TMI Blog2015 (7) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... to undertake the development activity but because of extraneous circumstances beyond his control which resulted in delay in obtaining the approval from the competent authority. In fact, the assessee has not brought a single piece of evidence on record to demonstrate that at any point of time the developer has expressed his unwillingness to perform his part of the contract of undertaking the development activity. The Hon’ble A.P. High Court in the case of Potla Nageswara Rao vs. DCIT (2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT) while interpreting the provisions of section 2(47) of the I.T. Act as well as section 53A of the Transfer of Property Act held that transfer in terms with section 2(47)(v) read with section 53A of the Transfer of Property Act takes place in the assessment year in which the development agreement is entered into and possession is delivered. Therefore, there is nothing on record to prove that the developer was unwilling to perform his part of the contract as provided under section 53A of the Transfer of Property Act, we are of the view that there is a transfer of capital asset in the impugned assessment year as envisaged under section 2(47)(v) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for developing the said piece of land into a residential colony after obtaining necessary permission from the authorities. As per the terms of the said development agreement, assessee is to receive 43% of constructed area along with undivided share in land to that extent in exchange of the land given to the developer under the development agreement. Further, the assessee entered into a supplementary development agreement on 19.10.2006 modifying certain terms of the registered development agreement by providing that the amount of ₹ 51,10,000 received as advance by the assessee from the developer will be treated as non-returnable security deposit. 4. On finding the aforesaid facts, the A.O. called upon the assessee to explain why capital gain will not be charged since there is a transfer of capital asset. In response to the query raised by the A.O., it was submitted by the assessee that though the assessee has entered into a development agreement with the developer during the relevant previous year and has also handed-over possession of the land to the developer but there is no transfer of the asset within the meaning of section 2(47)(v) read with section 53A of the Transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act. He was of the view that though the development agreement was entered into and possession of land was given in the year 2006, but the willingness of the developer to carry on development in terms of development agreement has not been taken-up for more than 7 years. Therefore, the transaction will not fall within the scope of section 53A of the Transfer of Property Act. Accordingly, he held that the capital gain will not accrue in the impugned assessment year and thereby, deleted the addition of ₹ 4.59 crores being made by the A.O. as long term capital gain. 6. The learned D.R. submitted before us that there is no dispute to the fact that assessee during the relevant previous year has entered into a development agreement with the developer and has also handed-over possession of the land to the developer. It was submitted, assessee has also received an amount of ₹ 51,10,000 as non-refundable security deposit from the developer. It is also a fact that the developer has applied for sanction of the plan to start the development activity but it could not be started as sanction was not given by the competent authority due to some difficulties beyond the control of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the orders of the revenue authorities as well as other materials on record. We have also carefully applied our mind to the decisions relied upon by the parties. The issue to be decided in the present appeal, precisely is, whether there is transfer of land by assessee to the developer in terms of section 2(47)(v) read with section 53A of the Transfer of Property Act, giving rise to capital gain in the impugned assessment year. There is no dispute to the fact that during the relevant previous year i.e., on 30.08.2006, the assessee had entered into a registered development agreement cum- General Power of Attorney with M/s. Sri Sai Venkateswara Estates and has also in terms with the development agreement handed-over possession of the land to the developer to start the development activity. It is also a fact that assessee has received an amount of ₹ 51,10,000 from the developer as non-refundable security deposit in terms with the development agreement. Keeping in view the aforesaid facts, let us examine the relevant statutory provision. The term transfer is defined under section 2(47) of the Act. As per clause (v) of the said provision, any transaction involving allowing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority. In fact, the assessee has not brought a single piece of evidence on record to demonstrate that at any point of time the developer has expressed his unwillingness to perform his part of the contract of undertaking the development activity. 8.2. As can be seen, as per clause 5(1) of registered development agreement, the developer has to complete the development work within 30 months from the date of provisional sanction granted by HUDA. Thus, the commencement of development work is inextricably linked with the sanction of HUDA. Therefore, unless sanction was granted by the competent authority, the developer could not have started the development work. It is evident from record the developer was ready and willing to implement the project as he has applied for building permission/sanction of plan in the year 2008 itself. However, as sanction was not granted, developer could not start the development work. From these facts, it is clear that the delay in starting the development work is not due to unwillingness of the developer to perform his part of the contract. If the assessee s claim that delay was due to unwillingness of developer is accepted, then, there is no reason or l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the fact that there is nothing on record to prove that the developer was unwilling to perform his part of the contract as provided under section 53A of the Transfer of Property Act, we are of the view that there is a transfer of capital asset in the impugned assessment year as envisaged under section 2(47)(v) of the Act resulting in capital gain. In our view, Ld. CIT(A) fell into error in not appreciating the aforesaid facts. As far as the decisions relied upon by the learned A.R. are concerned, on careful analysis of the same, we are of the view that they do not apply to the facts of the present case as in those cases the unwillingness of the developer to perform his part of the contract was proved by the concerned assessees by bringing evidence on record. Whereas, in the facts of the present case, the assessee has failed to do so. On the contrary, the material on record demonstrates that developer was all along willing to perform his part of the contract. For the aforecited reasons, while agreeing with the view of the A.O. to the effect that there is a transfer of land by assessee to developer giving rise to capital gain in the impugned assessment year, we set aside the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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