TMI Blog2015 (9) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... e present assessment year are wholly irrelevant and do not call for any adjudication. That aspect of the matter is academic. Once we hold, as we have held in this case, that an item of income is not taxable in the present assessment year, it is wholly academic to examine modalities of quantifying that income. - Decided in favour of assessee. - ITA. No. 487/Ahd/2011 - - - Dated:- 21-8-2015 - SHRI PRAMOD KUMAR AND SHRI KUL BHARAT, JJ. For The Assessee : Smt. Urvashi Sodhan, A.R. For The Revenue : Shri P. L. Kureel, Sr.D.R. ORDER PER PRAMOD KUMAR, A. M.: By way of this appeal, the assessee appellant has challenged correctness of the order dated 10th January, 2011 passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter), for the Assessment Year 2007-08, on the following grounds: 1. The Ld. CIT(A) has grossly erred in law and on facts in dismissing the appeal. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before him. I. ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN U/S. 50C ₹ 16,64,836/- 1. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23.5.2002. None of these submission, however, impressed the Assessing Officer. He rejected the plea of the assessee by, inter alia, observing as follows: Assessee's contention is not acceptable because the assessee himself has registered the transfer and sale of property deed with a stamp duty payment of ₹ 1,46,000/- voluntarily which is the stamp duty as per the stamp duty valuation done by the Valuation Authority of the State Govt. Thus, the assessee has accepted the valuation of property done by the State Govt. Authority at ₹ 32,65,440/-. The provision of Section 50C(2) provides for valuation of the capital asset by Valuation Officer of the Department where the assessee claims that the value adopted by the stamp valuation authority exceeds the fair market value of the property as on the date of transfer and that the value so adopted by that authority has not been disputed in any appeal or revision or no reference has been made before any other authority court or High Court. Thus, it is the discretion of the Assessing Officer that under the two situations he can refer the valuation to the Valuation Officer. There is no such provision to make reference for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statute. As per this provision, the valuation adopted by the stamp authorities is required to be taken for the purpose of calculating capital gain on the sale of an immovable property. If the claim of the assessee is accepted then the purpose of section 50C will be defeated by the assessees by not resorting to the execution of sale deed at the time of sale and thereafter, they will claim that the valuation made by the stamp duty authorities is not applicable. The valuation of the stamp duty authorities for this property, on the date of sale agreement is not available. The assessee / AO should have obtained the valuation from the stamp duty authorities as on 23-5-2002. The correct thing is to adopt the stamp duty valuation as on the date of sale agreement. 2.3.2 Further, there is no evidence that the possession was given on 23-5-2002, Neither before the Assessing Officer nor during the appellate proceedings such an evidence is given. In view of this reason and in the absence of availability of stamp duty valuation of this property as on the date of sale agreement, the action of the AO is confirmed and this ground of appeal is dismissed. 4. The assessee is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;] 7. Clearly, therefore, even in a situation in which possession of an immovable property is allowed to be taken in part performance of a contract of the nature referred to in Section 55A of the Act, such a possession being given will also amount to transfer . Elaborating upon this aspect of the matter, Hon ble Bombay High Court, in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT(A) (260 ITR 491), has observed as follows: 6. At the outset, we may point out that in this case, the assessee does not deny transfer. The only dispute in this case is whether the transfer took place during the accounting year ending 31st March, 1996 or whether it took place during the accounting year ending 31st March, 1999. In other words, the dispute is confined to the year of chargeability. Under section 2(47)( v), any transaction involving allowing of possession to be taken over or retained in part-performance of a contract of the nature referred to in section 53A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 which indicates that capital gains is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. In this case that test has not been applied by the department. No reason has been given why that test has not been applied, particularly when the agreement in question, read as a whole, shows that it is a Development Agreement. There is a difference between contract on one hand and Performance on the other hand. In this case, the Tribunal as well as the department have come to the conclusion that the transfer took place during the accounting year ending 31st March, 1996 as substantial payments were effected during that year and substantial permissions were obtained. In such cases of Development Agreements, one cannot go by substantial performance of a contract. In such cases, the year of chargeability is the year in which the contract is executed. This is in view of section 2(47)(v ) of the Act. Before us, it was argued on behalf of the assessee that the date on which possession is parted with by the transferor is the date which should be taken into account for determining the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996. At the same time, if one reads the contract as a whole, it is clear that a dichotomy is contemplated between limited Power of Attorney authorising the developer to deal with the property vide para 8 and an irrevocable licence to enter upon the property after the developer obtains the requisite approvals of various authorities. In fact, the limited power of attorney may not be actually given, but once under clause 8 of the agreement a limited power of attorney is intended to be given to the developer to deal with the property, then we are of the view that the date of the contract viz., 18th August, 1994 would be the relevant date of decide the date of transfer under section 2(47)( v) and, in which event, the question of substantial performance of the contract thereafter does not arise. This point has not been considered by any of the authorities below. No judgment has been shown to us on this point. Therefore, although there is a concurrent finding of fact in this case, we have enunciated the principles of applicability of section 2(47)( v). We do not find merit in the argument of the assessee that the Court should go only by the date of actual possession and that in this par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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