Smt Jayashree Gopakumar, Trivandrum V. ITO, Trivandrum

ITA 505/COCH/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7811 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 09-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: A S NARAYANAMURTHY
• Keywords: Capital asset

Judgement Text

1 ITA NO.505/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.TA NO. 505/COCH/2009 (ASSESSMENT YEAR 2005-06) SMT. JAYASREE GOPAKUMAR VS ITO, WD.1(4) SARANYA, SASTHAMANGALAM THIRUVANANTHAPURAM THIRUVANANTHAPURAM PAN : ADEPG6061A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.S. NARAYANAMURTHY RESPONDENT BY : SHRI ABHIMANYU SINGH YADAV DATE OF HEARING : 24-04-2012 DATE OF PRONOUNCEMENT : 09-05-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATED 08-07-2009 AND PE RTAINS TO ASSESSMENT YEAR 2005- 06. 2. THE ONLY DISPUTE ARISES FOR CONSIDERATION IS THE YEAR OF ASSESSABILITY FO THE CAPITAL GAIN. 3. SHRI A.S. NARAYANAMURTHY, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEME NT ON 16-09-2004. AS PER THIS AGREEMENT, THE POSSESSION WAS HANDED OVER ON THE DA TE OF THE AGREEMENT TO START THE DEVELOPMENT WORKS FOR IMPROVEMENT OF THE PROPERTY. REFERRING TO CLAUSE (5) OF THE 2 ITA NO.505/COCH/2009 AGREEMENT, THE LD.REPRESENTATIVE SUBMITTED THAT IN THE EVENT OF NON OBTAINING OF CLEARANCE AND BUILDING PERMIT THE AGREEMENT WAS TO BE CANCELLED AND THE ADVANCE PAID SHALL BE REFUNDED WITHOUT ANY INTEREST. IN VIEW OF THIS CLAUSE, ACCORDING TO THE LD.REPRESENTATIVE, THE DATE OF TRANSFER OF THE LAND FOR DEVELOPMENT WOULD BE THE DATE ON WHICH THE MUNICIPAL CORPORATION GRANTED APPROVAL FO R CONSTRUCTION OF THE BUILDING. ACCORDING TO THE LD.REPRESENTATIVE, THE MUNICIPAL C ORPORATION GRANTED APPROVAL ONLY ON 03-03-2005. THEREFORE, ACCORDING TO THE LD.REPRESE NTATIVE, THE DATE OF APPROVAL GRANTED BY MUNICIPAL CORPORATION WOULD BE TREATED AS DATE O F TRANSFER FOR COMPUTING THE CAPITAL GAIN. THE LD.REPRESENTATIVE HAS PLACED HIS RELIANC E ON THE DECISION OF THE HYDERABAD BENCH OF THIS TRIBUNAL IN MS. K RADHIKA VS DCIT 65 DTR (HYD)(TRIB) 250 AND ALSO THE DECISION OF THE KOLKATA BENCH OF THIS TRIBUNAL IN C HANCHAL KUMAR SIRCAR VS ITO (2012) 50 SOT 289 (KOL) AND THE DECISION OF THE DELHI BENCH O F THE TRIBUNAL IN ITO VS FINIAN ESTATES DEVELOPERS PVT LTD (2011) 142 TTJ 545 (DEL TRIB). 4. ON THE CONTRARY, SHRI ABHIMANYU SINGH YADAV, THE LD.DR SUBMITTED THAT ADMITTEDLY THERE WAS AN AGREEMENT FOR DEVELOPMENT O F THE LAND AND IN PURSUANCE TO THAT AGREEMENT THE PHYSICAL POSSESSION OF THE PROPE RTY WAS HANDED OVER TO THE DEVELOPER. THEREFORE, ACCORDING TO THE LD.REPRESEN TATIVE, THERE WAS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. THEREFORE , THE ASSESSEE IS LIABLE TO PAY CAPITAL GAIN IN THE YEAR IN WHICH THE AGREEMENT WAS ENTERED INTO. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFUL LY GONE THROUGH THE PROVISIONS OF SECTION 2(47) OF THE INCOME-TAX ACT. FOR THE PURPO SE OF CONVENIENCE, WE REPRODUCE BELOW THE PROVISIONS OF SECTION 2(47) OF THE INCOME -TAX ACT: (47) TRANSFER, IN RELATION TO A CAPITAL ASSET, I NCLUDES,- (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; O R 3 ITA NO.505/COCH/2009 (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRA DE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREA TMENT; OR (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON B OND; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSE SSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN P ART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 ( 4 OF 1882); OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBE R OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, O R ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. EXPLANATION.- FOR THE PURPOSES OF SUB-CLAUSE (V) AN D (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA. CLAUSE (VI) OF SECTION 2(47) CLEARLY STATES THAT AN Y TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO- OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AG REEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EF FECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY W OULD COME WITHIN THE MEANING OF TRANSFER. IN THIS CASE, THERE WAS AN AG REEMENT BY WHICH THE PROPERTY WAS HANDED OVER TO THE DEVELOPER FOR STARTING THE D EVELOPMENT AND IMPROVEMENT. THEREFORE, IT IS OBVIOUS THAT THE PRO PERTY WAS HANDED OVER TO THE DEVELOPER FOR ENJOYMENT, OF COURSE, THE PROPORTIONA TE SHARE OF THE LAND AS PER THE AGREEMENT. THE CONTENTION OF THE ASSESSEE BEFO RE THIS TRIBUNAL IS THAT THIS AGREEMENT DATED 16-09-2004 COULD BE CANCELLED IN CA SE THERE WAS NO CLEARANCE / PERMISSION WAS GRANTED BY THE MUNICIPAL CORPORATION . IN THIS CASE, ADMITTEDLY, THE MUNICIPAL CORPORATION GRANTED ITS PERMISSION FO R PUTTING UP THE CONSTRUCTION AS PER THE AGREEMENT. THEREFORE, THE GRANTING OF P ERMISSION BY THE MUNICIPAL CORPORATION WOULD RELATE BACK TO THE DATE OF AGREEM ENT. UNDER THE INCOME-TAX 4 ITA NO.505/COCH/2009 ACT MERE HANDING OVER POSSESSION IN PURSUANCE TO AN AGREEMENT OR ARRANGEMENT FOR ENJOYMENT OF THE PROPERTY WOULD BE SUFFICIENT F OR TRANSFER. EVEN THOUGH UNDER THE COMMON LAW FOR THE PURPOSE OF TRANSFER OF IMMOVABLE PROPERTY, THE SALE DEED NEEDS TO BE REGISTERED WHEREAS UNDER THE INCOME-TAX ACT, THE LEGISLATURE PRESCRIBED A SEPARATE MODE FOR RECOGNIS ING THE TRANSFER. THEREFORE, EVEN THOUGH THERE MAY NOT BE A TRANSFER UNDER THE C OMMON LAW, UNDER THE INCOME-TAX ACT THERE WAS A TRANSFER WITHIN THE MEAN ING OF SECTION 2(47)(VI) OF THE ACT ON THE DATE ON WHICH THE AGREEMENT WAS ENTE RED INTO. THEREFORE, THIS TRIBUNAL IS UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE TRANSFER WOULD TAKE PLACE ONLY ON THE DATE OF APPROVAL GRANT ED BY THE MUNICIPAL CORPORATION. THE DATE OF APPROVAL GRANTED BY THE M UNICIPAL CORPORATION CANNOT DECIDE THE FACTUM OF TRANSFER. THE MATTER WOULD ST AND DIFFERENTLY IF THE MUNICIPAL CORPORATION DID NOT ACCORD ITS APPROVAL F OR CONSTRUCTION OF THE BUILDING. IN THIS CASE, ADMITTEDLY, THE MUNICIPAL CORPORATION ACCORDED ITS APPROVAL FOR PUTTING UP THE CONSTRUCTION; THEREFORE , THE TRANSFER TOOK PLACE ONLY ON 16-09-2004 FOR PUTTING UP CONSTRUCTION. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN MS. K RADHIKA (SUPRA). TH E HYDERABAD BENCH OF THIS TRIBUNAL HELD THAT PART PERFORMANCE OF THE AGREEMEN T CANNOT AUTHORIZE THAT SECTION 53A OF THE TRANSFER OF PROPERTY ACT WILL CO ME INTO PLAY. THE HYDERABD BENCH OF THIS TRIBUNAL HAD NO OCCASION TO CONSIDER CLAUSE (VI) OF SECTION 2(47) OF THE ACT. THEREFORE, THIS DECISION OF THE HYDERABAD BENCH OF THIS TRIBUNAL MAY NOT BE APPLICABLE TO THE FACTS OF THIS CASE. 7. THE DECISION OF THE KOLKATA BENCH OF THIS TRIBUN AL IS ON THE ISSUE OF EXEMPTION U/S 54EC OF THE ACT. THEREFORE, THIS DEC ISION IS ALSO NOT APPLICABLE TO THE FACTS OF THIS CASE. 5 ITA NO.505/COCH/2009 8. IN THE CASE OF DELHI BENCH OF THIS TRIBUNAL, AS PER THE AGREEMENT, NO PERMISSION WAS OBTAINED FOR CONSTRUCTION OF THE BUI LDING. IN THIS CASE, THE PERMISSION WAS GRANTED BY THE LOCAL MUNICIPAL CORPO RATION. THEREFORE, THE DECISION OF THE DELHI BENCH OF THIS TRIBUNAL MAY NO T BE APPLICABLE TO THE FACTS OF THIS CASE. 9. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND A NY INFIRMITY IN THE ORDERS OF LOWER AUTHORITY. WE CONFIRM THE ORDER OF COMMIS SIONER OF INCOME-TAX(A). 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF MAY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 09 TH MAY, 2012 PK/- COPY TO: 1. SMT. JAYASREE GOPAKUMAR, SARANYA, SASTHAMANGALAM, T HIRUVANANTHAPURAM 2. ITO, WD.1(4), THIRUVANANTHAPURAM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH