THE BALANCE 50% SHALL BE ALLOWED IN THE NEXT YEAR SINCE THE ELIGIBIL ITY OF THE ASSESSEE FOR CLAIMING 20% OF THE ADDITIONAL ITA NO.2198/15 :- 6 -: DEPRECIATION CANNOT BE DENIED BY INVOKING SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT. 12. THIS ISSUE WAS CONSIDERED BY THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF COSMO FILMS LTD (SUPRA ). THE REVENUE HAS TAKEN A SIMILAR GROUND AS TAKEN BEF ORE THIS TRIBUNAL THAT THE ASSESSEE CANNOT CARRY FORWAR D THE ADDITIONAL DEPRECIATION TO BE ALLOWED IN THE SUBSEQUENT ASSESSMENT YEAR. THE DELHI BENCH OF THIS TRIBUNAL AFTER CONSIDERING THE PROVISIONS OF SECTIO N 32(1)(IIA) AND PROVISO TO SECTION 321)(II) OF THE ACT FOUND THAT WHEN THERE IS NO RESTRICTION IN THE ACT TO DENY THE BENEFIT OF BALANCE 50%, THE ASSESSEE IS ENTITLED FOR THE BALANCE ADDITIONAL DEPRECIATION IN THE SUBSEQUENT ASSESSMENT YEAR. IN FACT, THE DELHI BENCH OF THIS TRIBUNAL HAS OBSERVED AS FOLLOWS AT PAGES 641 AND 642 OF THE ITD: ' THUS, THE INTENTION WAS NOT TO DENY THE BENEFIT T O THE ASSESSEES WHO HAVE ACQUIRED OR INSTALLED NEW MACHIN ERY OR PLANT. THE SECOND PROVISO TO SECTION 32(1)(II) RESTRICTS THE ALLOWANCES ONLY TO 50% WHERE THE ASSETS HAVE BEEN ACQUIRED AND PUT TO USE FOR A PERIOD LESS THAN 180 DAYS IN THE YEAR OF ACQUISITION. THIS RESTRICTION IS ONLY ON THE BASIS OF PERIOD OF USE. THERE I NO RESTRICTION THAT BALANCE OF ONE TIME INCENTIVE IN THE FORM OF ADDITIONAL SUM OF DEPRECIATION SHALL NO T BE AVAILABLE IN THE SUBSEQUENT YEAR. SECTION 32(2) PROVID ES FOR A CARRY FORWARD SET UP OF UNABSORBED DEPRECIATI ON. THIS ADDITIONAL BENEFIT IN THE FORM OF ADDITIONAL ALLOWANCE U/S 32(1)(IIA) IS ONE TIME BENEFIT TO ENCOURAGE THE INDUSTRIALIZATION AND IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF BAJ AJ TEMPO LTD. V. CIT [1992] 196 ITR 188 , THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBE RALLY AND PURPOSIVE TO MAKE THE PROVISION MEANINGFUL WHIL E GRANTING THE ADDITIONAL ALLOWANCE. THIS ADDITIONAL BENEFIT IS TO GIVE IMPETUS TO INDUSTRIALIZATION AND THE BASIC INTENTION AND PURPOSE OF THESE PROVISIONS CAN BE REASONABLY AND LIBERALLY HELD THAT THE ASSESSEE DESERVES TO GET THE BENEFIT IN FULL WHEN THERE IS N O ITA NO.2198/15 :- 7 -: RESTRICTION IN THE STATUTE TO DENY THE BENEFIT OF BALANCE OF 50% WHEN THE NEW MACHINERY AND PLANT WERE ACQUIRED AND USED FOR LESS THAN 180 DAYS. ONE TIME BENEFIT EXTENDED TO ASSESSEE HAS BEEN EARNED IN THE YEAR OF ACQUISITION OF NEW MACHINERY AND PLANT . IT HAS BEEN CALCULATED @15% BUT RESTRICTED TO 50% ONLY ON ACCOUNT OF USAGE OF THESE PLANT & MACHINERY IN THE YEAR OF ACQUISITION. IN SECTION 32(1)(IIA), THE EXPRESSION USED I 'SHALL BE ALLOWED'. THUS, THE ASSESSEE HAD EARNED THE BENEFIT AS SOON AS HE HAD PURCHASED THE NEW MACHINE RY AND PLANT IN FULL BUT IT IS RESTRICTED TO 50% IN THAT PARTICULAR YEAR ON ACCOUNT OF PERIOD USAGES. SUCH RESTRICTIONS CANNOT DIVEST THE STATUTORY RIGHT. LAW DOES NOT PROHIBIT THAT BALANCE 50% WILL NOT BE ALLOWE D IN SUCCEEDING YEAR. THE EXTRA DEPRECIATION ALLOWABLE U/S 32(1)(IIA) IN AN EXTRA INCENTIVE WHICH HAS BEEN EARNED AND CALCULATED IN THE YEAR OF ACQUISITION BU T RESTRICTED FOR THAT YEAR TO 50% ON ACCOUNT OF USAGE. THE SO EARNED INCENTIVE MUST BE MADE AVAILABLE IN T HE SUBSEQUENT YEAR. THE OVERALL DEDUCTION OF DEPRECIAT ION U/S 32 SHALL DEFINITELY NOT EXCEED THE TOTAL COST OF MACHINERY AND PLANT . IN VIEW OF THIS MATTER, WE SE T ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIREC T TO EXTEND THE BENEFIT. WE ALLOW GROUND NO.2 OF THE ASSESSEE'S APPEAL. SINCE WE HAVE DECIDED GROUND NO. 2 IN FAVOUR OF ASSESSEE, THERE IS NO NEED TO DECIDE THE ALTERNATE CLAIM RAISED IN GROUND NO.3. THE SAME IS DISMISSED.' 13. THIS ISSUE WAS ALSO CONSIDERED BY ANOTHER BENCH OF THIS TRIBUNAL AT DELHI IN SIL INVESTMENT LTD (SUPRA ). AT PAGE 233 OF THE TTJ, THE TRIBUNAL HAS OBSERVED AS FOLLOWS: '40. THERE IS NOTHING ON RECORD TO SHOW THAT THE DIRECTIONS GIVEN BY THE LEARNED CIT(A) ARE NOT PROP ER. THE ELIGIBILITY FOR DEDUCTION OF ADDITIONAL DEPRECI ATION STANDS ADMITTED, SINCE 50 PER CENT THEREOF HAD ALREAD Y BEEN ALLOWED BY THE AO IN THE ASST.YR.2005-06, I.E. THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THEREFORE, OBVIOUSLY, THE BALANCE 50 PER CENT OF THE DEDUCTION I S ITA NO.2198/15 :- 8 -: TO BE ALLOWED IN THE CURRENT YEAR, I.E. ASST. YR. 2006 -07. THE LEARNED CIT(A) HAS MERELY DIRECTED THE VERIFICATION OF THE CONTENTIONS OF THE ASSESSEE AND TO ALLOW THE BALANCE ADDITIONAL DEPRECIATION AFTER SUC H FACTUAL VERIFICATION. ACCORDINGLY, FINDING NO MERIT THEREIN, GROUND NO.3 RAISED BY THE DEPARTMENT IS REJECTED.' 14. A SIMILAR VIEW WAS TAKEN BY MUMBAI BENCH OF THIS TRIBUNAL IN MITC ROLLING MILLS (P.) LTD. (SUPRA). I N VIEW OF THE ABOVE DECISIONS OF THE CO-ORDINATE BENCHES O F THIS TRIBUNAL ON IDENTICAL SET OF FACTS THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE BALANCE 50% OF THE DEPRECIATION HAS TO BE ALLOWED IN THE SUBSEQUENT YE AR, THEREFORE, THE ORDERS OF THE LOWER AUTHORITIES ON T HIS ISSUE ARE SET SIDE AND THE ASSESSING OFFICER IS DIR ECTED TO ALLOW THE CLAIM OF BALANCE 50% ADDITIONAL DEPRECIATION IN THE YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION WH ICH WAS NOT ALLOWED IN THE EARLIER YEAR. ACCORDINGLY, THE ORDERS OF THE L OWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE BALANCE 10% ADDITIONAL DEPRECIATION. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO COMPUTA TION OF CAPITAL GAINS. 7. SHRI R.VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER COMPUTED LONG TERM CAPITAL GAINS AT ` 86,45,99,912/- ON THE BASIS OF THE JOINT VENTURE A GREEMENT DATED 7.9.2009. ACCORDING TO THE LD. COUNSEL, AS PER TH E JOINT VENTURE AGREEMENT AND THE POWER OF ATTORNEY GIVEN BY THE A SSESSEE, IT WOULD ITA NO.2198/15 :- 9 -: BE EFFECTIVE ONLY AFTER THE APPROVAL OF CONSTRUCTIO N RECEIVED FROM THE CONCERNED AUTHORITIES. DURING THE YEAR UNDER CONSI DERATION, THE NECESSARY APPROVALS WERE NOT RECEIVED FROM THE CONC ERNED AUTHORITIES, THEREFORE, THERE WAS NO TRANSFER OF INTEREST IN THE IMMOVABLE PROPERTY. REFERRING TO THE COPY OF THE JOINT DEVELOPMENT AGRE EMENT WHICH IS AVAILABLE AT PAGE 34 OF THE PAPER BOOK, THE LD. COU NSEL SUBMITTED THAT THE JOINT DEVELOPMENT AGREEMENT CANNOT BE CONSTRUED AS DELIVERY OF POSSESSION BY THE ASSESSEE TO THE DEVELOPER IN PAR T PERFORMANCE OF THE CONTRACT AS DEFINED U/S 53A OF TRANSFER OF PRO PERTY ACT, 1982. IN VIEW OF THIS SPECIFIC AGREEMENT BETWEEN THE PARTIES , ACCORDING TO THE LD. COUNSEL, THE POSSESSION OF THE PROPERTY WAS NOT GIVEN TO THE DEVELOPER. THEREFORE, THE CAPITAL GAINS WITHOUT AN Y TRANSFER CANNOT BE ASSESSED DURING THE YEAR UNDER CONSIDERATION. 8. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT ADMITTEDLY, THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND M/S GODREJ PROPERTIES LTD FOR DEVELOPMENT OF 20 ACR ES AND 26 CENTS LAD IN SEMBARAMBAKKAM VILLAGE, SRIPERUMBUDUR TALUK. AS PER THIS AGREEMENT, M/S GODREJ HAS TO CONSTRUCT BUILDING ON THE LAND. THE ASSESSEE IS ENTITLED FOR 30% OF THE CONSTRUCTED ARE A. IN LIEU OF 30% OF THE CONSTRUCTED AREA, THE ASSESSEE HAS TO TRANSFER 70% OF THE UNDIVIDED SHARE IN THE PROPERTY. IN FACT, THE PHYS ICAL POSSESSION F THE PROPERTY WAS HANDED OVER TO THE DEVELOPER. REFERRI NG TO THE ITA NO.2198/15 :- 10 -: AGREEMENT, THE LD. DR POINTED OUT THAT THE ASSESSE E CLAIMS THAT THE POSSESSION WAS NOT HANDED OVER TO THE DEVELOPER IN PURSUANCE OF PART PERFORMANCE OF CONTRACT U/S 53A OF THE TRANSFER OF PROPERTY ACT. THE FACT REMAINS THAT THE PROPERTY WAS HANDED OVER TO T HE DEVELOPER IN PURSUANCE TO AN ARRANGEMENT MADE BETWEEN THE ASSES SEE AND M/S GODREJ, THEREFORE, IN VIEW OF SUCH ARRANGEMENT, TH E ASSESSEE CANNOT GET BACK 70% OF THE UNDIVIDED SHARE IN THE LAND. T HE ASSESSEE, AT THE BEST, CAN GET BACK 30% OF THE CONSTRUCTED AREA IN LIEU OF 70% OF THE UNDIVIDED SHARE IN THE LAND GIVEN TO THE DEVELO PER. REFERRING TO SECTION 2(47) OF THE ACT, MORE PARTICULARLY, SUB-CL AUSE (VI), THE LD. DR POINTED OUT THAT ANY TRANSACTION OR ARRANGEMENT WHI CH HAS EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOV ABLE PROPERTY HAS TO BE CONSTRUED AS TRANSFER WITHIN THE MEANING OF SEC. 2(47) OF THE ACT. ACCORDING TO THE LD. DR, TRANSFER U/S 2(47) IS AN INCLUSIVE DEFINITION. THEREFORE, WHEN THERE IS AN ARRANGEMEN T BETWEEN THE PARTIES WHICH ENABLES ENJOYMENT OF THE PROPERTY BY THE DEVELOPER AS ITS OWN THERE IS A TRANSFER WITHIN THE MEANING O F SEC. 2(47) OF THE ACT EVEN THOUGH THERE MAY NOT BE TRANSFER WITHIN THE ME ANING OF SEC. 53A OF THE TRANSFER OF PROPERTY ACT. THE FACT THAT PHY SICAL POSSESSION WAS HANDED OVER TO THE DEVELOPER CANNOT BE DENIED. THE REFORE, THE CAPITAL GAINS HAS TO BE ASSESSED ONLY DURING THE YEAR UNDER CONSIDERATION. ITA NO.2198/15 :- 11 -: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE ENTERED INTO AN AGREEMENT FOR JOINT DEVELO PMENT OF THE PROPERTY WITH M/S GODREJ ON 7.9.2009 WHICH FALLS DU RING THE YEAR UNDER CONSIDERATION. CLAUSE (2) OF THE AGREEMENT C LEARLY SAYS THAT THE ASSESSEE AGREED IRREVOCABLY TO GRANT ALL RIGHTS, PO WERS AND AUTHORITY TO DEVELOP THE PROPERTY TO THE DEVELOPER. A REFERENCE WAS ALSO MADE THAT THE PERMISSION GRANTED TO THE DEVELOPER SHALL NOT BE CONSTRUED AS DELIVERY OF POSSESSION U/S 53A OF THE TRANSFER OF PROPERTY ACT. THE AGREEMENT FURTHER SAYS THAT THE ASSESSEE IS ENTITL ED FOR 30% OF THE CONSTRUCTED AREA. IN LIEU OF 30% CONSTRUCTED AREA ALLOTTED TO THE ASSESSEE, THE ASSESSEE HAS TO TRANSFER 70% OF THE UNDIVIDED SHARE IN THE LAND TO THE DEVELOPER. THIS AGREEMENT IS IRREV OCABLE. THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER FOR CARR YING OUT THE DEVELOPMENT ACTIVITIES. THE ASSESSEE HAS ALSO GRA NTED EXCLUSIVE RIGHT TO THE DEVELOPER TO SELL THE PROPERTY TO VARIOUS PR OSPECTIVE PURCHASERS. A BARE READING OF THIS AGREEMENT CLEARLY SHOWS THAT THE ASSESSEE CAN GET BACK 30% OF THE CONSTRUCTED AREA IN LIEU OF 70 % OF THE UNDIVIDED SHARE IN THE LAND GIVEN TO THE DEVELOPER. THEREFOR E, BY WAY OF AN ARRANGEMENT, THE PROPERTY WAS HANDED OVER TO THE DE VELOPER FOR DEVELOPMENT. THIS KIND OF ARRANGEMENT MAY NOT BE TRANSFER UNDER COMMON LAW. HOWEVER, INCOME-TAX ACT, 1961, SPECIFIC ALLY DEFINES AN ITA NO.2198/15 :- 12 -: ARRANGEMENT BETWEEN THE PARTIES AS TRANSFER U/S 2(47) OF THE ACT. THIS ARRANGEMENT ENABLES THE DEVELOPER TO ENJOY THE PROPERTY AS ITS OWN OR TO SELL THE PROPERTY AS ITS OWN. THEREFORE, IN VIEW OF THIS SPECIFIC DEFINITION IN SEC. 2(47)(VI) OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE WAS A TRANSFER OF PRO PERTY DURING THE YEAR UNDER CONSIDERATION WITHIN THE MEANING OF SEC. 2(47) OF THE ACT. THEREFORE, THE CAPITAL GAIN HAS TO BE ASSESSED ONLY DURING THE YEAR UNDER CONSIDERATION. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAM E IS CONFIRMED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 4 TH MARCH, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF