TMI Blog2017 (8) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also a fact that the assessee has not parted with the possession of the property till date or has not handed over the possession of the property to the new developer and even the new agreement. In view of the decision of Hon’ble Bombay High Court in the case of Geetadevi Pasari (2008 (7) TMI 990 - BOMBAY HIGH COURT), and the fact of the case that no transfer of property took place during the FY relevant to the AY 2008-09 and no possession was handed over to the developer and ultimately the agreement between the assessee and the developer, the assessee cannot be held to be liable for capital gain tax liability. Accordingly, all these five appeals of the assessee are allowed. - ITA No. 6677/Mum/2016, ITA No. 6678/Mum/2016, ITA No. 6679/Mum/2016, ITA No. 6680/Mum/2016 And ITA No. 6681/Mum/2016 - - - Dated:- 23-8-2017 - SRI MAHAVIR SINGH, JM For The Assessee : Shri N . B . Khandelwal, AR For The Revenue : Shri T . A . Khan, DR ORDER PER MAHAVIR SINGH, JM : This appeal by the assessee is arising out of the order of CIT(A)-38, Mumbai, in appeal Nos. CIT(A)-38/ITO 21(2)(2) (3)/IT 188,187, 190,191 189/2014-15 dated 31-03-2016. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on date 15 / 11 / 2016 . An application for condonation of delay as provided under section 5 of the LIMITATION ACT, 1963 to be filed along with affidavit . 7 . That I am Senior Citizen aged about 64 years and not keeping well and not having educational background and not aware of the provision for filing appeal and limitation period thereof . 8 . That in this way there is a delay of 140 days for which an application under Section 5 of the Limitation Act has been filed alongwith memorandum of appeal . 9 . That delay in filing the appeal is because of a genuine belief of the applicability of a particular provision of the Income Tax Act 1962 which was neither accepted neither rejected the CIT ( A ) and further for pending application for rectification of appeal order with Commissioner of Income Tax Appeal - 38, Mumbai . 10 ) That I had no intention to jeopardize the interest of the revenue by delaying the filing of the appeal . 3. Exactly identical worded petitions are filed in the case of other assessee s of the group. When these facts were pointed to the Learned Sr. DR, he fairy conceded that the appeal can be admitted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/361 and 389 of Matunga Division, Antop Hill, Wadala. The said property consisting of slum structuring Pucca Chawls mainly residential and few structure being used as shop/ commercial premises and undivided as slum by additional collector (est.) on 19-08-1993 under section 41(1) of the Maharashtra Slum area (IC R) Act 1971. Earlier co-owners entered into agreement with one M/s Raj Realtors vide agreement date 11-11-1994 i.e. development agreement to re-develop the property under Slum re-development scheme. This development agreement became unsuccessful after about 14 years and M/s Raj realtors vide release deed dated 03-08-2008 and letter of surrender dated 04-07-2008 withdrawn from the development agreement. Subsequently, the assessee along with other seven co-owners entered into agreement for development dated 27-12-2007 as M/s Jiva Builders and Developers for re-development of property whereby, the co-owners, the holders of re-development of the property will be provided on completion of development of property an independent residential building admeasuring 1500 sq. ft. of carpet area and three shops in rehabilitation component of Ground floor each of 150 sq. ft. carpet are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f property in the redeveloped property . Hence, it becomes important to ascertain the full value of consideration . Such transactions are thus a combination of sale and exchange . In the light of above context, the issues raised in the case of appellant are dealt as under : II . Receipt / accrual of consideration and quantum thereof ( a ) In order to hold that there is a transfer of a capital asset and capital gain is chargeable to tax it is necessary that consideration should be either received or accrued . Consideration should also be properly determinable for the purpose of computation of capital gain . In terms of section 48 of the Act Capital Gain can be determined w . r . t . full value of consideration received or accruing it has been held by the Supreme Court in the cases of CIT v . George Henderson and Co . Ltd . , 66 ITR 622 and CIT v . Gillanders Arbuthnot and Co . 87 hR 407 that full value of consideration has been used in the law for the reasons that law does not deal only with the case of sale in which case consideration in money would be available . In the case of development agreement the land owner wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and transaction will be deemed to be transfer where possession has been taken or retained in part performance of a contract of the nature referred to in section 53A of Transfer of Properly Act . To qualify for the protection of the doctrine of part performance it must be shown that there is a contract to transfer for consideration immovable property and the contract is evidence by a writing signed by the person sought to be bound by it and from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty . These are prerequisites to invoke the equitable doctrine of part performance . Alter establishing the aforementioned circumstances it must be further shown that a transferee had in part performance of the contract either taken possession of the property or any part thereof or the transferee being already in possession continues in possession in part performance of the contract and has done some act in furtherance of the contract . The acts claimed to be in part performance must be unequivocally referable to the preexisting contract and the acts of part performance must unequivocally point in the direction of the existence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Chaturbhuj Dwarkadas Kapadia vs . CIT ( 2003 ) 260 ITR 491 ( Born ). Thus it is held to be transfer in the case of such Development Agreements as per section 2 ( 47 ) ( v ) and section 45 r . w . s . 53 of TPA which was also affirmed by Bombay High Court in the case of ACIT vs . Geeta Devi Pasari 17 DIR 280 ( BOM ). ( c ) In the case of CIT v . Ashok Kapoor ( HUF )( 2007 ) 165 Taxman 569 ( Del .) a question regarding transfer of rights in property and chargeability of capital gain had come up for consideration before the Hon'ble Delhi High Court . In the above case, the Hon'ble High Court has taken a view that transfer has taken place at the time of entering into the agreement with the developer for the reason that as per the agreement the dealer had agreed to allocate 50 % of share in the property to be built and the builder was allowed to srll the area comprised in the builder's allocation . On the basis of clauses of the agreement the Hon'ble High Court had held that clause of agreement has all the elements of transfer at the stage of entering into the agreement and, therefore, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such lands were to be compensated with increase in FSI . ix . Thus it has to be understood in such factual matrix that the physical transfer of property was not necessary . The possession of property could be only after fulfilling the conditions laid down in the agreement and the fact that there has been a delay on the part of the Developer to start the project cannot in any way negate the transfer of the aforesaid property . X . Thus, once the development agreement has been signed and the control of the immovable property has been passed by grant of an irrevocable authority, then even the date of agreement of development will constitute the date of transfer of capital asset . xi . Thus it is crystal clear that the domain and control of the property in question has passed to the Developer by grant of irrevocable authority and thus the date of agreement of development which in this case is 27 . 12 . 2007, will constitute the date of transfer of capital asset as held by jurisdictional High Court in the case of Chaturbhuj Dwarkadas Kapadia vs . CIT as mentioned supra . xii . In the instant case, it is observed that the agreement for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh possession is given to developer immediately for the purpose of construction on entering into agreement legal ownership of land continues to be with owner . ( b ) It has, been held by the Courts that date of registration of such document is not relevant for the purpose of transfer under Section 2 ( 47 ) of the Act . ( c ) In regard to the matter as to the importance of registration of documents under the Transfer of Property Act conferring rights in the immovable property, reference can be made to certain court decisions wherein a view has been taken that notwithstanding that the documents have not been registered the rights will be deemed to be transferred to the person having the possession of the property for the purpose of taxability of income . Reference in this regard can be made to the decision of Hon'ble Supreme Court in CIT v . Podar Cement ( P .) Ltd . ( 1997 ) 226 ITR 625 ( SC ). ( d ) The Hon'ble Supreme Court has taken a view that registration for the purpose of conferring ownership right was not necessary as regards taxability of income received in respect of the property . Following the view ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the above, the addition to the extent of Rs . 22,29,875 /- is confirmed . Aggrieved, now these five assessees are in appeal before Tribunal. 7. I have heard the rival contentions and gone through the facts and circumstances of the case. Before me, both the parties i.e. the Sr. DR as well as learned counsel for the assessee admitted that the facts narrated are undisputed. The facts are that the assessee along with 7 other co-owners entered into development agreement dated 27-12-2007 with M/s Jiva Builders and Developers for development of Slum i.e. the property of the assessee under Slum redevelopment scheme wherein the developer was required to obtain all sanctions, consent of payments and of slum dwellers, occupiers etc. as well as permissions, plans and lay out sanctioned from local authorities and government. Unless and until, such plans and layout first approve and signed by the land owners the development rights would not commence. It only intended to transfer the said properties on fulfillment of the said conditions stipulated in the agreement and no transfer has taken place during the year under consideration because terms and conditions of the developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another developer M/s Jiva Builders and developers dated 27-12-2007 deed of confirmation was registered with the sub-registrar Mumbai city-3 vide dated 07-01-2010. It is also a fact that the assessee has not parted with the possession of the property till date or has not handed over the possession of the property to the new developer and even the new agreement. According to me, the liability for capital gain would arise only in the year in which possession is given and this view of ours is supported by the decision of Hon ble Bombay High Court in the case of Geetadevi Pasari ( supra ), wherein Hon ble Bombay High Court held as under:- 4 . In the aforesaid Judgment, this Court had clearly taken a view that in the relevant Assessment year for the purpose of computation of capital gains will be the Assessment year in which the assessee was actually physically put in possession and in the instant case, there is no dispute that though the agreement was entered into on 29th March, 1994, the assessee was put in possession only in the year 10th April, 1998 . 5 . In view thereof, the assessee will be liable for being assessed for capital gains only in the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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