TMI Blog2015 (1) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee. - I .T.A. No.3096/Mum/2012 - - - Dated:- 14-11-2014 - S/SHRI B.R.BASKARAN AND VIVEK VARMA, JJ. For the Appellant : Shri Vimal Punamiya For the Respondent : Shri Jeetendra Kumar ORDER Per: B R Baskaran: 1. The appeal filed by the assessee is directed against the order dated 29- 03-2012 passed by Ld CIT(A)-29, Mumbai and it relates to the assessment year 2001-02. 2. The issues urged before us is whether the Ld CIT(A) was justified in law in confirming that the capital gain is assessable in the assessment year 2001-02 and if the answer to the above question is Yes, then, whether the computation of capital gain approved by Ld CIT(A) is correct in law. 3. The facts relating to the case are stated in brief. We shall first narrate the events as to how the assessee acquired the property. The father of the assessee named Shri Anand Vazirani was originally habitant of Pakistan and he owned certain land there. Pursuant to Indo-Pakistan partition, Shri Anand Vazirani migrated to India along with his family members during 1947 and left his property in Pakistan. In 1954, he applied for compensation and allotment of any evacuee s property un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.1995 17.5.1996 and a Deed of Confirmation was also executed on 13.11.1997. Thereafter the assessee also applied to the Income tax department seeking clearance u/s 269UL and the Income tax department also issued a certificate on 15.9.1998. There after, the assessee executed supplementary MOU on 29.3.2000 and the development agreement was executed on 25.9.2000 with M/s Murali Realtors. Thereafter, on 10.2.2001 the assessee cancelled the MOU entered with M/s Radiant Builder earlier in 1994. Between 2000 to 2005, the assessee purchased the tenancy rights of various tenants. In 2005, the assessee received substantial payments from M/s Murli Realtors and the possession was handed over. Finally the assessee executed sale deed on 19.5.2007 in favour of M/s Murali Realtors. According to the assessee, since the substantial amount was received and the possession was also handed over by March 2005, the Capital gain was offered in the assessment year 2005-06. The legal heirs of Mr. Anand Vazirani were the assessee herein, his mother and his sister. The assessee s mother died in between and his sister executed release deed in favour of the assessee. Accordingly the assessee herein became t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (* to the Settlement Commission towards differential price) The assessee met the above said expenses out of the advance of ₹ 4,56,67,167/- received from M/s Murli Realtors from time to time. 6. The Ld CIT(A) also confirmed the view taken by the assessing officer. Paragraph 5.3 of his order reads as under:- 5.3 The sale of property has been effected by a development agreement dated 25.9.2000. The sale has to be concluded as complete on this date for the following reasons:- (1) Development agreement has been signed on this date, consideration is quantified and possession has been given to the buyer. (2) Part of the consideration amount has been received or deemed to have been received. (3) There is part performance of the contract and as per provisions of section 2(47) r.w.s. 53A the transfer of property is regarded as complete once the possession is given and transferee is ready and willing to perform his part of the contract. Apparently, the tax authorities have applied the ratio laid down by Hon ble jurisdictional Bombay High Court in the case of Chaturbhuj Dwarakadas Kapadia of Bombay Vs. CIT (2003)(260 ITR 491). A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to the assessment year 2001-02, the assessee was not sure that the developer would comply with the terms of the development agreement. Further, the assessee has not given possession to the developer, but gave only licence to enter into the property. Accordingly, he submitted that the tax authorities are not correct in law in assessing the capital gain in AY 2001-02. The Ld A.R also invited our attention to various clauses of the Development Agreement and also drew support from various Case laws to support his contentions. 8. On the contrary, the Ld D.R, Shri Jeetendra Kumar submitted that the assessee had received substantial amount by virtue of the development agreement, where as in the case laws relied upon by the assessee, the consideration paid to the owners of the property was not substantial. Further, by giving licence to enter the property, the assessee has given possession to the developer. Accordingly, the Ld D.R submitted that the provisions of sec. 2(47)(v) and 2(47)(vi) shall square apply to the impugned transaction and hence the Ld CIT(A) was justified in confirming the assessment of Capital gain in AY 2001-02. 9. We have heard the rival contentions and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e development agreement itself was entered on 25.9.2000 only. During the financial year 1.4.2000 to 31.3.2001, the assessee has received a sum of ₹ 1.57 crores. In FY 2001-02, he received a sum of ₹ 30 lakhs only. In FY 2002-03, no advance was received. In FY 2003-04, he received a sum of ₹ 25.00 lakhs only. Final payment of ₹ 3.07 crores was made to the assessee only in FY 2004-05. Hence, the assessee claims that the development agreement was really given effect to, only in the financial year 2004-05 relevant to the assessment year 2005-06. 10. Further, our attention was invited to the following clauses of the development agreement dated 25.9.2000, which is placed at pages 102 to 117 of the paper book:- (a) As per clause 5, the owners (assessee herein) has agreed to execute a Power of Attorney in favour of the developer. (b) As per clause 6, the owner has to get the Deed of Transfer executed by the Government of Maharashtra in his favour. The expenses to be incurred in connection there with shall be borne by the owner. (c) As per clause 15, the owners have executed licence in favour of the Developer to carry out construction activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arvind S Phadke Vs. Addl. CIT (2014)(46 taxmann.com 335)(Pune) - In this case, the development agreement was entered on 13.9.2007 and the physical possession was given on 1.3.2008. The Tribunal held that the date of transfer should be taken as the date on which physical possession was given. (c) Binjusaria Properties (P) Ltd Vs. ACIT (2014)(45 taxmann.com 115)(Hyd) - In this case, the assessee entered into a development agreement cum General Power of Attorney with a developer on 2nd February, 2006. However, the builder did not start the works as per the agreement. The AO assessed the capital gains in AY 2006-07 observing that the transfer had taken place in AY 2006-07. The Tribunal noticed that the assessee has given only permissive possession to the developer, vide the development agreement. Further, the developer did not carry on any development activity on the property as per the development agreement. Accordingly, the Tribunal held that there was no transfer of property by virtue of development agreement giving rise to Capital gain in AY 2006-07. It is pertinent to note that the Tribunal had placed reliance on the Third member decision rendered in the case of Vijaya Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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