TMI Blog2000 (2) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not necessary that the contractee should have absolute ownership of the land. It is enough if he has some limited interest in the land. The persons who had entered into agreement with the appellant to take the flats, etc., before construction had by virtue of that agreement acquired right interest in the plot of land to the extent of the undivided share in the land relatable to the flats agreed to be taken by them. This observation of the Additional Commissioner was after examining the nature of the contract entered into by the appellant with the prospective purchaser of the building and making the provisions of Ownership Flats Act, 1972 applicable. 4.. In the judgment dated September 24, 1999* following findings were recorded in respect of liability of tax under section 5B of the K.S.T. Act: (a) If the building was first constructed and thereafter agreed to be sold then it was a case of transfer of immovable property on which no tax is attracted. (b) According to the agreement entered into by the appellant with the allottees of flat or other building, advance is taken at the time of execution of contract and thereafter in 15 instalments the balance amount is paid. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was observed that the term owner as occurring in section 32(1) of the Income-tax Act, 1961 must be assigned a wider meaning. Any one in possession of property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner of the building though a formal deed of title may not have been executed and registered as contemplated by the Transfer of Property Act, the Registration Act, etc. "Building owned by the assessee",-the expression as occurring in section 32(1) of the Income-tax Act, means the person who having acquired possession over the building in his own right uses the same for the purposes of the business or profession though a legal title has not been conveyed to him consistently with the requirements of law such as the Transfer of Property Act and the Registration Act, etc., but nevertheless is entitled to hold the property to the exclusion of all others. 8.. On the basis of the judgments referred to above it is submitted that the appellant was the owner of the land as he has already entered into agreement for purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that the construction of the building commenced in 1988 and commencement certificate was obtained on April 6, 1988 and that the purchase of the building by the ultimate purchaser was subsequent to such commencement. Copy of the commencement certificate annexure B is submitted and area of about 2,36,000 sft. was constructed and it is stated that agreement to sell before April 6, 1988 were for 47,775 sft. The investment was made by the appellant from his own funds. It is submitted that other builders are entering into two agreements one for sale of undivided interest in land and another to construct the flat for and on behalf of the purchaser and after the building is completed a sale deed is executed only in respect of undivided interest in the land and no sale deed is executed in respect of flat/building. In the case of the appellant the agreement is for the sale of undivided interest in the land as well as for sale of flat/building and registered sale deed have been executed for which full stamp duty is paid. The sanction plan of the premises were in the name of the owner of the land and not in the name of the purchaser and there was no prospective purchaser at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 5B was neither held leviable nor could be levied. In this regard it may be observed that the revising authority in his order dated February 27, 1998 observed that before construction of the residential flats, shops, offices, etc., on the said plot M/s. Mittal Investment Corporation entered into several agreements with prospective buyers to sell the flats, shops, etc., with undivided interest in the land at which they were proposed to be built for an agreed price on ownership basis. After building, the sale deeds have been executed in favour of the buyers of flats, shops, offices, etc., jointly by M/s. Venkateshwara Enterprises and M/s. Mittal Investment Corporation respectively as vendors of the land confirming party respectively. This also shows that the Additional Commissioner has taken into consideration only such agreement which were entered into before the construction of the building. Even in the judgment given by us the tax under section 5B was held attracted as it was found that when the agreement was entered into construction of the building was not started. In other words, in respect of the agreement which have been entered into after the construction of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record which has been entered into with M/s. Saltlake Shirts Pvt. Ltd. It is mentioned that the land was originally owned by Mrs. S. Thirulakshmi, who has subsequently entered into partnership with Mr. Parmeshwar Mittal w.e.f. April 25, 1981 for development of the property. Development agreement is dated April 27, 1981 between M/s. Venkateswara Enterprises on the one part and the appellant on the other, which authorises the appellant to develop the said property and construct the building thereon and to sell and dispose of flats, office premises, tenements, garages and godowns and other premises in the building to be constructed by the developers on the said property on ownership basis or otherwise. The appellant has moved the Bangalore Municipal Corporation and other concerned authorities to permit them or their allottees to use the top 5th and 7th floors of the residential building for office or other commercial purposes. 17.. The agreement has stipulated that the developer are desirous of selling and disposing of offices, shops, godowns, garages on ownership basis and thus the agreement for sale was entered into. 18.. Under the agreement the variations and modifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement which have been entered into before starting the construction that the appellant has to undertake the construction as a contractor and not as the owner of the building, no tax could be levied. 19.. From the above, it is clear that the entire building was not constructed after entering into agreement. According to the appellant he has entered into agreement for 47,715 sft. before construction was started. In order to make the provisions of Ownership Flats Act, 1972, apply, it has to be seen as to whether the said agreements were in respect of residential flats or for commercial property. The provisions of the Ownership Flats Act, 1972 are not applicable to commercial property. This matter has to be examined by the assessing authority at his level. 20.. In respect of the residential building it has to be examined as to what extent the agreements were entered into before the construction commenced. The judgment dated September 24, 1999 has proceeded on the See page 3 supra. basis that the construction has started only after agreements were entered into. On this basic point there is a mistake apparent which is liable to be rectified and for that purpose the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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