TMI Blog2019 (7) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... re 6500 sq.ft. The apparent sale consideration for the land and building was ₹ 98,99,100/- which was approved by the Appropriate Authority. So far as the second development agreement dated 24.05.1995 is concerned, the extent of land agreed to be transferred was 3997 sq.ft, i.e., 45% of undivided share in 8882 sq.ft. However, in the said agreement, there was no building. These agreements were considered by the Appropriate Authority and noting there is an agreement to transfer property with reasonable certainty and on being satisfied about the apparent sale consideration, no objection was granted. Therefore, it would be incorrect to state that the development agreement do not contemplate transfer of immovable property, but we may say that there is a clear certainty in the extent to be transferred. Therefore, in our considered view, the transaction would continue to qualify under the definition of 'transfer' as defined under Section 2(47)(v) of Act. Value of cost of construction - appellate authority reckoned the delay in completing the project, obtained information from the developer and uniformly fixed the cost at ₹ 717/- per sq.ft., for both the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, we find there is no building thereon and in fact, a readjustment of schedule A of the property has been mentioned in the agreement which in fact, is the schedule property in the development agreement dated 27.03.1994. Thus the assessee is entitled to exemption under Section 54 of the Act. - Decided in favour of the assessee. - Tax Case Appeal No.1986 of 2008 - - - Dated:- 11-6-2019 - Mr. Justice T.S. Sivagnanam And Mrs. Justice V. Bhavani Subbaroyan For the Appellant : Mr.M.P.Senthil Kumar For the Respondent : Mrs.S.Premalatha, Standing Counsel JUDGMENT T.S.SIVAGNANAM, J. This appeal, by the assessee filed under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as the Act ), is directed against the order dated 24.08.2007, passed by the Income Tax Appellate Tribunal B Bench, Chennai (for brevity, the Tribunal ), in I.T.A.No.114/Mds/2005 for the assessment year 2001-2002. 2.At the time when the appeal was entertained by order dated 08.12.2008, four substantial questions of law were admitted. 3.Mr.M.P.Senthil Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requesting for No Objection Certificate in terms of Section 269-UL of the Act. The Appropriate Authority by order dated 22.06.1994 granted No Objection Certificate to transfer of the property indicated as per the agreement dated 27.03.1994 and as per the statement filed in Form No.37-I. Subsequently, another agreement was entered into with the developer on 24.05.1995 which pertains to a small piece of land adjoining to the property subject matter of development in the agreement dated 27.03.1994 and in the said second development agreement, the assessee and the other co-owners agreed to transfer 45% undivided share in the land, in return, the developer agreed to build and hand over 55% built-up area to the owners. This document was once again submitted before the Appropriate Authority, who by order dated 24.08.1995, granted No Objection Certificate for transfer of the property. In both the approvals granted by the Appropriate Authority, the apparent sale consideration which was agreed to was accepted, namely ₹ 98,99,100/- and ₹ 67,17,150/- respectively. 8.During the assessment year 2000-2001, the developer handed over the built-up area t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. 12.The first question to be considered is whether the Tribunal was right in interpreting the terms of development agreement and rejecting the contentions that the entire transfer took place in an earlier year and no portion of capital gains is taxable in the year under consideration, viz., 2001-2002. The Assessing Officer as well as the CIT(A) and the Tribunal while interpreting the terms and conditions of the development agreement, referred to clause no. 21 of the agreement and proceeded to hold that the developer was allowed to enter into the property as the licensee of the owner only for the purpose of carrying out the development of the said property by providing alternate accommodation to the assessee and the assessee has not given absolute possession to the developer and the developer had no absolute and complete control over the property. Further, it held that the developer is only a licensee of the assessee to carry out the construction activities and to get permission from various authorities for construction and the transfer of possession took place only when the assessee got registered the undivided share of land to the extent of 6175 sq.ft., to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. 15.In terms of the above provision, if a person contracts to transfer for consideration any immovable property in writing, from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, then it would qualify for part performance of a contract. 16.The Tribunal was of the view that the assessee was only a licensee. We do not agree with the said finding on account of a crucial fact which cannot be disputed by the Revenue, viz., the No Objection Certificate issued by the Appropriate Authority under Section 269-UL of the Act. The approval clearly states the extent of land which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial to doubt the cost of construction, which was consciously agreed to between the parties, question of adding the damages paid by the developer on account of non fulfilment of the condition in the agreement with regard to the time limit of handing over the possession of the constructed area can in no way increase the cost of construction at the hands of the appellant/assessee. Therefore, the finding in this regard requires to be set aside and accordingly, it is hold that the cost of construction as mentioned in the agreement, namely, ₹ 480/- and ₹ 550/- respectively, are confirmed and the second substantial question of law is answered accordingly. 22.The next question is whether the Tribunal was right in holding that the entire damages, deposit and rent free accommodation should be assessed as capital gain. The development agreement makes it abundantly clear and the first of the covenants states that the developer shall provide free of rent for the owners alternate residential accommodation. Admittedly, rents were paid by the developer, rental deposit was paid by the developer and the agreement does not provide for any adjustment of these payments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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