TMI Blog2019 (3) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 28-2-2019 - Shri B.R. Baskaran, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri Shreehari Kusta, CA. For the Respondent : Dr.K.R.Subhash, JCIT(DR ORDER PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeal against the order of the CIT(A)-III, Bengaluru, dated 20/03/2014 passed u/s 143(3) and 250 of the Income-tax Act,1961 ['the Act' for short]. 2. The assessee has raised the following grounds of appeal: 1. The Order of the Hon'ble CIT, are opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant's case. 2. The Hon'ble CIT(A) has erred in upholding the Order of Learned Assessing Officer with regarding the taxing the Capital Gains on the date of JDA considering it as transfer within the meaning of section 2(14) of the Income Tax Act based on the decision of Hon'ble High Court of Karnataka in the case of Dr T K Dayalu without considering the terms of JDA which clearly establishes that, it is only a license for construction and development of Property and it should not be construed as Transfer within the meaning of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Justice and Equity. 3. Brief facts of the case are that the assessee is having income from house property, business income and capital gains and other sources and filed the Return of income for the assessment year 2009-10 on 05/06/2009 with total income of ₹ 2,48,980/- and the case was selected for scrutiny under CASS and notices u/s 143(2) and 142(1) were issued. In response to notice, the learned AR of the assessee appeared from time to time and submitted details as called for. The AO, while verifying the details furnished by the assessee found that the assessee, along-with his brothers S/Shri Y.C.Rajanna, Y.C.Gopinath and Y.C.Rangaswamy along-with their children as confirming parties, entered into Joint Development Agreement (JDA) on 14/02/2009 with M/s. Century Real Estate Holdings P. Ltd., to develop and construct apartments in the land admeasuring 4 acres and 18 guntas in Sy.No.3 of Shivanahalli Village, Yelahanka Hobli, Bengaluru and the said land was ancestral property of the owners and converted on 06/02/1999 for non-agricultural purpose. 4. The learned AO found as per JDA, 60% of the constructed area is allocated to developer and 40% to owners and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O in the assessment order. With regard to the appellant's contention that the has been terminated and that the appellant is not liable to capital gains tax is not acceptable. As stated by the AO in the remand, cancellation deed duly registered before the Sub Registrar evidencing cancellation the registered JDA was not produced for verification. As evidenced by the remand report, it is crystal clear that the developer has not terminated the agreement. In view of the above, the addition made by the AO sustained to the extent of 1/4 share of the appellant. Reliance is a placed on the decision of the Hon'ble Karnataka High Court in the case Dr. T.K. Dayalu reported in 14 Taxmann.com 120. This ground is partly allowed. 6. Aggrieved by the CIT(A) s order, the assessee has assailed appeal before the Tribunal. Before us, the learned AR submitted that no possession was given by the assessee to the developer to attract transfer u/s 2(47) of the Act and subsequently the development agreement was terminated. Therefore, there is no capital gains arising in the hands of the assessee and further the submissions were made on this disputed issue before the first appellate authority b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r within meaning of Sections 2(47)(ii), (v) and (vi) of the Income Tax Act-A0 further held that, in case of assessee owning a 1000 square yards plot, full value of consideration would be less cost of acquisition thus long term capital gain was, therefore, stated to be on higher amount-CITA(A) dismissed appeal upholding order passed by AO-Tribunal upheld order of AO-High Court held that transactions in hand envisaged transfer exigible to tax by reference to Section 2(47)(v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882-Held, Section 2(47)(vi) would not apply for reason that there was no change in membership of society, as contemplated- Under section 2(47)(vi), any transaction which had effect of transferring or enabling enjoyment of any immovable property would come within its purview-Reading of JDA would show that owner continued to be owner throughout agreement, and had at no stage purported to transfer rights akin to ownership to developer-Income from capital gain on a transaction which never materialized was at best, hypothetical income-It was admitted that, for want of permissions, entire transaction of development envisaged in J ..... 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