M/S. CHENNAI PROPERTIES AND INVESTMENT LIMITED, CHENNAI V. ACIT, CENTRAL CIRCLE3(1), CHENNAI

ITA 222/CHNY/2022

AI Insights

The case involves Chennai Properties and Investments Ltd. (CPIL), which was engaged in a real estate transaction with Aadhi Enterprises Pvt Ltd (AEPL) involving the sale of a property named 'Firhaven'. The Income Tax Department conducted a search and seizure operation and subsequently assessed capital gains on the transaction. The main legal contention was whether the transfer of property constituted a 'transfer' under section 2(47)(v) of the Income-tax Act, 1961, and whether the property, once converted into stock-in-trade, should be taxed under capital gains or business income. The Tribunal's decision hinged on the interpretation of the arbitral award and the nature of the transaction as a stock-in-trade.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136033 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: AllowedAllowed
• Bench Allotted: C
• Next Hearing Date: 08-12-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 11-04-2022
• Other Referred Cases: PCIT vs. Chuni Lal Bhagat, Suraj Lamp & Industries (P.) Ltd. vs. State of Haryana, Late R. Krishnaswamy vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Gift; Business income; Search and seizure; Capital Gains
• Section: 143(3); 54F; 13; 153C

Judgement Text

आयकरअपीलीयअिधकरण,‘सी’ यायपीठ,चे ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ीमहावीर सह, , , , उपा य एवं ी मनोज कुमार अ वाल, , , , लेखा सद यके सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.:222/CHNY/2022 िनधा रण वष /Assessment Year: 2016-17 Chennai Properties and Investments Ltd., 113-114, A Block B Wing, 3 rd Floor, Mena Kampala Arcade, Sri Theyagaraya Road, T.Nagar, Chennai – 600 017. PAN: AAACC 3726G vs. The ACIT, Central Circle – 3(1), Chennai. (अपीलाथ /Appellant) ( यथ /Respondent) & आयकरअपीलसं ./ITA No.:310/CHNY/2022 िनधा रण वष /Assessment Year: 2016-17 The ACIT, Central Circle – 3(1), Chennai. vs. Chennai Properties and Investments Ltd., 113-114, A Block B Wing, 3 rd Floor, Mena Kampala Arcade, Sri Theyagaraya Road, T.Nagar, Chennai – 600 017. PAN: AAACC 3726G (अपीलाथ /Appellant) ( यथ /Respondent) िनधा रतीक ओर से/Assessee by : Shri B. Ramakrishnan, FCA राज वक ओरसे /Revenue by : ShriP. SajitKumar,JCIT सुनवाई क तारीख/Date of Hearing : 09.12.2022 घोषणा क तारीख/Date of Pronouncement : 31.01.2023 2 I.T.A. Nos.222 & 310/Chny/2022 आदेश आदेशआदेश आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: These cross appeal by the assessee and Revenue for the assessment year 2016-17 are arising out of order of Commissioner of Income Tax (Appeals)-18, Chennai in ITA No.316/2019- 20/CIT(A)-18, Appeal Reference No.CIT(A), Chennai-18/10416/ 2019-20, dated 28.02.2022. The assessment was framed by the ACIT, Central Circle 3(1), Chennai u/s. 143(3) r.w.s. 153C of the Income-tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.12.2019. 2. The only common and interconnected issue in both the appeals is as regards to the order of CIT(A) upholding the action of the AO partly that the provisions of section 2(47)(v) of the Act are applicable in regard to 40 grounds and 1,896 sq.ft., out of 79 grounds and 2,222 sq.ft., of land owned by assessee under the name ‘Firhaven’ in MRC Nagar, Chennai and balance 39 grounds 326 sq.ft., is not transferred in view of the terms of arbitral award. For confirmation of addition of long term capital gains partly, assessee in its appeal has raised following Ground Nos.2 & 3:- “2. For that the Learned Commissioner of Income Tax (Appeals) erred in directing the Learned Assessing Officer to re-compute the Capital Gains for 3 I.T.A. Nos.222 & 310/Chny/2022 the property ‘Firhaven’ ad-measuring 40 grounds and 1896 sq.ft. held as Stock-in-trade by adopting the Arbitral Award dated 19.03.2018 of Rs.170 crores. 3. For that the Learned Commissioner of Income Tax (Appeals) erred in upholding the Order of Assessing Officer that the provisions of section 2(47)(v) of the Act are applicable to property / land held as Stock-in-Trade. 2.1 The Revenue has raised the following Ground Nos.21. to 2.5 in regards to the order of CIT(A) deleting the addition of long term capital gains partly:- 2.1 The learned CIT(A) has erred in directing the Assessing officer to recomputed the capital gains by taking into sale consideration of Rs. 170 Crores and indexed cost of 40 grounds and 1896 sq.ft. 2.2. The learned CIT(A) Ought to have appreciated that the possession of the entire property has been taken over by M/s. Aadhi Enterprises Pvt Ltd in the FY 2015-16 and the capital gains is rightly charged by the assessing officer by taking into sale consideration of Rs.380 Crores and indexed cost of 79 grounds and 2222 sq.ft. 2.3. The learned CIT(A) erred in stating that the capital gains is to be recomputed with reference to 40 grounds and 1896 sq.ft of land even though possession of entire 79 grounds and 2222 sq.ft was given to M/s.AEPL in the FY 2015-16. 2.4 The learned CIT(A) failed to note that as per the Sale Agreement, the buyer M/s.AEPL is entitled to assign and transfer its interest to any third party without any prior consent of the seller, which indicates that the transfer was complete in all respects over 79 grounds and 2222 sq.ft of land in FY 2015-16 itself. 2.5. The learned CIT(A) erred in directing the AO to recompute capital gains for the AY 2016-17 based on the events that happened subsequent to the assessment year 2016-17. 3. Brief facts are that the assessee Chennai Properties and Investments Ltd., (hereinafter ‘CPIL’) is engaged in the business of 4 I.T.A. Nos.222 & 310/Chny/2022 renting out of immovable properties and in real estate business. The assessee filed its return of income u/s.139(4) of the Act, for the relevant assessment year 2016-17 on 31.03.2018. The Income Tax Department conducted search and seizure operation u/s.132 of the Act in the case of Aadhi Enterprise Pvt. Ltd., (hereinafter ‘AEPL’) and also covered the office premises of CPIL i.e., the assessee. During the course of search operation in the case of AEPL and others on 09.11.2017 at No.1, Pandaram Street, Pursaiwalkam, Chennai-7, a registered sale agreement dated 16.03.2015 entered into between CPIL and AEPL pertaining to sale of property named ‘Firhaven’, MRC Nagar, Chennai was found and seized vide loose sheet Nos.121 to 136 vide Annexure A-1. As per this agreement of sale, CPIL agreed to sell the property i.e., Firhaven for a consideration of Rs.380 crores to AEPL and accordingly an amount of Rs.15 crore was paid to CPIL as advance on the date of agreement. As a consequence to search conducted on the office premises of the assessee i.e., CPIL, a statutory notice u/s.153C of the Act was issued to the assessee on 15.10.2019 but no return of income in response to this notice was filed despite service of notice. Further, notice u/s.142(1) of the Act was issued dated 06.12.2019 but no compliance was made. 5 I.T.A. Nos.222 & 310/Chny/2022 3.1 The AO on perusal of this agreement for sale noted that there are two General Power of Attorney (GPA) documents executed by assessee, CPIL on 01.04.2015 and 06.04.2015 in favour of Shri Sunil Khetpalia and Shri Manish Parmar, which was also found and seized by the Income Tax Department. As per the above two GPAs, assessee gave power to AEPL in regard to all the rights for getting necessary approvals, development of land, transfer, convey or sell the undivided share of land or superstructure, receive the sale consideration, etc. In pursuance to the above sale agreement and the two GPAs, the AO observed in his assessment order that AEPL has transferred a sum of Rs.282.5 crores to CPIL, the assessee in financial year 2015-16 relevant to this assessment year 2016-17. The AO also noted that this amount was duly accounted for in the books of accounts of the assessee, the CPIL. He also noted that in view of enquiries conducted during the course of search revealed that the possession was handed over by the assessee to AEPL after execution of agreement for sale. For this, Revenue has recorded statements u/s.132(4) of the Act of ShriManeshParmar on 11.11.2017, Shri Shankar Varadharajan, COO of CPIL on 12.11.2017, ShriSrinivsanNatarajan, Director of CPIL on 11.11.2017 and ShriVallal RCK, shareholder of CPIL on 09.01.2018. According to AO, all these persons who are directly connected with 6 I.T.A. Nos.222 & 310/Chny/2022 the assessee company gave statement that the possession of the land in question was given to AEPL and thereafter the AO recorded in the assessment order considering the arbitration award that the transaction of agreement for sale squarely falls within the meaning of transfer as defined u/s.2(47)(v) of the Act which has taken place in financial year 2015-16 relevant to this assessment year 2016-17. The relevant portions of assessment order reads as under:- “From the above, the definite fact which emerges is that possession had been handed over by CPIL to AEPL. The only issue unresolved is the year of transfer. In this regard, as could be seen, ShriManeesh was not specific in his reply while ShriSankarVaradarajan and ShriSrinivasanNatrajan gave different period. This may be due to difficulty to recall events which happened more than two years earlier. Hence with regard to the year of transfer it is necessary to have some documentary proof to ascertain the true facts. In this regard the "Award of the arbitration Tribunal" dated 19.03.2018 becomes a crucial evidence. Subsequent to the agreement and payment of Rs 297.5 crores by AEPL to CPIL, certain differences cropped up resulting in invoking the arbitration clause in the sale agreement. Hon'ble Mr. Justice S Jagadeesan was appointed as the sole arbitrator in this regard. During the pendency of the arbitration proceedings the two parties reached a compromise and a Memorandum of Compromise was entered into by the two parties on 10.03.2018. The said memorandum was signed by ShriSrinivasanNatrajan, Director of CPIL, on its behalf and ShriManeeshParmar on behalf of AEPL. As per the award of the arbitration tribunal dated 19.03.2018, the said compromise memo will be part and parcel of the award. The award is scanned and reproduced below for ready reference. ................ ................ Thus it is clear that both the parties mutually agreed to the compromise and the same has been made part of the award. More importantly the above award has been accepted by both the parties. In page 2, clause 03 of the compromise memo it is clearly mentioned that (i) possession of the property was handed over by CPIL to AEPL consequent to the GPAs executed by 7 I.T.A. Nos.222 & 310/Chny/2022 CPIL dated 01.04.2015 and 06.04.2015, and (ii) AEPL after taking possession of the said property demolished the existing buildings in the property after obtaining necessary permission from the corporation of Chennai vide letter dated 10.07.2015. The relevant page of the compromise memo is scanned and given below for ready reference. ............... ............... From the above fact, it is conclusively proved that the possession of the said land has been given by CPIL to AEPL before 10.07.2015. 3.2 The AO reproduced the statement of Shri Shankar Varadharajan, COO of Shiva Group of Companies on 12.11.2017 andShriVallal RCK, Shareholder of the assessee company, the CPIL dated 19.01.2018 and also ShriManeeshParmar, Director of AEPL recorded on 31.12.2019 and concluded that the above transaction squarely falls within the meaning of transfer as defined u/s.2(47)(v) of the Act. Accordingly, the AO computed Long Term Capital Gain by taking total sale consideration of Rs.380 crore as sale consideration of the above property and computed Long Term Capital Gain and made addition accordingly. Further documentary proofs/evidences for AEPL having taken possession of the property in FY 201-16 are clearly available as enumerated below: (i)AEPL after taking possession of the property appointed G4S Security services to secure the land and payments have been made to them from the bank accounts of AEPL. The relevant ledger copy is scanned below:- ................... ................... (i) AEPL entered into an agreement with M/s Pacatolus Investments Limited, Mauritius on 14.11.2015 to fund the project. 8 I.T.A. Nos.222 & 310/Chny/2022 (ii) AEPL applied to RBI for foreign inward remittances from Nov 2015. Hence it follows that all the elements of part performance of contract as per Sec 53A of the Transfer of Property Act 1882' are fulfilled as given below:- (i) Written Agreement:- A written sale agreement was entered into between AEPL & CPIL on 16.03.2015 whose terms are clear and unambiguous. Subsequently General Power of Attorney have been given by CPIL in favour of AEPL on 01.04.2015 and 06.04.2015 in pursuant to the agreement. (ii) Transferee must taken possession:- AEPL has taken possession during F.Y.2015-16 relevant to A.Y, 2016-17 as discussed below. (iii) The transferee must have done some act in furtherance of the contract AEPL demolished the existing building in the land by obtaining permission from corporation on 10.07.2015; it appointed a security agency to guard its premise; it entered into a FDI agreement with a Mauritius based Pacatolus Investments Ltd and it has also applied to RBI in FY 2015-16 for foreign inward remittances. (iv) Transferee must have performed or willing to perform his part of the contract: AEPL paid Rs 297.50 crores to CPIL (Rs.15 crores in F.Y. 2014- 15 and Rs.282.5 crores in FY 2015-16). This amounts to 78.3% of the total consideration of Rs 380 crores. In view of the above facts, this office is of the considered opinion that the above transaction squarely falls within the meaning of transfer as defined in section 2(47)(v) of the I.T. Act, 1961 which has taken place in the F.Y.2015-16 relevant to A.Y.2016-17. Aggrieved, assessee came in appeal before the CIT(A). 4. The CIT(A) after considering the submissions of the assessee and considered other material placed before him, noted that AEPL has performed its part of the contract majorly in paying the sale consideration of Rs.15 crores in financial year 2014-15 and Rs.282.5 crore in financial year 2015-16 and accordingly all the conditions as 9 I.T.A. Nos.222 & 310/Chny/2022 mentioned in section 2(47)(v) r.w.s. 53 of the Act of the transfer of part property are fulfilled to record it as a transfer. According to him, the condition of possession was fulfilled in financial year 2015- 16 only and hence, the capital gain is chargeable/assessable in assessment year 2016-17. 4.1 But while quantifying the quantum of land transferred and sale consideration towards it, he considered the clauses agreed between the parties of the arbitral award and was of the view that the transfer effected by assessee to AEPL is to the extent of 40 grounds and 1,896 sq.ft., and therefore, the sale consideration for the same will remain at Rs.170 crores. For this, he observed in para 6 as under:- 6. The remaining grounds relate to the quantum of land transferred and the sale consideration towards it. The AO though has relied on the Arbitral award for possession part, he has not considered the other clauses agreed between the parties in the said arbitral award. In the Arbitral award as stipulated, it was specifically agreed between the parties that the appellant had to sell only 40 grounds and 1896 sq.ft. for Rs.170 cr. and not the entire land for the consideration stated in the sale agreement. Therefore, what is transferred is only 40 ground and 1896 sq. ft. for Rs.170 crores and hence the appellant would be liable to pay tax only on the said sale consideration due to the appellant. As the assessee returned Rs.42.67 crores to AEPL before arbitration, the balance to be returned has been fixed at Rs.84.83 crores in the Arbitration award, which has also been returned by the assessee. Thus, the assessee fulfilled the conditions under the arbitral award. It 10 I.T.A. Nos.222 & 310/Chny/2022 was stated by the AR that cancellation deed and sale deed accordingly could not be executed as the property has been under attachment by the department. The Award itself stipulates that within 30 days after attachment is lifted, the cancellation deed and sale deed have to be executed as per the award. It is therefore fair and reasonable to take the sale consideration at Rs.170 crores for 40 grounds and 1896 sq.ft. for capital gains purposes for the AY 2016-17 as per the Arbitration award. I accordingly direct the AO to adopt the sale consideration at Rs.170 crores for 40 grounds and 1896 sq.ft. The AO would recomputed the capital gains by allowing the indexed cost of the land for 40 grounds and 1896 sq.ft. and determine the capital gains by taking the sale consideration of Rs.170 crores and indexed cost of 40 grounds and 1896 sq.ft. The grounds of appeal in this regard are thus partly allowed. Aggrieved, both assessee as well as Revenue came in appeal before the Tribunal. 5. We have heard rival contentions and gone through facts and circumstances of the case. The facts of the case are that during the search operation conducted by the Income-Tax Department u/s.132 of the Act in the case of AEPL, a registered sale agreement was fund. This sale agreement was entered into between CPIL and AEPL dated 18.03.2015 by which the assessee agreed to sell the property referred to as ‘Firhaven’ admeasuring about 79 grounds and 2,222 sq.ft., for a total consideration of Rs.380 crores. A sum of Rs.15 crores was paid as advance on the date of agreement. In pursuance to the sale agreement, powers of attorney were also executed on 01.04.2015 and 06.04.2015. These powers of attorney 11 I.T.A. Nos.222 & 310/Chny/2022 were also found and seized by Income-Tax Department during search. The AO during the course of assessment proceedings noticed that in addition to the advance of Rs.15 crores paid by AEPL at the time of entering into agreement on 18.03.2015, the assessee has further received an amount of Rs.282.5 crores from AEPL in the financial year 2015-16. Thus the total payment received was at Rs.297.5 crores as against the total sale consideration fixed as per sale agreement at Rs.380 crores. The AO and the CIT(A) considered the arbitral award dated 19.03.2018 and memorandum of compromise entered into by these two parties on 10.03.2018 and also the seized material including the registered sale agreement, power of attorneys and other details of payments. The AO assessed the entire sale consideration of Rs.380 crores as sale consideration on account of transfer of property referred as Firhaven admeasuring 79 grounds and 2222 sq.ft. as capital gains. The CIT(A) considered the arbitral award and noted that the assessee had to sell only 40 grounds and 1896 sq.ft. for a consideration of Rs.170 crores and not the entire land for the consideration stated in the sale agreement. Therefore, he held that what is transferred is only 40 grounds and 1896 sq.ft for a consideration of Rs.170 crores and hence, the assessee is liable to pay tax only on the sale consideration received by the assessee actually at Rs.170 crores. He noted that assessee 12 I.T.A. Nos.222 & 310/Chny/2022 has returned back a sum of Rs.42.67 crores to AEPL before arbitration award and balance was returned subsequent to arbitration award at Rs.84.83 crores. The CIT(A) despite the fact noting that cancellation deed and sale deed could not be executed as the property had been under attachment by the Income-Tax Department for recovery proceedings and by the Enforcement Directorate. It was argued before CIT(A) that award itself stipulates that within 30 days of attachment lifting, cancellation deed and sale deed have to be executed as per the award. But the CIT(A) not convinced and held that the assessee has actually transferred 40 grounds and 1896 sq.ft. of land for a total consideration of Rs.170 crores. According to him, assessee is liable for capital gain tax for sale consideration of Rs.170 crores. 6. Now before us, the ld.AR for the assessee stated the factual aspect not considered by the AO or CIT(A) that the property Firhaven owned by assessee was converted into stock-in-trade w.e.f. 25.03.2016and for this, he produced before us copies of annual report along with final accounts as on 31.03.2015 & 31.03.2016. The ld.AR drew our attention to page 74, wherein the relevant note given reads as under:- 13 I.T.A. Nos.222 & 310/Chny/2022 “Note: During this financial year, the Company obtained necessary approvals and demolished the building stood at Firhaven Estate, with an intention to develop the land in to saleable units of residential flats. Hence, the immovable property at Firhaven Estate has been converted in to stock- in-trade with effect from 25 th March 2016.” 6.1 The ld.AR for the assessee also drew our attention to page 75, wherein advance received against the converted asset into stock-in- trade for the purpose of developing the property on its own. The ld.AR drew our attention to para 2.2 & 2.3 of the audit report, which is enclosed at page 75 and the same reads as under:- “2.22 Advance Received against sale of property: The Company has entered into an agreement dated 16 th Mar 2015 for sale of one of its property. However, due to the subsistence of Stay of sale by H’ble High Court of Madras and due to non-fulfilment of Conditions to the sale by the Purchaser, the sale has not been fructified. Considering the situation, the Company converted the said Asset into Stock in trade for the purpose of developing the property on its own. 2.23 In the opinion of the Board and to the best of its knowledge and belief, the value of realization of current assets, loans and advances will, in the ordinary course of business, not be less than the amounts at which they are stated in the Balance Sheet.” We have also gone through the arbitral award passed by Hon’ble Justice S. Jagadeesan, Sole Arbitrator dated 19.03.2018 whereby it is clarified that they have to carry out certain conditions for execution of sale deed and the relevant is referred in clause ‘f’ of the arbitral award and the same reads as under:- (f) The Parties herein agree and confirm that out of the total sale advance of 14 I.T.A. Nos.222 & 310/Chny/2022 Rs.254.83 Crores (Rupees Two Hundred Fifty Four Crores and Eighty ThreeLacs only) paid by the Second Party to the First Party, the First Party shalltreat and retain Rs.170 Crores (Rupees One Hundred and Seventy Croresonly) as sale consideration paid by the Second Party for the total extent of 40Grounds and 1896 Sq.ft. (i.e., consideration for 36 Grounds and 1428 Sq.ft.to be conveyed to the Second Party and consideration for 4 Grounds and 468 Sq.ft. giftedto Greater Chennai Corporation). The First Party shall refundthe balance sale advance of Rs.84.83 Crores (Rupees Eighty Four Croresand Eighty ThreeLacs only) to the Second Party: by way of DemandDraft/Bankers Cheque on or before the execution of (a) Cancellation Deedscancellingthe i) Agreement of Sale, (i) two General Powers of Attorney and(iii) the Sale Deed executed in favourof the Second Party in respectof 1000Sq.ft. undivided share in the land, and (b) executionof the Sale Deed infavour of the Second Party and/orits nominees conveying the Schedule “B” Property to the Second Party and/or its nominees.” 7. On the other hand, the ld. Senior DR relied on the assessment order and that of the CIT(A) and argued that sale is completed qua the consideration received by assessee for a sum of Rs.170 crore in term of arbitral award and according to him, for the entire property possession is handed over and once possession is handed over, the AO has rightly invoked the transfer u/s.53A of the Transfer of Property Act, and once the transaction is complete in term of part performance u/s.53A of the Transfer of Property Act, the AO has rightly charged the capital gain on the entire transaction. The ld. Senior DR stated that all the ingredients of Section 53A r.w.s. 2(47) of the Act are complete for the reason that the assessee entered into an agreement for sale of this property, part consideration was 15 I.T.A. Nos.222 & 310/Chny/2022 received, possession was handed over by virtue of power of attorney to the prospective buyers and once these ingredients are complete the transfer is complete in every aspect. Hence, he urged the Bench to confirm the order of AO and allow the appeal of Revenue and dismiss the appeal of assessee. 8. We noted that neither AO nor CIT(A) at all considered the aspect of the claim made by assessee from the beginning that the assessee’s property at Firhaven Estate has been converted into stock-in-trade w.e.f. 25.03.2016 and once, assessee’s property is converted as stock-in-trade and accounts are accepted as it is by the Revenue and not at all rejected, the status of this asset cannot be brought for taxing purpose under the head ‘capital gains’. The reason for this is that once this asset is converted into stock-in- trade, which is undisturbed, the same has to be assessed under the head ‘business income’. This position has been clarified by the Hon’ble Supreme Court in the case of PCIT vs. ChuniLalBhagat, [2019] 103 taxmann.com 379, wherein even the issue of invoking of section 53A of the Transfer of Property Act was held to be not applicable in the absence of registration of JDA. The 16 I.T.A. Nos.222 & 310/Chny/2022 Hon’bleSupreme Court in the case of ChuniLalBhagat, supra, has adjudicated this issue as under:- After considering the relevant statutory provisions and the case law, the following conclusions weredrawn: "(1) Perusal of the JDA dated 25.02.2007 read with sale deeds dated 2.03.2007 and 25.04.2007 in respect of 3.08 acres and 4.62 acres respectively would reveal that the parties had agreed for pro-rata transfer of land. (2) No possession had been given by the transferor to the transferee of the entire land in partperformance of JDA dated 25.02.2007 so as to fall within the domain of Section 53A of 1882 Act. (3) The possession delivered, if at all, was as a licencee for the development of the property and not inthe capacity of a transferee. (4) Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Actand all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In theabsence of registration of JDA dated 25.02.2007 having been executed after 24.09.2001, theagreement does not fall under Section 53A of 1882 Act and consequently Section 2(47) (v) of theAct does not apply. (5) It was submitted by learned counsel for the assessee-appellant that whatever amount was receivedfrom the developer, capital gains tax has already been paid on that and sale deeds have also beenexecuted. In view of cancellation of JDA dated 25.02.2007, no further amount has been receivedand no action thereon has been taken. It was urged that as and when any amount is received capitalgains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, whiledisposing of the appeals, we observe that the assessee appellants shall remain bound by their saidstand. (6) The issue of exigibility to capital gains tax having been decided in favour of the assessee, thequestion of exemption under Section 54F of the Act would not survive any longer and has beenrendered academic. 17 I.T.A. Nos.222 & 310/Chny/2022 (7) The Tribunal and the authorities below were not right in holding the assessee-appellant to be liableto capital gains tax in respect of remaining land measuring 13.5 acres for which no considerationhad been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs. Therefore, the appeals areallowed." 8.1 Even this issue of execution of GPA’s and on the basis of GPA’s possession handed over will not conclude the transfer as complete and this has been held by Hon’ble Supreme Court in the case of Suraj Lamp & Industries (P.) Ltd., vs. State of Haryana, [2011] 14taxmann.com 103, wherein it is held as under:- 18. We have merely drawn attention to and reiterated the well-settled legal position that SA/GPAWILLtransactions are not 'transfers' or 'sales' and that such transactions cannot be treated as completedtransfers or conveyances. They can continue to be treated as existing agreement of sale. Nothingprevents affected parties from getting registered Deeds of Conveyance to complete their title. The said"SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possessionunder section 53A of TP Act. If they are entered before this day, they may be relied upon to apply forregularization of allotments/leases by Development Authorities. We make it clear that if the documentsrelating to 'SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed,merely on account of this decision. 19. We make it clear that our observations are not intended to in any way affect the validity of saleagreements and powers of attorney executed in genuine transactions. For example, a person may give apower of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or toexecute a deed of conveyance. A person may enter into a development agreement with a land developeror builder for developing the land either by forming plots or by constructing apartment buildings and in 18 I.T.A. Nos.222 & 310/Chny/2022 that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer toexecute agreements of sale or conveyances in regard to individual plots of land or undivided shares inthe land relating to apartments in favour of prospective purchasers. In several States, the execution ofsuch development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations specific stamp duty. Our observations regarding ‘SA/GPS/WILL transactions’ are not intended to apply to such bona fide/genuine transactions. 8.2 Further this issue has also been considered by the Hon’ble High Court of Madras in the case of Late R. Krishnaswamy vs. CIT in T.C.A. Nos.697 and 698 of 2013. 9. In view of the above facts, the first facet of the case is that once the property is converted into stock-in-trade by the assessee and which is undisputed fact and not disturbed by Revenue by rejecting the method of accounting adopted, the Revenue cannot assess the same as capital gains and this is to be assessed as business income. Further, even the sale is not compete and even the sale deed is not executed in this case till date as confirmed by the ld.AR for the assessee by making statement at bar. He made categorical statement that assessee is yet to transfer the land by executing sale deed. In view of the above, we are of the view that the CIT(A) has erred in upholding the part consideration as capital gains qua 40 grounds and 1896 sq.ft. for a sale consideration of 19 I.T.A. Nos.222 & 310/Chny/2022 Rs.170 crores. We reverse the order of CIT(A) and allow this appeal of assessee. Consequently, the appeal of Revenue is dismissed. 10. In the result, the appeal filed by the assessee in ITA No.222/CHNY/2022 is allowed and the appeal filed by the Revenue in ITA No.310/CHNY/2022 is dismissed. Order pronounced in the open court on 31 st January, 2023 at Chennai. Sd/- Sd/- (मनोज कुमार अ वाल) (MANOJ KUMAR AGGARWAL) लेखा सद य/ACCOUNTANT MEMBER ( महावीर सह ) (MAHAVIR SINGH) उपा"य# /VICE PRESIDENT चे%ई/Chennai, 'दनांक/Dated, the 31 st January, 2023 RSR आदेशक ितिलिपअ ेिषत/Copy to: 1. िनधा रती/Assessee 2. राज व/Revenue 3. आयकरआयु (अपील)/CIT(A) 4. आयकरआयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF.