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2021 (12) TMI 589 - AT - Income TaxValidity of reopening of assessment u/s 147 - Assessment of capital gain upon entering joint development agreement - HELD THAT:- It is an admitted fact that the Joint Development Agreement was not furnished by the assessee along with return of income and the details of JDA came to the notice of the AO only subsequently - JDA would constitute fresh material. It is a settled proposition of law that the entries made in the books of account will not be deciding factor in so far as Income tax Act is concerned. Hence we are of the view that there was sufficient reason for the AO to entertain the belief that there was escapement of income. Accordingly, we uphold the validity of reopening of assessment. Transfer of capital asset u/s 2(47) - We notice that the assessee has entered into a joint development agreement on 29.12.2005 and on the very same day a supplementary joint development agreement was also entered. Both the agreements have been registered with the registration authorities - the developer is granted irrevocable permission and license to enter the scheduled property for the purpose of construction of residential apartments as per the plan to be obtained. It is specifically been mentioned that the license so granted shall not be considered as possession delivered in part performance of the contract u/s 53(sic. 53A) of Transfer of property Act nor any property right shall be deemed in favour of developer. The transferee should have taken possession in part performance of the contract and has done same act in furtherance of the contract. In the instant case, development agreement clearly specified on the possession of the property was not given and what was given is only license to enter the property. The question whether granting of such kind of license would amount to “Possession” within the meaning of sec.53A of Transfer of Property Act r.w.s sec. 2(47)(v) of Income tax Act was examined by the Bangalore SMC bench of Tribunal in the case of Smt. Lakshmi Swarupa [2018 (10) TMI 1345 - ITAT BANGALORE] In the instant case also, we have noticed that the assessee has given permissive possession and not “legal possession” as contemplated within the meaning of sec.53A of the Transfer of Property Act. Hence we hold that the provisions of sec.53A of the Transfer of Property Act are not applicable to the impugned Joint Development Agreement. In this view of the matter, the provisions of sec.2(47)(v) of the Act are also not applicable. Hence the tax authorities are not justified in invoking the above said provision and consequently, the capital gains assessed in the hands of the assessee is liable to be deleted - direct the AO to delete the assessment of short term capital gains.
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