TMI Blog2019 (5) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of development agreement and possession of the property it is submitted by the assessee that there is an agreement dated 01/05/2008 and as per the agreement, the developer has to obtain necessary plans, approvals and sanction from the competent authorities due to slump in the real estate, the developer has not developed the land. Therefore the possession is with the assessee and is running poultry in the same land which he running earlier also. All the relevant details are filed, in our opinion, the assessee has discharged his burden casted upon him to show that the possession is with the assessee. Under the above facts and circumstances of the case, once the assessee has discharged his burden, it is the duty of the Assessing Officer to examine the details filed by the assessee and he has to prove that possession is still with the developer and not with the assessee. In the present case, the developer has not discharged his obligation as per the agreement, therefore taxking the capital gains is not justified. From the assessment order, it is very clear that the Assessing Officer has not pointed out anything in respect of the notice issued to the developer and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observed that in the present case, no assessment was completed u/s. 143(3) and the return was only processed and therefore there was no occasion to examine whether the impugned lands are agricultural or not? 6. The Ld. CIT (A) also erred in holding that there was no transfer of asset, ignoring the fact that the development agreement was still in force and was not cancelled and also considering the fact that the assessee, received advance consideration of ₹ 2,25,00,000 vide the said agreement? 7. Any other ground that may be urged at the time of hearing. 3. Facts of the case in brief are that the assessee-Sri D.Venkateswara Rao along with two others have entered into a development agreement for development of the land situated at survey Nos. 549, 550 551 in Kolthur Village, Shamirpet Mandal, Ranga Reddy District. The assessee had entered into a development agreement-cum-GPA, dated 19/05/2008 with M/s.IPL Infraservices Pvt. Ltd., Hyderabad. The assessee had filed his return of income in the capacity of individual and also Director of M/s. Kohinoor Hatcheries Pvt. Ltd., by declaring total income of ₹ 3,28,675/-, agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the assessee s case was reopened. A notice under section 148, dated 30/03/2015 was issued. In response, the assessee filed a letter dated 22/04/2015 stating that the return filed on 31/07/2009 may be treated as filed in response to the notice issued u/s. 148. Subsequently, the Assessing Officer has issued notice under section 143(2) 142(1) dated 06/10/2015. In response, the AR of the assessee appeared and submitted that as per the development agreement-cum-GPA, no possession was handed-over on the date of agreement and there is no transfer of capital asset and there is no capital gain chargeable to tax arising out of the said document. The Assessing Officer after considering the explanation of the assessee and by following the decision of the Hon'ble Jurisdictional High Court in the case of Potla Nageswara Rao Vs. DCIT in I.T.T.A.No. 245/2014, dated 09/04/2014, he has observed that the first party undertakes to give the vacant possession of the property starting from 8th month of the date of execution of this deed and shall accommodate the second party s plans for development. Therefore, according to the Assessing Officer, there is a transfer of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no application to the facts of the assessee s case and gave a finding that neither the land under consideration is a capital asset nor there was no transfer of the asset as per the terms of development agreement-cum-GPA and accordingly, the addition made by the Assessing Officer was deleted. For the sake of convenience, the relevant portion of the order of the ld.CIT (A) is extracted as under:- 6.4 I have carefully considered the issue, the submissions made by the AR the assessment order and the case records. The return of income filed by the appellant has been processed 143(1). During the course of assessment proceedings of M/s.Kohinoor Hatcheries Private Limited for the AY 2012-13, in which the appellant is a Director, it came to the notice of the AO that the above mentioned DAGPA was entered by the company along with two other Directors namely Sri D.Venkateswara Rao and Sri D. Raghava Rao (appellants) with M/s. IPL Infraservices Private Limited for the development of the property consisting of 28 Acres 18 Guntas situated at Koithur Village, Shameerpet Mandal, Ranga Reddy District. As per the DAGPA, the consideration to the first and second appellants were worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l facts necessary for assessment. This case will not fall under the category of mere product/of of books of accounts and other records. This case very dearly falls under the category of true and full disclosure, upon which the first assessment order was passed on the opinion that the lands sold were agricultural lands. Therefore, to say after 4 years that the lands were sold to a Real Estate Company for the purpose of forming a Special Economic Zone, would undoubtedly tantamount to a change of opinion, which is not permitted by law. 7.1 From the aforesaid facts on record and the order of the Hon'ble High Court, it is evident that the lands which were subject matter of capital gains is not a capital asset in terms of provisions of Section 2(14) of the Act. 7.2 Coming to the issue whether there was any transfer of capital asset in terms of Section 2(47) of the Act, my conclusions are as under:- As per, Point No.3 of the DAGPA, the appellant undertakes to give vacant possession of the property from 8 month of the date of execution of the deed. It is the contention of the appellant that this clause of the agreement was never acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 of the Act and therefore applying the ratio laid down by the Hon'ble High Court in that case to the present case, is not correct. It is further submitted that the ld. CIT(A) is not correct in holding that there was no transfer of capital asset for the reason that the development agreement was still in force and the same was not cancelled. He relied on the decision of the Hon'ble Jurisdictional High Court in the case of Potla Nageswara Rao (supra) and also relied on the decision of Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia vs CIT [(2003) 180 CTR 107 (Bom.)] and strongly supported the order passed by the Assessing Officer. 8. Ld. Authorised Representative for the assessee has submitted that the Assessing Officer simply taken into consideration of the date of agreement and came to an erroneous conclusion that the capital gain has to be assessed in the hands of the assessee without considering the explanation and subsequent developments, and submitted that the assessee has not given possession at all to the developer, therefore unless possession is handed over to the developer, no transfer is took place and capital gains ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the said judgment to the assessee s case. He relied on the following case-laws:- 1) CIT Vs. Geetadevi Pasari [(2009) 17 DTR 280 (Bom.)] 2) ACIT Vs. R. Srinivasa Rao 9(2015) 152 ITD 887 (Hyd.)] 3) Binjusaria Properties Pvt. Ltd. Vs. ACIT [(2015) 40 ITR 230 (Trib. Hyd.) 4) Fibars Infratech Pvt. Ltd. Vs. ITO [(2014) 98 DTR 281 (Hyd.)] 5) S. Ranjith Reddy Vs. DCIT [(2013) 95 DTR 283 6) P. Prathima Reddy Vs. ITO [(2012) 54 SOT 409] 9. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. 10. The issue involved in this appeal is whether there is a transfer of capital asset or not under section 2(14) of the Act. In this case, the assessee Sri D. Venkateswara Rao is a Director of M/s. Kohinoor Hatcheries Pvt. Ltd. along with Sri D. Raghava Rao has entered into a development agreement, dated 19/05/2008 for development of the land to the extent of 28 Acres 18 guntas situated in survey Nos. 549, 550 551 at Kolthur Village, Shamirpet Mandal, Ranga Reddy District with M/s. IPL Infraservices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by another letter dated 14/12/2015 that with regard to status of the development agreement, possession of the property is with the assessee and no development has taken place and the assessee is carrying poultry business. To support his argument, he has submitted the relevant details, such as renewal of registration certificate under the Andhra Pradesh Shops and Establishment Act, 1988 issued by the Government of Telangana dated 27/02/2015. The power bills issued by the Power Distribution Company and also inspection report submitted by the Electrical Inspector which are placed at page Nos. 37 to 47 and also property tax paid by the assessee at page No. 48. The Assessing Officer in the assessment order, simply held that as per the development agreement entered on 19/05/2008 as per clause (3), the assessee (first party) shall give a vacant possession of the property from 8th month of the date of execution of this deed and once agreement has been entered into, there is a transfer of property has taken place. We find that the assessee has submitted before the Assessing Officer that the second party M/s. IPL Infraservices Pvt. Ltd. not fulfilled the conditions as per the agreement enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the details submitted by the assessee, simply he came to the conclusion that there is an agreement therefore according to the agreement, the assessee has to give possession, therefore capital gains has to be taxed. Accordingly, taxed. So far as taxing the capital gains of ₹ 5,22,18,475/-, he has not given any basis for that amount and he simply referred the development agreement. As per the development agreement only the assessee has to receive 35% of the developed area, 65% has to go to the developer. We do not know how the Assessing Officer came to the above figure. The paper book at page No. 51 dated 02/12/2015, the Assessing Officer has issued a letter to the Principal Officers of M/s. IPL Infraservices Pvt. Ltd. under section 133(6) of the Act calling various details in respect of scrutiny proceedings in the case of M/s. Kohinoor Hatcheries Pvt. Ltd. and asked the development agreement-cum-GPA entered into with M/s. Kohinoor Hatcheries Pvt. Ltd., D. Venkateswara Rao and D.Raghava Rao and called the details of the development carried subsequent to the agreement entered into with the above parties and furnish the details of the ownership of the property as on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins only in the A.Y. 1999-2000. From the above it is very clear that though there is an agreement was entered into in the year 1994 and actual possession is handed over to the developer in the year 1998 though capital gains has to be taxed in the A.Y. 1999-2000. In the present case, no such possession has been handed over therefore the Assessing Officer is not correct in taxing the capital gains. 12. In the case of ACIT Vs. R. Srinivasa Rao (supra), the Hyderabad Bench of the Tribunal has observed that unless there is willingness on the part of the developer to perform his part of the contract, there cannot be a transfer of capital asset as envisaged u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act. The department has failed to controvert the finding of the ld.CIT(A) by brining material on record to show that the developer has taken any steps towards development activity. Further, we may observe, though the Assessing Officer referring to the development agreement has inferred that possession of the property was handed over to the developer, however, on going through the pleadings and prayer of the plaintiffs in the plaint filed in civil court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Insofar as alternative finding given by the ld. CIT(A) based on the Hon'ble High Court of Telangana Andhra Pradesh in W.P.No. 2148/2015 at paragraph 24 it has been held that the lands are agricultural lands though the issue before the High Court in respect of reopening, but gave a finding that the Assessing Officer has examined specifically in respect of nature of the land and assessment was completed under section 143(3) based on that, ld. CIT(A) gave a finding. 17. So far as case-laws relied on by the ld. Departmental Representative in the case Potla Nageswara Rao (supra) and Chaturbhuj Dwarkadas Kapadia (supra), have no application to the facts of the present case. 18. In view of the above, we find that no reason to interfere with the order passed by the ld. CIT(A). Thus, this appeal filed by the Revenue is dismissed. 19. Facts involved in ITA Nos.2067/HYD/2017 574/HYD/2018 are similar to the facts involved in ITA No. 2066/HYD/2017, therefore, the order passed in ITA No. 2066/HYD/2017 shall apply mutatis mutandis to these appeals also. 20. So far as cross objection is concerned, it is only suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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