TMI Blog2011 (6) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... .50 lac vide Deed of Agreement for Sale dated 23.3.2001 and possession of the flat was also delivered to the assessee on 27.4.2001, the conditions for exemption u/s. 54 of the Act are fulfilled and assessee is eligible for exemption. The issue under consideration is allowed in favour of the assessee in entirety. - ITA NO. 266 (KOL.) OF 2010 - - - Dated:- 24-6-2011 - SHRI MAHAVIR SINGH, AND SHRI C.D. RAO, JJ Represented By: Shri S.K. Tulsyan for the Appellant. Shri G. Mondal for the Respondent. Mahavir Singh, Judicial Member This appeal by assessee is emanating out of order of CIT(A)-XX, Kolkata, in Appeal No. 192/CIT(A)-XX/Wd.36(1)/07-08//Kol dated 01.10.2009. Assessment was framed by ITO Ward-36(1), Kol, for the assessment year 2005-06 u/s. 143(3) of the Income-tax Act 1961 (hereinafter referred to as 'the Act') vide his order dated 25-10-2007. 2. The only issue in this appeal of assessee is against the order of the CIT(A) confirming the action of the AO in assessing the long term capital gain in this assessment year instead of assessment year 2001-02, when the property was transferred in terms of section 53A of Transfer of Property Act and denial of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 24.10 lacs by virtue of an agreement for sale dated 28-12-2000 entered into with the purchaser, Consolidated Commercial Enterprises Ltd. The assessee has handed over the possession of land to the purchaser on 28-12-2002 vide a possession letter addressed to Kamala Properties Ltd. SVM Cera Tea Build Ltd and Consolidated Commercial Enterprises Ltd. The assessee also received part consideration to the extent of 18.75 lacs between 01-10-2000 to 10-03-2001 except the balance amount of Rs. 5.35 lacs. The assessee also executed a power of attorney in favour of Director of Consolidated Commercial Enterprises Ltd. namely Shri Bardhan Mohta which is dated 14-03-2001. Subsequently, Consolidated Commercial Enterprises Ltd. was amalgamated with Kamala Properties Ltd under an order of Hon'ble Calcutta High Court and in turn Kamala Properties Ltd. requested assessee that a conveyance deed is to be executed in favour of their nominee i.e., Gold Moon Agencies Private Ltd vide letter dated 15-11-2004. Accordingly, a conveyance deed was executed in favour of Gold Moon Agencies Private Ltd. which is dated 07-01-2005(the copy of sale deed is enclosed in the APB at pages 33-55). The assessee also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per above the amount of Rs. 43,75,983/- determined by the Stamp Valuation Authority is taken as the deemed value of receipt for the transfer of the Land property and the computation of the same is done as under and added to the income of the assessee." Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of A.O. by giving following finding in para 3.7 of his appellate order: "3.7. I have perused the material on record and considered the submission of the appellant. I am inclined to agree with the AO that the material on record only suggests that the appellant sold the property to M/s. Gold Moon Agencies (P) Ltd. in the FY 2004-05, and therefore, the capital gain arising out of such sale is assessable in the AY 2005-06. The appellant has herself shown the capital gain in her return for the AY 2005-06. Also, the appellant did not file any revised return. The director of M/s. Gold Moon Agencies (P) Ltd. has clearly stated that the sale was made in FY 2004-05 and the possession was also transferred during the same period. In view of the above, the contention of the appellant holds no ground. The AO has rightly held that the sale was made in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. was amalgamated, subsequently, with Kamala Properties Ltd. under an order of Hon'ble Calcutta High Court. We find that Kamala Properties Ltd. (who became the owner of the property on amalgamation) requested the assessee for executing a conveyance deed in favour of their nominee Gold Moon Agencies Pvt. Ltd. during the previous year relevant to the A.Y. 2005-06 vide its letter dated 15.11.2004 and accordingly a Conveyance deed dated 7.01.2005 was executed in favour of Gold Moon Agencies Pvt. Ltd. which are attached in the assessee's paper book at Pages 33-55. We find that the assessee also purchased a Residential Flat in Gautam Enclave, 7/5 Burdwan Road, Alipore, Kolkata from M/s. Sarkar Promoters Pvt. Ltd. at a total cost of Rs. 23,50,000/- by virtue of a Deed of Agreement for sale dated 23.03.2001 in the F.Y. 2000-01 relevant to the A.Y. 2001-02 and possession of the said flat was delivered to assessee on 27.04.2001. (Copies of the agreement of sale dated 23.03.2001 and possession letter are enclosed in the assessee's paper book at Pages 56-99). 6. We find that the AO as well as CIT(A), in view of the above fact, has erred in holding that the assessee sold the property to Gol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member of or acquiring shares in a co-operative society, company, or association of persons or by way of any agreement or any arrangement whereby such person acquires any right in any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multi-storeyed constructions in big cities. The definition also does not cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in section 53A of the Transfer of Property Act, 1882. New sub-clauses (v) (vi) have been inserted in section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. We find from the above provisions of section 2(47) of the Act as well as the position explained by CBDT for insertion of sub-sections (v) and (vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed 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 or a transferee for consideration who has no notice of the contract or of the part performance thereof." We find that in order to attract the provisions of section 53A of the Transfer of Property Act, 1882, following conditions need to be fulfilled: (1) there should be a contract for consideration; (2) it should be in writing; (3) it should be signed by the transferor; (4) it should pertain to transfer of immovable property; (5) the transferee should have taken possession of the property; and (6) the transferee should be ready and willing to perform his part of the contract. We find that the assessee fulfilled all the conditions mentioned in this section of Transfer of Property Act. 7. As the case law referred by the Ld. Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete under the general law. In this case, the test had not been applied by the Department. No reason had been given why that test had not been applied, particularly when the agreement in question, read as a whole, showed that it was a development agreement. Once under clause 8 of the agreement a limited power of attorney was intended to be given to the developer to deal with the property, then the date of the contract, viz., August 18, 1994, would be the relevant date to decide the date of transfer under section 2(47)(v) and, in which event, the question of substantial performance of the contract thereafter would not arise. This point had not been considered by any of the authorities below. The assessee had paid the capital gains tax for the assessment year 1999- 2000. From mere substantial compliance of the agreement, one could not infer transfer in the accounting year ending March 31, 1996. April 1, 1996, was the date on which the developer came into possession, then the possession was received by the developer during the financial year 1996-97 corresponding to the assessment year 1997-98. Therefore, this finding of the Tribunal was erroneous. Taking into account the totality of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to attract section 53A there should be an agreement for consideration, it should be in writing; it should be signed by the transferor, it should pertain to transfer of immovable property; the transferee should have taken possession of the property and the transferee should be ready and willing to perform his part of contract. Therefore, capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effectively complete under the general law." 9. Further in the case law decided by Authority for Advance Rulling has discussed regarding executing of power of attorney and was held to be "transfer" in Jasbir Singh Sarkaria, In re [2007] 294 ITR 196 (AAR - New Delhi), wherein it was held as follows: "... Therefore, the crucial event or step that amounted to a "transaction involving the allowing of possession to be taken" within the meaning of section 2(47)(v) of the Income-tax Act, 1961, was the execution of the irrevocable general power of attorney in accordance with clause 15 of the collaboration agreement. Such general power of attorney was executed in favour of the developers on May 8, 2006, i.e., du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to be deemed full value of the sale consideration for the purposes of computation of long term capital gain, it is stated that section 50C of the Act was inserted by the Finance Act, 2002 w.e.f. 1.4.2003 and thus, is not applicable to the assessee's case. Once it is a fact that the transfer took place as on 28.12.2000, the provisions of section 50C which was made applicable w.e.f. 1.4.2003 i.e., for and from assessment year 2003-04, the same will not apply to assessment year 2001-02, when the capital asset of the assessee was transferred. Accordingly, in our considered opinion, the provisions of section 50C of the Act will not apply to the present case. 12. As regards to allowance of exemption u/s. 54F, it is a fact that assessee also purchased a Residential Flat in Gautam Enclave, 7/5 Burdwan Road, Alipore, Kolkata from Sarkar Promoters Pvt. Ltd. for a total consideration of Rs. 23,50,000/- vide Deed of Agreement for sale dated 23.03.2001 in the F.Y. 2000-01 relevant to the A.Y. 2001-02. The possession of the said property was delivered to the assessee on 27.04.2001. (Copies of the agreement of sale dated 23.03.2001 and possession letter are attached at Pages 56 to 99 of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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