TMI Blog2021 (7) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... caped assessment. It does not mean that there should have been final ascertainment about the fact by legal evidence and conclusion. We are of the opinion that the AO had reason to believe that income has escaped assessment and he duly recorded the reasons on this count. Being so, as held in the case of Rajesh Jhaveri v. ACIT , [ 2005 (3) TMI 55 - GUJARAT HIGH COURT] we uphold the reassessment. Capital gain on JDA - Transfer u/s 2(47) - AO sought to bring capital gain only on the reason that the assessee entered into JDA with the Developer. But there was no progress in the development in the assessment year under consideration. It was the submission of the ld. AR that there was no development activity until the end of FY 2006-07. Commencment of building construction has not been initiated a the building approval was obtained in the next financial year. Therefore, no income is said to have accrued as laid down in section 48 of the Act. Nothing is brought on record by the AO to show that there was development activity in the impugned land during the assessment year under consideration and cost of construction incurred by the developer was not known. Therefore, it is to be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal for the assessment year 2007-08. 2. The Learned CIT(A) erred in upholding the order of reassessment for the assessment year 2007-08. 3. The Learned CIT(A) erred in holding there is a transfer of property by the Appellant in favour of the Developer on 05-02- 2007, being the date of execution of Joint Development Agreement and G.P.A without appreciating that section 2(47)((v) of the Act is not applicable to the facts of the appellant's case. 4. The Learned CIT (A) without any material on record held the appellant has given possession on 05-02-2007 and section 2(47)(v) of the Act is applicable and the transaction is liable to tax for the assessment year 2007-08. 5. The Learned CIT (A) has failed to appreciate that in order to bring a transaction u/s.2(47)(v) of the Act part performance ought to have been performed by the Transferee and there is no material on record to hold there was any part performance by the Developer during the year in question in order to bring the transaction u/s.2(47)(v) of the Act. 6. The Learned CIT(A) erred in upholding the computation of capital gain in the assessment year 2007-08 basing on events that have happened in subsequent ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on 08.02.2009 by accepting the return of the Appellant. Subsequently, the assessment was reopened by issue of notice U/ s.148 of the Act dated 28.03.2014 on the ground that the Appellant had entered into joint development agreement with M/s.. Home Concept on 05.02.2007 to develop a multi-storeyed residential apartment building on the land owned by the Appellant located in Kodigehalli Village, Yelahanka, Bangalore. Further, the Joint Venture Development agreement entered into by the appellant enables the appellant to claim 45% of saleable construction area whereas balance 5% belongs to the developer. The AO was of the view that the possession of the land vest with the developer on account of JDA and on account of construction carried on as per JDA and as such there is transfer of property of 55% of land from the appellant to M/s. Home Concept. Further, the Assessing Officer has also observed that to the extent of land transferred, the Appellant is liable to capital gain tax in the year in which JDA is entered into. Subsequently, the assessment was completed u/s.143 (3) r.w.s.147 of the Act by holding that the Appellant is liable to capital gain tax in the year in which Joint De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment agreement indicate that the owners of the land have given the control of the land to the developer. The possession as per section 2(47)(v) is not exclusive possession. The developer by virtue of the terms and conditions mentioned in the agreement has obtained has enabled him to exercise general control over the property and to make use of it for the intended purpose. Further by virtue of terms and conditions has the sole right to develop the said land and has rights to mortgage, sell or alienate the developer's share in the said land. By virtue of the terms and conditions mentioned in the Joint Development agreement, transfer as contemplated Sub-clause (v) of section 2(47) has taken place. The land mentioned in the JDA has been transferred as per the provisions of the section 2(47)(v) of the Income Tax Act, 1961 and hence liable for capital gains in the year of Joint development agreement. 7. The ld. AR submitted that the Appellant has owned a piece of land in Kodigehalli, Bangalore which has been held for a period of more than 3 years. The land was given for development to M/s Home Concept by entering into JDA , who has agreed to construct 20 flats in the said land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer should be made by the Owners. Thus, in the JDA, there was no suggestion that the Developer is the transferee. The JDA did not satisfy the conditions provided u/s. 53A of the Transfer of Property Act. Consequently the provisions of Sec.2(47)(v) of the IT Act was also not applicable. Consequently, there is no liability to capital gains for the assessment years 2007-08. The capital gains would arise when the sale deed is registered with respect to each of the transferee since there was no deemed transfer to the Developer, the Appellant themselves was executing the sale deed in respect of transfer of undivided share in the land to the ultimate buyers. 10. In this connection, it is submitted that the judgment of the Karnataka High Court in the case of CIT vs. Dr. T.K. Dayalu reported in 60 DTR (Kar) 403 / 202 Taxman 571 , wherein the Hon'ble court followed the judgment of Chaturbhuj Dwarkadas Kapadia vs. CIT (2003) 260 ITR 491 (Bom) were not applicable to the facts of the present case. 11. The ld. AR further submitted that there was non-refundable consideration for the acquisition of undivided share in the land by the Developers apart from giving super-structur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly there was no assessment u/s. 143(3) of the Act and reopening was made within four years from the end of relevant assessment year and the AO validly recorded reasons for reopening the assessment as recorded above. At the time of reopening, there need not be conclusive evidence for reopening an assessment. U/s 147 of the Act, reason to believe that income has escaped assessment confers jurisdiction to reopen the assessment where the case is not covered by the provisions of section 143. Intimation u/s. 143(1) cannot be treated as an order of assessment and there being no assessment u/s. 143(3), there is no question of change of opinion on the issue dealt by the AO for reopening the assessment. 15. In the present case, the AO has reason to believe that income had escaped assessment. It does not mean that there should have been final ascertainment about the fact by legal evidence and conclusion. We are of the opinion that the AO had reason to believe that income has escaped assessment and he duly recorded the reasons on this count. Being so, as held by the Hon ble Supreme Court in the case of Rajesh Jhaveri v. ACIT, 284 ITR 593 (SC) , we uphold the reassessment. 16. On merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nominee/s shall be borne by the Developer or the nominee/s of the Developer. 18. He also drew our attention to clause 9 of the GPA as under:- To enter into agreements for sale of undivided share in the Schedule Property to the extent of 55% of Developer with or without construction any intending purchaser of flats in terms of Joint Development Agreement. Except presenting the document relate to the Conveyance of the flat before the Sub Registrar for which the executor Owner shall come and present the same before the Sub-Registrar as for as the share of the developer is concern. 19. Thus, the ld. AR submitted that giving licence to the developer to enter into the land cannot be equated with giving absolute legal title of the property to the developer. He therefore submitted that it cannot constitute as transfer in terms of section 2(47)(v) of the Act. According to him, capital gain under the development agreement arises only on exchange of built-up area by the developer to the landlord.. Further, it was submitted that the construction area of the property is not in existence on the date of JDA or on the date of GPA and it is subject to many factors like sanction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty Act, 1882 contract can be ascertained when in part performance of contract, a person has taken over the possession and has done in furtherance of the contract performed or is willing to perform his part of the contract. In the case of Seshasayee Steels though the possession was taken over, there was no willingness to perform his part of contract as the transferee had not adhered to the terms and conditions of the agreement to sell and therefore, the compromise deed was executed to ratify the agreement to sell and GPA. The compromise deed could be stated to be the document to effect the transfer and as such the Hon'ble Supreme Court held that on the receipt of the last cheque mentioned in the compromise deed, the assessee's rights in the property stood extinguished. 23. Whereas in the present case, the assessee has permitted the developer to enter upon the schedule property and perform all such acts as are necessary to develop the schedule property. The JDA states that the landlord shall not revoke the rights so granted till completion of development and sale of built-up area. The act of asse and developer, can beyond any doubt of uncertainty, be concluded as a cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifically clause no. 9. A reading of the above clauses make it clear that the assessee has only given the licence to the developer to enter into the land and to construct the building on the same. The assessee has to come for final registration in favour of flat owners who has to convey the ownership in their favour. As seen from the date of JDA, it was entered on 5.2.2007 at the fag end of the FY 2006-07 relating to AY 2007-08. In this year under consideration, no much development has taken place. The AO sought to bring capital gain only on the reason that the assessee entered into JDA with the Developer. But there was no progress in the development in the assessment year under consideration. It was the submission of the ld. AR that there was no development activity until the end of FY 2006-07. Commencment of building construction has not been initiated a the building approval was obtained in the next financial year. Therefore, no income is said to have accrued as laid down in section 48 of the Act. Nothing is brought on record by the AO to show that there was development activity in the impugned land during the assessment year under consideration and cost of construction incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such circumstances ought to have held no interest is leviable u/s.234B of the Act. 8. The Learned CIT(A) ought to have held that no interest is leviable since rejection of exemption cannot be considered as current income so as to hold there is failure to pay advance tax. Appellant craves leave of this Hon'ble Tribunal to permit to add/alter/delete any ground or grounds at the time of hearing in the interest of justice. 29. Ground No.4 is not emanating from the order of CIT(Appeals) and as such the same is dismissed. 30. Ground No.5 is not pressed and accordingly the same is dismissed. 31. Regarding ground Nos. 1, 2 6, we have already held that there was no capital gain in the AY 2007-08 and the assessee herself has offered capital gain in the AY 2009-10 and submitted that in this AY charging of capital gain by lower authorities may be confirmed. More so, the construction was completed and assessee s share of constructed area was received and the assessee has to pay capital in the relevant assessment year. Being so, there is no merit in this ground and it is accordingly dismissed. 32. Ground Nos.3 7 is with regard to grant of exemption u/s. 54/54F of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /[2015] 373 ITR 127 (Mad.), CIT v. Syed Ali Adil [2013] 33 taxmann.com 212/215 Taxman 283/352 ITR 418 (AP), G. Chinnadurai v. ITO [2016] 74 taxmann.com 227 (Mad.). 8. On the other hand, learned counsel for the revenue submitted that the word used 'a residential house' has to be interpreted in the facts and circumstances of the case. It is further submitted that assessee in the facts of the case is not entitled to the benefit of Section 54(1) of the Act and the same would amount to abuse of law. It is further submitted that an attempt is made by the assessee to evade the tax. Learned counsel for the revenue has invited our attention to the decision relied by learned Senior Counsel for the assessee in the case of Smt. K.G Rukminiamma (supra) and has pointed out that on a site a residential premises existed, which was demolished and was given to a builder under a Joint Development Agreement for putting up flats. In the aforesaid factual background, it was held that all four flats are situate in a residential building and therefore, constitute 'a residential house' for the purposes of Section 54 of the Act. Similarly, it is pointed out that in all the cases relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1897 held that unless there is anything repugnant in the subject or context, the words in singular shall include the plural and vice versa. It was further held that context in which the expression 'a residential house' is used in Section 54 makes it evident that it is not the intention of the legislature to convey the meaning that it refers to a single residential house. It was also held that an asset newly acquired after sale of original asset can also be buildings or lands appurtenant thereto, which also should be residential house, therefore, the letter 'a' in the context it is used should not be construed as meaning singular, but the expression should be read in consonance with other words viz., buildings and lands. Accordingly, the contention raised by the revenue was rejected. Similar view was taken by a bench of this court in Khoobchand M. Makhija supra, B. Srinivas supra and in the case of Smt. Jyothi K Mehta supra. The Madras High Court while dealing with Section 54 of the Act as it stood prior to amendment by Finance Act No. 2/2014 in the case of Tilokchand Sons supra took the similar view and held that the word 'a' would normally mean on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, Volume 22, Para 1682, Page 796, the relevant extract reads as under: The enunciation of the reasons or principle on which a question before a court has been decided is alone binding as a precedent. This underlying principle is often termed the ratio decided, that is to say, the general reasons given for the decision or the general grounds on which it is based, detached or abstracted from the specific peculiarities of the particular case which gives rise to the decision. [Also see: 'State of Haryana v. Ranbir @ Rana', [2006] 5 SCC 167 'Girnar Traders v. State of Maharashtra', [2007] 7 SCC 555]. 15. This Court as well as Madras and Delhi High Court have interpreted the expression 'a residential house' and have held that the aforesaid expression includes plural. The ratio of the decisions rendered by coordinate bench of this court are binding on us and we respectively agree with the view taken by this court while interpreting the expression 'a residential house'. Therefore, the contention of the revenue that the assessee is not entitled to benefit of exemption under Section 54(1) of the Act in the facts of the case does not deserve accepta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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