ACIT, Central Circle-2(2), Hyderabad V. Kavya Kaza, Hyderabad

ITA 434/Hyd/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5477 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Appeal Filed On: 11-09-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIRTUE OF JDA DT...; CONTINUED; PRINTED FROM ITATORDERS.INPRINTED FROM COUNSELVISE.COM
• Keywords: Capital asset; Search and seizure; Cost of acquisition; Competent authority; Capital Gains
• Section: 142(1); 153A; 133(6); 43; 48; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri R.K. Panda, Vice President AND Shri Laliet Kumar, Judicial Member Appellant by : Shri Ravi Bharadawaj, C.A. Respondent by : Ms. Vijaya Lakshmi, CIT-DR. Date of Hearing : 29.08.2023 Date of Pronouncement : 08.11.2023 O R D E R PER SRI LALIET KUMAR, J.M: The captioned two appeals filed by different assessees are against the separate orders passed by the learned Commissioner of Income Tax (Appeals) – 12, Hyderabad dt.21.06.2022 and 22.06.2022, respectively, for the assessment year 2016-17. Sl. No ITA No A.Y. Appellant / Assessee Respondent 1 434/Hyd/2022 2016-17 ACIT, Central Circle 2(2), Hyderabad. Smt. Kavya Kaza, R/o.Hyderabad PAN : BPCPK6434G 2 440/Hyd/2022 2016-17 -do- Sri Lakshminarayana Kaza, R/o.Pedagonnuru. PAN: ACOPK1765C 2 ITA Nos.434 and 440/Hyd/2022 2. The grounds raised by the respective assessees in both the appeals are same and hence, we are reproducing the grounds of ITA No.440/Hyd/2022 only, for the sake of brevity and the same read as under : “1. The Ld. CIT(Appeals) erred both in law and on facts of the case in granting relief to the assessee. 2. On the facts and in the circumstances of the case, and in law, whether the Id. ClT(Appeals) is correct in holding that the development agreement dt.10-02-2016 did not result in "transfer" of land on 10-02-2016, as defined in Section 2(47)(v) of the I.T. Act. 3. On the facts and in the circumstances of the case, and in law, the Id. ClT(A) failed to appreciate that there was a breach and break down of the earlier development agreement dt.04-04-2007 due to the failure of the transferee/developer thereof, in obtaining the sanction of the building plan from the competent authority and also failing to perform its part of contract, thereby rendering the agreement as null and void in the eyes of law. 4. On the facts and in the circumstances of the case, and in law, the Id. CIT(A) failed to appreciate that as per clause 20 of the second development agreement dt.10-02-2016, the parties agreed and confirmed that the said agreement was made and executed in supersession of the first development agreement dt.04-04-2007 implying thereby that there was a transfer of land by the assessee on 10-02-2016 under the provisions of Section 2(47)(v) of the Act. 5. On the facts and in the circumstances of the case, and in law, the Id. CIT(A) failed to appreciate that the development agreement dated 10.02.2016 cannot be considered as the one entered into, in continuation of the earlier agreement dated 04.04.2007 when the sharing ratio of the constructed / developed area between the land owners and the developer in the latest agreement is different from that of the earlier agreement. 6. On the facts and in the circumstances of the case, and in law, the Id. CIT(A) erred in holding that the second development agreement dt.10-02- 2016 is a case of assignment of rights in favor of another developer by the transferee/developer of the development agreement dt.04-04-2007 3 ITA Nos.434 and 440/Hyd/2022 and that there was no transfer of land as defined in Section 2(47)(v) of the Act. 3. As the facts and issues in both the appeals are same, except the amounts involved, we are reproducing the facts of appeal in ITA No.440/Hyd/2022 for the sake of brevity. 4. Facts of the case, in brief, are that assessee is an individual filed the original return of income for the AY 2016-17 on 29.10.2016, admitting income of Rs.1,10,82,590/-. A search and seizure operation u/s.132 was conducted in the case of Avanti Group on 07.11.2019. As part of the search operations, warrant was issued in the case of the assessee and search was conducted u/s.132 of the Act. Notice u/s.153A was issued to the assessee by the AO. In response to the notice, the assessee filed the return of income on 17.02.2021, admitting total income of Rs. 1,10,82,590/-. Accordingly, notices u/s.143(2) and 142(1) were issued to the assessee by the AO. After examining the material on record and the information furnished, assessment was completed by the Assessing Officer u/s. 153A of the Income Tax Act, 1961, interalia making an addition of Rs.15,39,34,176/- towards long term capital gains. Accordingly, AO completed the assessment and passed order dt.30.09.2021 u/s 153A of the Act by observing as under : 4 ITA Nos.434 and 440/Hyd/2022 5 ITA Nos.434 and 440/Hyd/2022 6 ITA Nos.434 and 440/Hyd/2022 5. Feeling aggrieved with the order of Assessing Officer, assessee carried the matter before ld.CIT(A), who allowed the appeals of assessee by holding as under : 7 ITA Nos.434 and 440/Hyd/2022 8 ITA Nos.434 and 440/Hyd/2022 9 ITA Nos.434 and 440/Hyd/2022 6. Feeling aggrieved with order of ld.CIT(A), Revenue is now in appeal before us. 7. Though, the Revenue has raised as many as 6 grounds, out of them ground no.1 is general in nature which do not require any separate adjudication and the remaining ground nos.2 to 6 are related to the addition towards Long Term Capital Gains of Rs.15,39,34,176/-. 10 ITA Nos.434 and 440/Hyd/2022 8. The primary contention of the learned DR is that the findings recorded by the learned CIT (A) were incorrect as ld.CIT(A) had wrongly recorded that the possession of the property was handed over to TBPD by the assessee and other land owners on 4.4.2007 after receipt of security deposit of Rs.12.27 crores from TBPD. Ld.CIT(A) had further wrongly held that the transfer took place on 4.4.2007 and no taxable event occurred either on account of agreement dated 10.02.2016. Further, the learned CIT (A) had noted that the land owners (assessee and others) had given their no objection for transfer of development rights to the second developer (TJP). Quite contrary to this finding, ld.CIT(A) had mentioned that there was no cancellation of the agreement dated 4.4.2007 by any of the land owner (assessee) and others. Further, it was submitted by ld. DR that once assessee and other land owners had transferred their rights on 04.04.2007, then there was no need to take their NOC or becoming a consenting party / confirming party in 2 nd JDA. Further, it was noted down by the learned CIT (A) that the amount of Rs.12.27 crores which was initially paid by the TBPD to “Group of assessees”. This amount was subsequently paid by the second developer i.e., TJP to TBPD and besides that the TJP had also paid cost of expenses to Rs.3,75,00,640/- to TBPD. It was submitted that returning of security deposit to TBPD by TJP and reimbursement of expenses clearly shows that new contract came into existence which had substituted the earlier one. 11 ITA Nos.434 and 440/Hyd/2022 9. The ld. DR contended that the ld.CIT(A) had further noted down that the two land owners have sold their rights to the third party. It was submitted that once these two persons had transferred their right through subsequent sale deed, it clearly shows that they have not transferred their right at the time of 1 st JDA dt.04.04.2007. 10. The learned DR further submitted that the assessee had neither paid the tax on account of transfer of land in the year 2008-09 nor they have paid the taxes at the time of entering into agreement in the year 2016 nor they have paid the taxes in the year of issuance of completion certificate. It was submitted that if the transfer has taken place within the four corners of law in the year 2007, then the assessee was left with no other right in the property except to the rights in their favour by virtue of the JDA dt.4.4.2007. However, it was the contention of the learned DR that reading of agreement dated 10.02.2016 shows that the assessee along with others had signed this agreement as consenting party, which clearly shows that the assessees were having a right in the property. It was further contended that merely on account of handing over the possession on 04.04.2007 would not had resulted in the transfer of the capital asset. 11. The learned DR had sought to make distinction that there is a difference between handing over of the possession for the purpose of construction and handing over of the possession for the 12 ITA Nos.434 and 440/Hyd/2022 purpose of transfer. In the present case it was submitted that the agreement dated 4.4.2007 was merely a development agreement to construct the property and no transfer took place in pursuant to the said agreement, as the TBPD has not even sought the permission to construct the property within the time stipulated by the said agreement. Admittedly, the agreement provided a period of 30 months to complete the project with a grace period of 6 months. However, pursuant to the agreement dated 4.4.2007, no work was carried out by the TBP. Further, it was submitted that the period of 4 years have already been lapsed in the year 2011 and it cannot be said that an agreement which was required to be executed and completed within a period of 36 months would continue to hold good even after lapse of 9 years. Further it was submitted that there is a change in the terms and conditions in both the JDAs. 12. In support of his contentions, ld. DR filed written submissions wherein he submitted that the ld.CIT(A) had given relief on the basis that there was no cancellation of earlier development agreement and the second development agreement was only an assignment of development rights by the first developer to the second developer with concurrence/no objection of the land owners (reference para 5.4.3 of the appeal order) and further submitted that the same is not correct due to some reasons. The reasons mentioned by the ld. DR in his written submissions read as under : 13 ITA Nos.434 and 440/Hyd/2022 (a) Para 20 of the development agreement states that the second development agreement dt: 10/2/2016 was made and executed in suppression of the first development agreement dt 4/4/2007 which means this is a new development agreement and old agreement stands suppressed or cancelled. (b) This is not just an assignment of development rights with land owners as consenting parties. The agreement may perused. There are a number of changes in the terms of the development agreement to which the owners have been made party - the permission for plans to be obtained by the new developer, amount of built up area and its sharing ratio, club house, maintenance charges collection, the maintenance of the project by the developer, the, contribution to corpus fund etc (from paragraphs 2 to 18 of the agreement). The only point of the no objection comes in para 1 where the second party (earlier developer assigned its rights). When land owners and the developer are coming up with new terms, saying this is only an assignment of development rights is incorrect, for that is only 1 part of the agreement and in every other aspect it is drawing up of a new agreement. (c) Even if it is said that there is no cancellation of earlier agreement, this development agreement still falls within the provision of section 2 (47) (v) of the IT Act that defines transfer in relation to capital asset. The stated 2(47(v) refers to the transaction in relation to part performance of contract under section 53A of the Transfer of Property Act which reads as under:- [53A. Part performance.—Where any person contracts to transfer for consideration any immoveable 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 in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person 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 transferee has taken or continued in possession, 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 for consideration who has no notice of the contract or of the part performance thereof.] 14 ITA Nos.434 and 440/Hyd/2022 (d) The current agreement fulfills the conditions laid out in the above - 1) person contracts to transfer - both the landowners (first party) and the earlier JDA holder (second party) have contracted to transfer by way of no objection and by handing over of possession of property respectively 2) consideration in the contract - built up area 3) terms ascertained with reasonable certainty - yes 4)transferee taken possession of property - yes (third party) 5) transferee has performed or is willing to perform his part of the contract - yes (e ) There is no stipulation in the above provisions of section 53A of the Transfer of Property Act that the possession to the transferee should be directly from the land owner.” 13. In support of his case, the learned DR relied on the following decisions: i) Smt. Naga Padmaja Vangara vs. Income Tax Officer (145 Taxmann.com)115 (Hyd.Trib) ii) K. Vijaya Lakshmi vs. ACIT (91 Taxmann.com 253) iii) Potla Nageswara Rao vs. DCIT 50 taxmann.com 137 A.P 2014 iv) Chaturbhuj Dwarakadas Kapadia of Bombay vs. Cit (120 Taxman 497). 15 ITA Nos.434 and 440/Hyd/2022 14. On the other hand, ld. AR of the assessee had submitted that the 2 nd JDA is continuation of the earlier JDA as the rights of the assessee by virtue of JDA dt.04.04.2007, continued and there is not substantial change in it. Further it was submitted that in an identical case of Veda Kaza vide order dated 13.05.2023 the Assessing Officer had accepted the return of income and no addition was made based on the agreement dated 10.02.2016. Further the learned AR submitted that in another case of Appollo Corporate Services and Consultants (P) Ltd vide order dated 25/03/2022, the Assessing Officer had not made any additions on account of transaction of capital asset on the basis of the JDA dt.10.02.2016 and that the the assessee is not liable to pay any capital gain in pursuant to the agreement dated 10.02.2016. 15. Further, the Ld. AR submitted that the order of ld.CIT(A) is in accordance with law, as the ld.CIT(A) after giving comprehensive reasoning held that second development agreement is only an assignment of development rights by the first developer to the second developer with no objection of the land owners and since there was no transfer of land / capital asset during the year and that there was no case for taxing the same under long term capital gains and hence, directed the Assessing Officer to delete the addition made on account of long term capital gains. 16 ITA Nos.434 and 440/Hyd/2022 16. We have heard the rival submissions and perused the material on record. We have an occasion to examine the JDA dt.04.04.2007 and 10.02.2016 in the appeal of one Sruthi Riedl (ITA No.126/Hyd/2023) wherein we have examined the issue of transfer of capital asset u/s 2(47) of the Act and after examining the rival contentions of the parties and perusal of the material on record, we allowed the appeal of assessee Our finding in the said matter is as under : 9. We have heard the rival submissions and perused the material on record. In the present case, the DRP/Assessing Officer had made addition in the hands of the assessee on the ground that the transfer of land took place on account of the Joint Development Agreement (JDA) dt.10.02.2016 entered between assessee and other 46 persons as land owners (hereinafter called as “group of assessee”), M/s. Trendset Bharat Project Developer Pvt. Limited (TBPD) and M/s. Trendset Jayabheri Project LLP (TJP). 9.1. It is the case of the assessee that prior to execution of the document dated 10.02.2016, the "Group of assessee" had entered into registered JDA on 04.04.2007 with TBPD and at the time of entering into JDA, the possession of the entire land of Ac.12.09 gts was handed over to the TBPD under the JDA dt.04.04.2007. The "Group of assessee" had received the security deposit of Rs.12.27 crores from TBPD. Besides that the share in the built-up area was agreed in the ratio of 45 : 55 between the "Group of assessee" and the TBPD. 9.2. TBPD in pursuance of the registered joint development agreement dt 04.04.2007 executed various works of levelling of excavation work etc and had spent approximately Rs.3.75 crore for that purposes. 9.3. As the TBPD was having financial constraints and other technical problems, therefore, the TBPD had approached TJP for taking over the development of the project on as is where is basis. The TJP had agreed to complete the development project in accordance with the terms and conditions of the new arrangement were agreed between the "Group of assessee", TBPD and TJP vide development agreement cum General Power of Attorney dt.10.02.2016. 17 ITA Nos.434 and 440/Hyd/2022 9.4 The development agreement cum General Power of Attorney dt.10.02.2016 (hereinafter called as “2 nd JDA”) is the foundation of the addition made by the Assessing Officer and confirmed by the DRP. It is the case of the Revenue before us that the transfer within the meaning of section 2(47) of the Act has taken place pursuant to the 2 nd JDA as the 1 st JDA has not been acted upon and fell apart. It is the case of the Assessing Officer that the TBPD has not taken sanction either from the concerned authorities for conversion of agricultural land into residential area or the approval of construction plan. 9.5. In the light of the above said finding of the Assessing Officer, the whole issue which is required to be adjudicated by us is whether transfer took place at the time of entering into first agreement on 04.04.2007 or it took place after entering into the 2 nd JDA. 9.6. For the above-said purposes, it is necessary for us to consider various terms mentioned in the 1 st JDA dt.04.04.2007. We are reproducing hereinbelow some of the important terms of the 1 st JDA dt.04.04.2007 which are relevant for the adjudication of the present dispute. At internal page 19 of the 1 st JDA, it was mentioned as under : “Thus the owners became the absolute owners and in exclusive possession of agricultural plots nos.1 to 20 together with proportionate passage rights for the said agricultural plots totally admeasuring Ac.12.09 gts (including passage area of 0.09 gts) situated in Survey No.5 of Kondapur Village, Serlingampally Mandal, R.R.District (hereinafter referred to as the SCHEDULE PROPERTY). 9.7 The relevant clauses i.e., 2, 3, 4, 8, 9, 11, 21, 26 at page 57 afterwords of the agreement provides as under : “2. (a) In like of the development work granted by the owners in favour of the Developer, the Owners and the Developer shall share the built up area (inclusive of all common areas i.e., usable area, floor area like balconies, staircase, lift, corridors and etc., and the parking area in the ratio of 45:55 i.e., 45% in favour of the owners and 55% in favour of the Developer. The Owners and the Developer shall be entitled for the undivided share of land in the schedule property in the above said ratio i.e., 45 %: 55 %. (a) It is made clear that the total built up area and the parking area i.e., commercial area and the 18 ITA Nos.434 and 440/Hyd/2022 residential area or any other structures sanctioned by the Government / HUDA / Municipal Authority for the total extent of Ac.12-09 Gts., of land shall be proportionately calculated to the share of the schedule property and the same shall be proportionately shared by the Owners and the Developer. However, amenities being developed by the Developer in the schedule property shall be the common property of both the Developer and Owners. (b) The Owners and Developer shall share the terrace area or any additional area granted by the Government in the same ratio of 45% : 55% to the Developer. However, after completion of the project all terrace rights shall vest as per HUDA mandate. (c) The allotment of the built-up area shall be depended upon the actual extent of the land available in the Schedule Property, after conducting survey of the total land area and the same shall be incorporated in the Supplementary Agreement to be executed by and between the Owners and the Developer for allotment of the built-up area. It is further agreed that the allotment between the Owners and Developers shall be mutual between the Owners and Developer shall be mutual and the allotment among the owners shall be as part transparent lottery system.” ....... (3) The Developer at its costs and expenses undertakes to obtain necessary permissions such as conversion of land use from the HUDA / Govt. of A.P. and sanctioned building plan from the HUDA / Municipal Authority or any other authorities. (4). The Owners along with other Owners undertake to sign the applications, affidavits, building plans, revised plans, declarations etc., for obtaining the building plant for the total extent of Ac.12.09 gts, including passage area of Ac.0.09 gts) of land from the Government / HUDA / Municipal Authority viz., conversion of land use from residential use zone to commercial use zone and sanctioned building plans for construction of Commercial / Residential area. 19 ITA Nos.434 and 440/Hyd/2022 (8) The Owners agree to refund his/her respective security deposit to the developer upon handing over of the possession of his / her respective share. If the owners fail to refund the interest free secutiy deposit, the developer can retain the proportionate built up area and one of the 45% built up area allotted to the share of the owners to the extent its meets the security deposits at the then market value and it can deal with the same absolutely and that the owners hereby agree for the same. The developer shall have lien over the property of the defaulting owner and consequently exercise the right to transfer the same through valid sale deeds in favour of the developer / attorney of their nominees. (9) The developer undertakes to complete the constructions of the commercial / residential area as per the sanctioned HUDA / Municipal Plan for the total extent of Ac.12-09 gts of land and the specifications annexed herewith and shall deliver possession of the built up area and the car parking areas allotted to the share of the owners, within 30 (THIRTY) months from the date of the sanctioned plan granted by the HUDA / Municipal Authority with a grace period of six months. The developer shall complete the construction of the commercial / residential area with all the finishing work, colouring / painting etc., in the above said period and it shall be habitable for use and occupation. It is also mutually agreed that if for any reason the project is delayed due to any force Majeure, restraint orders of the court, natural calamities, the period of completion shall be extended accordingly. (11) Today the owners have delivered vacant physical possession of their respective land in the schedule property to the developer for commencement of the development work. (21). The Owners covenant and undertakes that they will not to attempt to sell, deal with or dispose or alienate or otherwise enter with any other agreement in respect of their respective land in the schedule property with any other person/s at any point of time during the subsistence of this development agreement, subject to clause 10 of this agreement. (26) Subject to clause 26 above, if any party commits breach of the terms and conditions of this agreement, the other party shall 20 ITA Nos.434 and 440/Hyd/2022 be entitled to enforce this contract for specific performance and shall be entitled for the damages against the defaulting party. (d) to enter into agreements of sale in respect of its share of 55% in the schedule property or any part thereof by virtue of these presents for such consideration, terms and conditions and covenants as he may deem fit and proper and register the same before the concerned authority, if required. (e) to execute, sign and present for registration the sale deed (s), conveyances and indentures and admit execution, inter-alia conveying the developer’s allocated share of 55% in the schedule property. (f) to receive and appropriate the sale consideration advances, rents and other monies and to acknowledge and pass receipts there for from the buyers, lessees and other person or persons entering into any kind of transaction in respect of its 55% share in the schedule property; This development Agreement -cum – General Power of Attorney for consideration paid and received shall be irrecoverable and be binding on the successors in interest, heirs, executors, administrators, legal representatives, agents and assigns of both the owners herein.” 9.8 The conjoint reading of the above said clause of the registered 1 st JDA clearly shows that the transfer within the meaning of section 2(47) had taken place on 04.04.2007. As the possession of the land has been transferred by the "Group of assessee" to the TBPD and TBPD had also paid the security to the "Group of assessee". Further, the ratio of built up share has been agreed in the ratio of 45 : 55 between the "Group of assessee" and the TBPD. As per 1 st JDA, the developer (TBPD) had a right to enter into agreement of sale in respect to its share of 55% in schedule property and register it as “owner” [Para 26 of 1 st JDA]. Once the developer has a right to enter into agreement of sale of the property, then Assessing Officer cannot assume that the "Group of assessee" continues to be the owner of their land falling as share of TBPD and no transfer has taken place pursuant to 1st JDA. In view of the above, the taxable event i.e., transferring right in land had taken place in the year 2008-09 and not in the year under consideration. Our above said view is duly supported by the decision of the jurisdictional High Court in the case of Potla Nageswara Rao has held as under : 21 ITA Nos.434 and 440/Hyd/2022 “9. The element of factual possession and agreement are contemplated as transfer within the meaning of the aforesaid section. When the transfer is complete, automatically, consideration mentioned in the agreement for sale has to be taken into consideration for the purpose of assessment of income for the assessment year when the agreement was entered into and possession was given. Here, factually it was found that both the aforesaid aspects took place in the previous year relevant to the assessment year 2003-04. Hence, the learned Tribunal has rightly held that the appellant is liable to pay tax on the capital gains for the assessment year. Accordingly, we do not find any element of law to admit this appeal.” 9.9. In the present case, the parties have entered into registered JDA on 04.04.2007 and the "Group of assessee" have also handed over possession to the TBPD pursuant to the agreement. Hence, for all purposes, transfer took place in the assessment year 2008-09. Hence, an addition, if any, can be made in the assessment year 2008-09 for the consideration mentioned in the JDA dt.04.04.2007. Undoubtedly, no additions were made in the hands of the "Group of assessee" on the basis of 1 st JDA dt.04.04.2007 by the Revenue. 10. The Revenue has made the addition on the basis of the 2 nd JDA dt.10.02.2016 on the pretext that the 1 st JDA dt.04.04.2007, fell apart and the Assessing Officer had estimated the capital gain on the total cost of the project. In our considered opinion, the Revenue cannot make the additions on the basis of 2 nd JDA as the rights and obligations of the "Group of assessee" and TBPD were crystalized by virtue of 1 st JDA, which was binding on both the parties and was irrevocable. However, for the purpose of completeness, we are reproducing hereinbelow some of the terms of the 2 nd JDA. 10.1. At page 11 of the JDA dt.10.02.2016, it was mentioned in Para R and S as under : R. WHREAS the Land Owners of First Party in order to develop the said property for better advantage entered into a Regd. Development Agreement cum GPA with Second Party / previous Developer vide Regd. Development Agreement Doc. No.7003 of 2007 dated 04.04.2007 for development of the said property as per the terms and conditions contained therein and handed over possession of the schedule property to Second Party on the date of development agreement i.e., on 04.04.2007 S. WHEREAS the second party has undertaken the development and commenced works such as leveling, excavation work and 22 ITA Nos.434 and 440/Hyd/2022 other works on the land. The second party, due to its pre- occupation and other commitments, is not in a position to carry out further development work on the agreed timelines, it has approached third party / the present developer to implement the development of the project by taking over the development of the property / project on as is where is basis and complete the project as per the terms set out in this agreement. 10.2. Similarly, in Para No.5.1 of JDA at page 11, it was mentioned as under : “5.1. In consideration of the Land Owners of First Part granting developmental rights to third party / the present developer, third party / the present developer with its own funds construct and deliver to the landowners of First Part 43% of commercial and residential super built up areas which includes all common areas, circulation areas, balcony areas and parking includes all common areas, along with proportionate share of undivided land in the proposed commercial / residential apartment complex in the schedule property. In consideration for developing the schedule land at its own cost and delivering the landowners share at free of cost, the third party / the present developer is entitled for the remaining / balance 57% of commercial and residential built up areas which includes all common areas, circulation areas, balconies areas and parking areas along with proportionate share of undivided land in the proposed residential / commercial complex. It is agreed between the parties that third party shall construct a minimum of 20 lakhs sq. feet of saleable that third party shall construct a minimum of 20 lakhs sq. feet of saleable area on the schedule property or as permitted by the approving authorities like GHMC / Fire Department / Airport Authority of India etc. The word “super built-up area” mentioned herein shall mean the total constructed area including balconies, sit outs, staircases, lift rooms, electrical meter room, pump room, generator rooms, security room, common areas and circulation areas excluding car parking area.” 10.3. The relevant clause i.e., Clause (1) of 2 nd JDA dt.10.02.2016, at page 12, was reproduced hereinbelow for ready reference : “PERMISSION FOR DEVELOPMENT: 1. The second party being in possession of the schedule property has today, handed over the possession of schedule property to third party / the present developer with all its rights including to enter upon the schedule property and develop the same in terms 23 ITA Nos.434 and 440/Hyd/2022 of this Agreement for which the landowners of First Part have no objection. 1.2....... 1.3. The Landowners of First Part and the second party hereby agree not to disturb or interrupt third party / the present developer in the course of consideration and development of the schedule property. However, the landowners of First Part shall always on a prior intimation and consent from Third Party be entitled to inspect the progress of the work to ensure that the Third Party / Present Developer is carrying out construction as per specifications. 1.4. The Third Party shall appoint Contractors, Civil Engineers, Architects, Consultants, Project Management Consultancy (PMC) as desired by it, and to effective development and completion of the buildings on the schedule property in such manner as the Developer may deem fit and proper. The Third Party / PMC shall furnish a quarterly report communicating to the land owner nos.21 and 33 viz., Sri K. Ajay Kumar & Sri. Avula Bhaskara Reddy for themselves and on behalf of and as representatives of the other landowners of First Part herein declare and confirm that since they are large in number, it is not possible for all of them collectively to take time to time decisions and to interact with the Thid Party / Present Developer and hence for their convenience, the landowners herein hereby appoint landowner nos.21 and 33 of the First Part as their authorized representatives to deal with the Third Party from time to time on their behalf in terms of this Agreement and further authorized to execute Rectification Deeds if necessary and further declare that time to time decisions to be taken by such representatives with the Third Party shall be deemed to be collective decisions taken by all the landowners of First Part.” 11. The finding of the Assessing Officer mentioned at Para 11 of his order, is read as under :: “11. After verification of the material available on the records and the replies filed the assessee, the assessee is completed as under : Brief facts of the case are as under : i. Originally, the assessee along with 44 landlords have entered into Joint Development Agreement on 24 ITA Nos.434 and 440/Hyd/2022 04.04.2007 with M/s. Trendset Projects Pvt. Ltd with a project cost determined at Rs.47,33,52,000/- and the sharing ratios were not determined. ii. In furtherance to the said development agreement, as there was no act in furtherance to the said JDA by the developer, the said JDA fell apart. iii. Subsequently, on 10.02.2016, the assessee along with other landlords (now 47 land lords) have entered into JDA with M/s. Trendset Jayabheri LLP with a project cost at Rs.177,50,70,000/- and the sharing ratio is determined for each land lord. In the said JDA, erstwhile developer i.e. Trendset Projects was also made a party. iv. It is noticed from the said latest JDA entered on 10.02.2016 that new land lords have joined and entered into the said JDA in place of old land owners. Some of the land owners have sold their land subsequent to the JDA entered on 04.04.2007. The said details of the old and new parties' names are tabulated as under : Sl.No. Names of the parties as per JDA dt.04.04.2007 Sl.No. Names of the parties as per JDA dt.10.12.2016 19 M/s. Cholapunam Park Pvt. Ltd 20 Kolli Gopala Krishna 20 M/s. Nija Developers Pvt. Ltd 25 Kethineni Goutham 25 Tammineedi Subbaa Rao 26 Kethineni Ananthalakshmi 42 T. Vijaya Kumar 28 Kethineni Satyanarayana 43 29 Kethineni Sriharsha -- 45 M/s. Kamadhenu Estates 46 Aishwarya Konijeti v. On comparison of both the development agreements, it is noticed that the parties as mentioned in the first two columns with serial numbers appearing in the original JDA dated 04.04.2007 are not appearing in the 'latest JDA dated 10.022016 and names of new parties 25 ITA Nos.434 and 440/Hyd/2022 against the serial numbers in the above table are mentioned. The said change in the parties' names means that the land lords have not relinquished their rights over the property and have not transferred the possession of the property to the original developer viz M/s Trendset. In response to the said query, the assessee submitted that vide the original JDA, the possession of land falling in her share has been already handed over to the original developer M/s Trendset and there in no change as far as the assessee's share is concerned. However, the version of the assessee cannot be accepted as the assessee along with other land owners have entered JDA and effect of the clauses in the said JDA will have on the assessee also. As brought out in the earlier paragraphs, the land owners have not relinquished their share of land, which includes the assessee's share also. Now the assessee cannot claim that she independently has handed over the possession. Hence, the claim of the assessee does not have any merits and hence rejected. vi. The assessee submitted that if it is presumed that there was no transfer of land to the first developer (original developer) under the provisions of Sec 2(47) on account of no further works were carried on, then immediately after entering the JDA, the new developer also did not take up any work but got the plans prepared and submitted to GHMC only on 17.10.2016, which were got approved on 09.05.2017 and hence, there cannot be a transfer u/s 2(47) so as to levy capital gains during the relevant assessment year 2016 - 17. The claim of the assessee is not acceptable as, it is noticed that the original developer has not obtained any approved plans as evidenced from the latest JDA dated 10.02.2016, as per Clauses 2.1 and 2.2.. It is mentioned that the developer M/s. Trendset Jayabheri shall prepare a comprehensive Plan and shall bear all the expenses and necessary fees to the GHMC/HMDA etc. The relevant excerpts of the said clauses are reproduced here as under: Clause 2.1 Third Party / the present Developer shall prepare a comprehensive plan for construction of Multi- storied residential apartment complex on the .part of the scheduled land and commercial complex on the part of the land as per the building bye-laws and shall submit the plans and shall submit the plans along with necessary.... to get them sanctioned. It is the sole discretion of the third. party / present developer, the extent of land..... 26 ITA Nos.434 and 440/Hyd/2022 Clause 2.2 The third party / present developer shall bear all the expenses for preparation of the said plans, and shall pay the necessary fees to the GHMC/HMDA ... etc. As seen from the above and also as submitted by the assessee herself, immediately after entering JDA on 10.02.2016, the developer has got plans prepared and submitted by 17.10.2016 I.e., immediately within a week after entering the JDA. It shows that the developer has done acts in furtherance to the clauses as mentioned in the latest development agreement. Hence, the assessee's version cannot be accepted. vii. Further, in response to the notice issued u/s 133(6) to the developer M/s. Trendset Jayabheri Project LLP, it is submitted by the said developer that during the F.Y. 2015- 16 and 2016-17, amounts of Rs.17.95 crores and Rs.33.85 crores respectively were spent towards the property development and reflected under “Inventories” in Balance Sheets for the respective years. It shows that the said developer has continued actions in furtherance to entering the development agreement.viii. If the assessee’s version that the possession of the property is with the original developer M/s. Trendset, then there is no need for entering a tripartite agreement (JDA) with the new developer M/s. Trendset Jayabheri. On a close scrutiny of new JDA entered on 10.02.2016, it is very much clear that the land owners have not parted with their ownership of the land and have not relinquished their rights over the property. The said details of clauses of the latest JDA dt.10.02.2016 have been discussed in the notice u/s 142(1) issued on 18.01.2022. 12. In our view, the finding recorded by the lower authorities is without any basis and contrary to record. Undoubtedly, possession was handed over by the "Group of assessee" to the TBPD on 04.04.2007. However, the Assessing Officer has raised suspicion on the basis of the finding given at Para (iv) supra, on the pretext that as against five persons, the names of seven persons are appearing in the 2 nd JDA and further, it was concluded that Smt. Mulpuri Meena had sold her share to M/s. Kamadhenu Estates vide sale deed dt. 06.02.2016. Similarly, the sale deed dt.28.01.2016 was executed by Mr. P. Dayananda Pai in favour of Mr. Kolli Gopala Krishna. The Assessing Officer relied upon Para 4.1 of the sale deed dt.28.01.2016 wherein it is mentioned as under : 27 ITA Nos.434 and 440/Hyd/2022 4.1. The vendor has today delivered the symbolic possession of the property to the purchaser pursuant to this sale deed the purchaser shall be entitled to enter upon, hold, possess, and enjoy the Vendor’s undivided share in the Property in terms of the DAGPA and receive the income and profits there from, as the sole and absolute owner, without any interference or disturbance from the Vendor, any predecessor-in-title and / or from persons claiming through, under or in trust from the Vendor. 13. In our view, the above said conclusion of the Assessing Officer/DRP is not correct as they have failed to appreciate and read the sale deed as a whole. In the sale deed, at Page 2, the following covenants are mentioned C to F. “(C) The Vendor hereby represents to the Purchaser that the Vendors predecessor in title i.e., MIs. Chola Punam Park Private Limited and Walden Properties Private Limited. (formerly Nija Developer Private Limited) have entered into a Development Agreement cum General Power of Attorney with Trendset Bharat Project Developers Private Limited (the "Developer") on 04.04.2007 granting development rights over the Property and the Vendor herein has, further agreed to adhere and grant the development rights over the Property to the said Developer in accordance with the already registered Development Agreement cum General Power of Attorney. This Development Agreement cum General Power of Attorney is registered as Document No. 7033 of 2007 (the "DAGPA") with the office of the District Registrar, Ranga Reddy District. (D) The Purchaser is aware of the existence of the DAGPA and explicitly acknowledges, agrees, and undertakes that pursuant to the execution and registration of Sale Deed, he shall adhere and abide by the terms and conditions of the DAGPA and shall extend the required support in the best interest of the transaction as he will be subrogating in place of the Vendor. (E) The Vendor has represented to the Purchaser that he is the absolute owner of the Property with uninhibited rights of alienation over the property. That Vendor's predecessors in title have delivered the actual physical possession of the Property to' Trendset Bharat Project Developers Private Limited for carrying out the development contemplated under the afore-mentioned DAGPA. Thus, the Vendor is handing over the symbolic possession of the Property to the Purchaser under this Sale Deed.” 28 ITA Nos.434 and 440/Hyd/2022 (F) 'The Vendor, hereby represents to the Purchaser that no person other than the Vendor has any-right, title 'or interest of any manner whatsoever in respect of the Property. 'The Vendor has agreed to sell the Property to the Purchaser representing that he is the absolute owner thereof with uninhibited rights of alienation over the same and that he will fulfil al1 legal requirements leaving behind no impediments in law for the conveyance of the Property in favour of Purchaser. 14. From the reading of the above said covenants, it is clear that the seller has sold his rights in the property subject to the registered JDA dt.04.04.2007. Further, in clause E, it was clearly mentioned that the actual physical possession was handed over by the vendor’s predecessor at the time of entering into 1 st JDA dt.04.04.2007 and only a symbolic possession was given to the purchaser at the time of possession. 15. In view of the above, it is clear that the finding recorded by the revenue authority is contrary to record and is not sustainable as the possession was all along been with the TBDP after 04.04.2007 and it had only handed over possession to TJP on 10.02.2016. In view of the above, it cannot be said that the transfer took place on 10.02.2016 and not on 04.04.2007. 16. The Assessing Officer had also given the reason that there is a change in sharing ratio of built up area between the "Group of assessee" and the second developer / 1 st developer. Earlier it was 45 : 55 and in the 2 nd JDA, it is 43 : 57. In our view, this reduction in the share of the "Group of assessee" cannot be made the basis of holding that the earlier JDA fell apart and a fresh JDA came into existence. As mentioned hereinabove, the "Group of assessee" were merely consenting / conferring party to the JDA and all their rights, substantially flown from the 1 st JDA. Even if there is some modification in the sharing of the constructed built-up area rights, then it will not amount to total abdication of the 1 st JDA at the most, it can be said to be negotiation / re-alignment of rights among the parties had happened, however the basic facts remained that the possession of the property had been transferred to TBPD on 04.04.2007. In our view, the assessee was left with no right in the property after entering into the Joint Development Agreement dt.04.04.2007 save and except the right to receive the built-up area in pursuance to Joint Development Agreement dt.04.04.2007. We are of the opinion that once the transfer has taken place on 04.04.2007 based on registered JDA then no addition can be made in the assessment year based on subsequent agreement dt.10.02.2016. 17. In our view assessee has neither received any consideration pursuant to the agreement dt.10.02.2016 nor the assessee had 29 ITA Nos.434 and 440/Hyd/2022 transferred the land to M/s. Trendset Jayabheri Project LLP nor there is increase in size of the assessee’s built-up area. As mentioned herein above in the registered 2 Nd JDA, the possession of the property was handed over by M/s. Trendset Bharat Project Developer Pvt. Limited to M/s. Trendset Jayabheri Project LLP at the time of entering into agreement dt.10.02.2016 (refer Para 103 supra). 18. The law is fairly settled that the contents of the registered document dt.10.20.2016 evidencing handing over of the possession by TBPD to TJP cannot be disputed by the assessing officer. Law is fairly settled in the Evidence Act that the contents of the registered document will prevail over the other pieces of evidence. No contrary evidence had been produced by the revenue to contradict the contents of 2 nd JDA dt.10.02.2016. 19. The undisputed facts are that Joint Development Agreement dt.04.04.2007 was a registered agreement and at the time of entering into the said agreement, assessee along with others received a total security amount of Rs.12.27 crore from M/s. Trendset Bharat Project Developer Pvt. Limited and handed over the possession to TBPD. 20. In our view, the issue needs no further deliberation as the judgements relied upon by the Revenue are in fact, supporting the case of the assessee instead of supporting the Revenue. The decision of the Hon’ble Supreme Court relied upon by the assessing officer in fact supports the case of the assessee as the JDA was registered, the possession was handed over to the developer and substantial security deposits were received by the "Group of assessee". The Assessing Officer has misread the decision and has not appreciated the ratio of the decision. For completeness, we are reproducing with emphasis of the decision of the Hon’ble Supreme Court which clearly shows that in case, the agreement is registered, the date of registration would be the date of transfer. In the case of BalbirSinghMaini [2017] 86 taxmann.com 94 (SC) it was held as under:- “20. The effect of the aforesaid amendment is that, on and after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act. This being the case, we are of the view that the High Court was right in stating that in order to qualify as a "transfer" of a capital asset under Section 2(47)(v) of the Act, there must be a "contract" which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 30 ITA Nos.434 and 440/Hyd/2022 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. The ITAT was not correct in referring to the expression "of the nature referred to in Section 53A" in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi (supra), that the Section applies, and this is what is meant by the expression "of the nature referred to in Section 53A". This expression cannot be stretched to refer to an amendment that was made years later in 2001, so as to then say that though registration of a contract is required by the Amendment Act of 2001, yet the aforesaid expression "of the nature referred to in Section 53A" would somehow refer only to the nature of contract mentioned in Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no "transfer" can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted on the facts of this case, we need not go into any other factual question. [Emphasis supplied by us] 21. However, the High Court has held that Section 2(47)(vi) will not apply for the reason that there was no change in membership of the society, as contemplated. We are afraid that we cannot agree with the High Court on this score. Under Section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property would come within its purview. The High Court has not adverted to the expression "or in any other manner whatsoever" in sub-clause (vi), which would show that it is not necessary that the transaction refers to the membership of a cooperative society. We have, therefore, to see whether the impugned transaction can fall within this provision. 22. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression "enabling the enjoyment of" takes color from the earlier expression "transferring", so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof 1 The idea is to 31 ITA Nos.434 and 440/Hyd/2022 bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 23. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose -the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction. 24. The matter can also be viewed from a slightly different angle. Shri Vohra is right when he has referred to Sections 45 and 48 of the Income Tax Act and has then argued that some real income must "arise" on the assumption that there is transfer of a capital asset. This income must have been received or have "accrued" under Section 48 as a result of the transfer of the capital asset. 25. ......This Court in E.D. Sassoon & Co. Ltd. v. CIT AIR 1954 SC 470 at 343 held: "................................................................................................................... ." 26. This Court, in CIT v. Excel Industries [2013] 358 ITR 295/219 Taxman 379/38 taxmann.com 100 (SC) at 463-464 referred to various judgments on the expression "accrues", and then held: ..........................................................................................................." 27. In the facts of the present case, it is clear that the income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, for want of permissions, the entire transaction of development envisaged in the JDA fell through. In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act. 28. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains "arose" from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act.” 21. In the decision first cited in the case of Smt. K. Naga Padmaja Vangara Vs. ITO, the Tribunal at Paras 12 to 14 had held as under : 32 ITA Nos.434 and 440/Hyd/2022 “12. The learned DR, on the other hand, drew the attention of the Bench to the detailed order passed by the learned CIT (A) on the issue of computation and or taxability of capital gain and submitted that the learned CIT (A) in his detailed order has rejected the claim of the assessee. His decision is based on the decision of the ITAT Hyderabad Bench in the case of Smt. K. Vijaya Lakshmi (Supra) where it has been held that provision of section 45(5A) cannot be applied retrospectively. 13. Further, the Hon'ble A.P High Court in the case of Potla Nageswara Rao (Supra) has held that transfer is complete on the execution of the JDA and thus was liable to be taxed in the impugned A.Y. He accordingly submitted that the order of the learned CIT (A) being based on the basis of the decision of the jurisdictional High Court and jurisdictional Tribunal, the grounds raised by the assessee should be dismissed. 14. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the ITA No 34 of 2020 Naga Padmaja Vangara various decisions cited before us by both sides. We find the assessee in the instant case has entered into a Joint Development Agreement cum-GPA with M/s Dhanush Builders & Developers for development of 791 sq.yards bearing Plot No.27 & 28, R.S. No.189/4A, Narayanapuram, Rajahmundry, A.P vide doc No.2038/2016 dated 24.02.2016. As per the agreement, she got 8 Flats of 1100 sq.ft. each. The total market value of the project as per the document (SRO) is Rs.2,70,50,000/- (land value Rs.79,10,000/- and market value of constructed area is Rs. 1,91,40,000/-. Since the assessee had not disclosed the land transfer transaction in her return of income, the Assessing Officer after considering the share of the assessee in the project at 40% determined the consideration and transfer of the property at Rs. 1,08,20,000/-. After deducting the indexed cost of acquisition of Rs. 11,717/- he determined the LTCG at Rs. 1,08,08,283/-. We find in appeal, the learned CIT (A) following the decision of the Coordinate Bench of the Tribunal in the case of K. Vijaya Lakshmi (Supra) held that the provisions of section 45(5A) cannot be applied retrospectively. Similarly, following the decision of the Hon'ble A.P High Court in the case of Potla Nageswar Rao (Supra) where it has been held that the transfer is complete on the execution of the JDA, he held that the assessee is liable to capital gain tax in the impugned A.Y i.e. A.Y 2016-17 when the Jt.Development Agreement was entered into between the assessee and M/s. Dhanush Builders & developers 33 ITA Nos.434 and 440/Hyd/2022 for development of the property. We do not find any infirmity in the order of the learned CIT (A) on this issue. Since the learned CIT (A) in his detailed order has decided the issue regarding the year of taxation of the capital gain and also the manner in which the capital gain should be computed which is based on the decision of the jurisdictional High Court and the Coordinate Bench of the Tribunal. Therefore, we do not find any ITA No 34 of 2020 Naga Padmaja Vangara infirmity in the order of the learned CIT (A) in dismissing the grounds raised before him. Accordingly, the grounds raised by the ass are dismissed.” 22. The sum and substance of the above said decision was that the transfer is complete on the execution of the JDA. In the present case, the JDA was entered between the assessee, other land owners and M/s. Trendset Bharat Project Developer Pvt. Limited on 04.04.2007 and therefore, this decision supports the case of assessee. No fresh transfer can happen in “Law” by the assessee during the year under consideration i.e., A.Y. 2016-17. Similarly, in the case of K. Vijaya Lakshmi Vs. ACIT, Circle 11(1), Hyderabad, the SMC Bench in Para 6.3 and 6.4 has held as under : “6.3. As far as the issue of bringing to tax the capital gains during the year, it was the contention of assessee that possession was not given and assessee retained possession of the property thereby the capital gains arises in the year in which the new flats were handed over. Ld. Counsel in his arguments, elaborately read out various portions of the agreement to substantiate assessee’s claim, whereas the Ld.DR relied on various other clauses to state that possession was handed over. As far as the development agreement is concerned, it is noticed that assessee did permit M/s. Diamond Infra to enter into the premises, do all the necessary things for construction of apartments. It is the common agreement by many people, who has purchased lands/plots in the developed area. It is also noticed that the said assessee went to construct the apartments and hand over the flats as per the schedule to the respective persons, including assessee. Some of the agreement holders also sold the flats in semi-finished condition or in fully developed condition, whereas few like assessee retained the flats as such. Therefore, I am of the opinion that assessee did hand over the possession and provisions of Section 2(47) regarding transfer certainly get attracted. Since there is part performance of the contract in the nature referred to in Section 53 of Transfer of Property Act, 1882, Clause(v) of Section 2(47) is clearly attracted. Therefore, I agree with the stand of AO that the capital gains did arise during the year under consideration as the agreement was 34 ITA Nos.434 and 440/Hyd/2022 entered on 12-05-2008. Accordingly, the issue of bringing to tax the capital gains during the year is to be upheld. Even though Ld. Counsel tried to distinguish the jurisdictional High Court judgment in the case of Sri Potla Nageswara Rao Vs. DCIT (supra) that it applies to a case, where there is no sale consideration and the issue is on non-receipt of sale consideration. I do not agree with that as the issue of transfer in the case of development agreement and consequent levy of capital gain in the year of entering into development agreement has been crystalised by the said judgment of the jurisdictional High Court in the case of Sri Potla Nageswara Rao Vs. DCIT (supra). Ld. Counsel relied on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Balbir Singh Maini (supra), where the entire transaction of development of land envisaged in JDA fell through. In those facts of the case, the Hon'ble Supreme Court held that no profits or gains arose from the transfer of capital asset so as to attract Section 45 and 48 of the Act. However, in the present case, the agreement has been undertaken and has been completed, therefore the jurisdictional High Court decision still holds good. Accordingly, I agree with the order of the CIT(A), confirming the capital gains during the year. 6.4. One of the arguments raised by the Ld. Counsel is that new Section 45(5A) has been introduced which defers the capital gains to the year of completion of the project by the Finance Act, 2017. This being substantive provision, I am of the opinion that this cannot be applied to the development agreement entered into earlier, in which 2(47)(v) would certainly get attracted. In view of that, I reject the contention and uphold the taxability of the capital gains in the year under consideration.” 23. From the reading of the above, it is abundantly clear that the SMC Bench had merely followed the decision of Potla Nageswara Rao wherein the jurisdictional High Court has held that the year of entering into JDA would be the year of taxability. Since in the case in hand, the JDA was entered into on 04.04.2007, therefore, the amount, if any, was required to be taxed in the assessment year 2008-09 only and not in the subsequent year. Further, the Tribunal after relying upon the newly inserted provision of section 45(5A) has held that the transaction which has happened prior to the insertion of new section would not be covered by Section 45(5A) of the Act and the capital gains would not be leviable on completion of development agreement. 24. Further, we noted that neither the consideration was received by the assessee pursuant to the Joint Development Agreement dt.10.02.2016 nor the possession was handed over to it by her, therefore, 35 ITA Nos.434 and 440/Hyd/2022 it cannot be said that any transfer took place within the meaning of Section 2(47) of the Income Tax Act, 1961. In the present case, neither the sale has taken place nor the exchange nor the relinquishment by any of them including the assessee in favour of TJP. As mentioned hereinabove, the possession of the property was handed over by TBPD to TJP pursuant to new Joint Development Agreement dt.10.02.2016 and the assessee has not received any consideration. Furthermore, once the Joint Development Agreement dt.04.04.2007 was existing and pursuant thereof, transfer has taken place in favour of TBPD, therefore, the assessee was left with no other right in the property except the rights provided under JDA dt.04.04.2007. Reliance upon the subsequent agreement dt.10.02.2016 by the Revenue to tax the income in the hands of the assessee based on new JDA is without any basis, as the assessee cannot transfer any land to TJP which it does not possess. The transfer, if any, had been done by TBPD to TJP. As per Section 45 of the Income Tax Act, the capital gain arising from transfer of a capital asset is chargeable to the head ‘Income from Capital Gains’ in the year in which the transfer took place. As we have held the transfer took place in the assessment year 2008-09, therefore, the capital gains on account of transfer of land is taxable in the assessment year 2008-09 only. 25. In our view, the second JDA had merely transferred the obligation of TBPD to TJP and corresponding entitlement of assessee in built-up area. There is another reason for requirement of allowing the appeal of the assessee as in the present case, the permission from the municipal authorities pursuant to the Joint Development Agreement dt.10.02.2016 was obtained by TJP on 17.10.2016 and the plans of the TJP was approved on 09.05.2017. Therefore, transfer of the capital asset as per newly inserted Section 45(5A), which was inserted on 01.04.2018, also happened in the subsequent assessment year i.e., A.Y. 2017-18 as the plans were approved on 09.05.2017 and certificate of completion would have been issued thereafter. Further, in our opinion, section 45(5A) is not applicable to the assessment year under consideration as it was inserted w.e.f. 01.04.2018 and was prospective in nature. In our considered opinion, no addition can be made even in the year 2016-17 on the basis of Section 45(5A) of the Act. 26. The above view of ours is also supported by the view taken by the Assessing Officer of other similarly situated assessees / persons mentioned by the assessee / revenue in the written submissions mentioned hereinabove. For the above said purposes, it will be apt to refer the name of the assessees i.e., Apollo Corporate Services and Consultants Private Limited, A. Bhaskar Reddy, HUF, and Sri Harsha Ketineni, wherein the assessee have not been taxed in the year 2016-17 and the Assessing Officer concluded that the taxable event happened in 36 ITA Nos.434 and 440/Hyd/2022 the year 2007-08 and not in A.Y. 2016-17. The Revenue has not given any cogent reasons for taking the contrary view and applying different yardsticks in the case of the assessee. In the result, the grounds nos. 10 to 21 raised by the assessee on merit are required to be allowed. 27. As we have granted the relief to the assessee on merits, therefore, the legal grounds nos. 1 to 9 raised by the assessee with respect to reopening of assessment have become academic and therefore, dismissed as infructuous.” 17. Relying upon our own decision in the case of Sruthi Riedl (supra), we opine that the appeal of Revenue is required to be dismissed. Thus, the appeal of Revenue is dismissed. 18. In the result, the appeal of Revenue in ITA No.440/Hyd/2022 is dismissed. 19. Now coming to the other appeal i.e. ITA No.434/Hyd/2022, which is identical to the facts and issues raised in ITA 440/Hyd/2022, our decision in ITA No.440/Hyd/ 2022 would apply mutatis mutandis. Accordingly, this appeal of the Revenue is also dismissed. 37 ITA Nos.434 and 440/Hyd/2022 20. To sum up, both the appeals of Revenue are dismissed. The copy of the same may be placed in all respective case files. Order pronounced in the Open Court on 8 th November, 2023. Sd/- Sd/-Sd/- Sd/- d/- (RAMA KANTA PANDA) VICE PRESIDENT (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 8 th November, 2023. TYNM/sps Copy to: S.No Addresses 1 Smt. Kavya Kaza, H.No.8-2-623/5/1, Road No.10, Banjara Hills, Hyderabad – 5000034. 2 Sri Lakshminarayana Kaza, H.No.1/75A, Main Road, Near Z.P. School, Pedagonnuru – 521329. 3 ACIT, Central Circle – 2(2), Hyderabad. 4 Principal Commissioner of Income Tax (Central), Hyderabad. 5 DR, ITAT Hyderabad Benches 6 Guard File By Order