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2015 (5) TMI 571 - ITAT PUNE

2015 (5) TMI 571 - ITAT PUNE - TMI - Capital gain arising out of the acquisition of land - sale of rights in the property - acquisition of property but transfer deed was not registered - short term capital gain or long term capital gain - Held that:- In the facts of the present case, where the possession of land had been given to the assessee in line with the terms agreed upon between the parties consequent to which an irrevocable Power of Attorney was executed, which has not been cancelled till .....

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d down by in Chaturbhuj Dwarkadas Kapadia Vs. CIT (2003 (2) TMI 62 - BOMBAY High Court), where the assessee had acquired certain rights over the property under the Development Agreement and the irrevocable Power of Attorney and the part possession of the property having been given to the assessee, we hold that there was effective transfer on the date of execution of Agreement dated 18.01.1996. Consequently, the assessee acquired certain rights in the said property from 18.01.1996 and the compens .....

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3-04 against order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961. 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in treating the capital gain arising out of the acquisition of land bearing Survey No. 312 (Old) & 130 (New), situated at Majrewadi, Dist Solapur, as Long Term Capital Gain. 2. On the facts and in the circumstances of the case and in law, the learned CIT( .....

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architects and engineers to enter and verify the property. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not observing page No.30 of Sale Deed dated 31.08.2000, wherein it is clearly written that the possession of the said property was given on 31.08.2000, i.e., on the same day of the agreement. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not observing the 7/12 extract wherein the name of the .....

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₹ 3,21,10,358/- from Maharashtra Housing and Development Authority (MHADA) towards acquisition of land admeasuring 80307 sq. mtrs. In the return of income filed pursuant to notice under section 148 of the Act, the assessee declared total income of ₹ 2,92,89,040/- and agricultural income of ₹ 1,57,350/-. The assessee had acquired development rights in the land situated at Survey No.312 (old) / 130 (new), Majarewadi, Jule Solapur, vide agreement dated 18.01.1996, under which the .....

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s land, MHADA acquired land admeasuring 80307 sq. mtrs. and paid compensation of ₹ 3,21,10,358/- on 14.12.2002. As per the assessee, income on account of compensation received was to be assessed as income from long term capital gain, whereas the Assessing Officer was of the view that the transaction between the parties was completed by handing over the possession vide Sale Deed dated 31.08.2000, as initially no possession was given to the assessee and only permission was given to carry out .....

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d 18.01.1996, the appellant was given the right to develop land and for this, Power of Attorney dated 18.01.1996 was executed. Under the said Power of Attorney, the permission for conversion of land as non-agricultural, division of land into plots and their sale, execution of sale deeds / agreements of sale and also acceptance of consideration was given to the assessee. The agreement also reflected that the expenses towards development of land had to be borne by the assessee including the expens .....

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er and the entire property along with easement rights was given in possession to the first party by the second party on 18.01.1996 by executing the Development Agreement and Power of Attorney, which agreement was still in existence. The CIT(A) was of the view that the assessee had acquired certain rights vide the Development Agreement and had also shown that assessee had part possession of the property although the vendors still retains his ownership or other rights. The CIT(A) further observed .....

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he assessee had acquired effective rights over the land as per section 53A of the Transfer of Property Act. Reliance was placed on the ratio laid down by the Hon ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia Vs. CIT, (2003) 260 ITR 491 (Bom) and it was held that since the rights over the property vested with the assessee as per Irrevocable Power of Attorney and Development Agreement dated 18.01.1996, therefore, there was effective transfer of impugned property on that date and the compen .....

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f the assessee was that the possession was given in 1996 on the execution of Development Agreement. It was pointed out by the learned Departmental Representative for the Revenue that both the Development Agreements do not mention giving of possession and only Power of Attorney was only registered. The learned Departmental Representative for the Revenue further pointed out that the ratio laid down by Hon ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia Vs. CIT (supra) was distinguishable as .....

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solute ownership and the perpetual ownership were given to the assessee. Further, reference was made to the terms of supplementary Development Agreement dated 26.07.1999, wherein it has been mentioned that the assessee was to take possession from MHADA. Further, the name of assessee was recorded in other relevant documents i.e. 7/12 extracts. The award for payment of compensation is placed at page 7 of the Paper Book and the award has been given to the Power of Attorney holder and even cheque wa .....

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ed the record. The assessee in the present case had acquired the development rights of land in question from one Shri Suresh S Bhaiyya in terms of an agreement dated 18.01.1996, consequent to which even a registered Irrevocable Power of Attorney was executed in favour of the assessee. Clause (c) of the said agreement clearly stated that if the assessee contradicted any provisions of the Act relating to development and construction, then the agreement would be cancelled and the transferor would h .....

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CIT(A) had examined the documents executed by the assessee vis-à-vis the said property and observed as under:- 3.2. I have considered the submissions made on behalf of the appellant, the objections of the Assessing Officer and the legal position with regard to transfer of a capital asset. The crux of the issue is the determination of the correct date of transfer of the land in question. Since this issue involves examination of the development agreement, POA and supplementary development a .....

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997) the appellant was given the rights to develop the land under the Talegaon Dabhade scheme of Govt. of Maharashtra. For development of the scheme, vide POA dated 18.1.1996 the appellant was to get the permission for conversion of land as nonagricultural, division of land in to plots, sale of the same, execution of sale deeds and agreements of sale as also accepting the consideration for the plots sold. The POA also gave the appellant the power to enter into agreement for development of plot a .....

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, sale deed of plots/flats, stamp duty, registration fee, etc (Clause M) have to be borne by the appellant. It is also seen from the record that, although the development agreement dated 18.1.1996 is not a registered document, the POA of even date has been registered with Sub Registrar (Solapur North) vide registration No. 1/96 dated 18.1.1996. I have also examined the supplementary development agreement dated 17.7.1999 which has been executed before the Tahsildar and Executive Magistrate, (Sola .....

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session to 1st party by 2nd party on 18.01.1996 by executing a registered Development agreement and Power of Attorney before Sub-Registrar North Solapur, Solapur vide registered agreement is still in existence and it is continuing" It also mentions, to quote "The above mentioned property is given to 1st party by 2nd party to carve plot and implement schemes as per law hence to execute the same this supplementary agreement is made and given to 1st party. The 2nd party assures and gives .....

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in rights viz. the development rights by which he is authorised to get the land converted for non agricultural use, take sanctions and permissions for construction of row houses (subsequently plots) as per the Talegaon Dabhade scheme. As already mentioned, the POA which is a registered document, mentions the rights acquired by the appellant for taking the various permissions, implementation of the row house scheme, division of the lands into plots, selling the plots and accepting the sale consid .....

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,000/-, but the appellant is seen to have acquired certain rights in the properly which amounts to part possession vide the earlier documents. This was also the view endorsed by the Third Member decision of ITAT Mumbai in the case of Rubab M Kazerani vs JCIT reported in 91 ITD 429. Subsequently, this view has been endorsed by the Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia reported in 260 ITR 491B and Pune ITAT in Dynaneshwar M Mulik vs DCIT reported in 98 TTJ 179. This view is .....

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of possession effectively pursuant to the covenants in the contract That tantamounts to legal possession." The court further held that "A developer armed with GPA cannot be regarded merely as a licensee or an agent subject to the control of the owners. His possession cannot be characterized as precarious or tentative in nature. The fact that the agreement describes the GPA as irrevocable and an express declaration to that effect is found in the GPA itself is not without significance. .....

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3A if the Transfer of Property Act. Undoubtedly, the sale deed executed as on 31.08.2000 grants control and possession of the land to the appellant as 'absolute owner. However, the arrangement confirming the privileges of ownership without transfer of title has been held by the Bombay High Court to fall within the purview of sec.2(47)(v). Accordingly, respectfully following the decision of the Hon'ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia's case and other cases referred s .....

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As per the entries made in Nature of Rights in Record of Right in Form 6D in pursuance of Development Agreement and Irrevocable Power of Attorney registered with Sub-Registrar of Solapur on 19.01.1996 the name of Shri Prakash R Bolgamwar is recorded in other rights . As per the commentary on 7/12 Extract and Recording of Rights by Adv. Sadanand Mankar on Pg No 104 Para 15 of this commentary, the examples of other rights are stated as under:- a) The name of Karta of HUF is shown as occupier and n .....

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egistration of Irrevocable Power of Attorney, it implies that the assessee had acquired the rights in the said property and since possession had already been given to the assessee, in view of the provisions of section 2(47)(v) of the Act, there was part performance of the contract under section 53A of the Transfer of Property Act and thus, where the assessee had acquired rights in the said property and also received possession, the ownership in the said property starts from 18.01.1996. 13. In th .....

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