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2015 (4) TMI 294 - AT - Income TaxDevelopment agreement entered by the assessee with a developer under the head Long term capital gain - CIT(A) deleted the addition - whether all that ingredients of transfer within the meaning of the section 2(47) of the IT Act and Section 53 of the Transfer of Property Act, 1882 have been fulfilled in the case? - Held that:- The reading of Clauses 1,5 and 6 of the Development Agreement clearly indicate that the assessee had given only the licence to enter into the land for development of the same in terms of the Development Agreement. The Developer neither started the construction nor took permission for construction till the date of the assessment. The property was inspected by the Inspector and it was noticed that there was no development in the land and it remained the same as it existed at the time of the Development Agreement. The possession of the land was not taken by the Developer as he did not initiate any development. The land in question continues to be agricultural land and the assessee has been carrying out cultivation on this land consisting of 1 acre 14 guntas 83 sq. yards. Thus it is very clear that the agreement has not been implemented by constructing flats on the land. Further it is clear that the Developer was not willing to fulfil his part of contract till date. Till date no construction has come up in the property and even the conversion of the land from agricultural land to housing plot has not been done. Provisions of deemed transfer u/s 2(47)(v) cannot be invoked on the facts of the present case and for the A.Y in dispute before us. The assessee has not received any consideration except for refundable deposit of ₹ 3.00 crores and there is no evidence brought on record by the Revenue to show that actually some construction has taken place at the impugned property in the previous year relevant to the A.Y under consideration and the right to receive the sale consideration has actually accrued to the assessee. The assessee is not exigible to capital gains on the entire sale consideration without the accrual of the consideration to the assessee We are also fortified by the decision of the Coordinate Bench in the case of Bhavya Construction Ltd & Others (2015 (4) TMI 295 - ITAT HYDERABAD). The ratio of the decision is that unless there is willingness on the part of the Developer to perform his part of the Contract, there cannot be a transfer of capital assets as envisaged u/s 2(47)(v) r.w.s. 53A of the Transfer of the Property Act. The ratio laid down as above squarely applies to the facts of the present case as the Department has failed to controvert the findings of the ld CIT (A) by bringing material on record to show that the developer has taken steps towards developmental activities. Hence, the capital gain cannot be brought to tax in the year under appeal. - Decided against revenue.
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