TMI Blog2018 (10) TMI 1935X X X X Extracts X X X X X X X X Extracts X X X X ..... mp duty and registration cost. The assessee also filed evidences in support of its contentions and submitted the said payments does not attract the provision Sec. 40A(3) - But it is noted from the record that the AO disallowed such amount by observing the assessee did not furnish any valid or tenable explanation - CIT(A) held the payment has to be directly paid to the government s account and rejected the contention of assessee and confirmed the addition made by the AO. Before us the Ld. AR pointed to page No.48 of the paper book and referring to the transactions at Sl. No. 12 and submitted that the major portion of said addition was made towards stamp duty cost and only minor portion is belonging to other expenditures - AR further referred to page No.s 58 59 of the paper book to show the said amount has reflected at Sl. No.12 at page No.48 of the paper book was being paid towards stamp duty under TR Form No.7 which is a challen for depositing of money in the account of Govt. of West Bengal. Likewise, it is seen from the pages 48 to 91 of the paper book which supports the contentions of the Ld AR. - DR did not controvert the same - assessee carried on transactions with two partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant portion of assessee s letter dt. 23-12-2011 is reproduced herein below:- Clause no. 1. Development right agreement with Bengal Shelter Housing Development Ltd ₹ 50.17 crores. Already we have filed with the copy of the development right and a supplementary agreement where the terms and conditions are stated clearly. Our Authorised Representative filed with you on 21.12.2011 when he received the above memo the explanations why the amount received in part amounting to ₹ 21.66 crores are not considered as the income of the year and it is very much clear that we disclosed in our books of ₹ 21.66 core as our liability which will be treated as income along with the balance amount in the coming year/s only when both the parties complied with the terms stated therein. The amount received against development in Gouripur Mouza, 24 Pgs (North). As such, your proposal to add ₹ 21.66 cores as income to your assesse does not hold good. And is justified from the point of justice and equity. 4. On perusal of said letter, we find that no permission to have been made by the assessee the possession was handed over to the said developer. 5. Further, the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh of ITAT Chandigarh and referred to para 4 at page-3 of the said order and submitted, the amendment of section 53A of Transfer of Property Act came into force w.e.f 24-09-2001 and the registration of an agreement is mandatory from 24-09-2001. The Tribunal held the said agreement does not fall u/s. 53A of Transfer of Property Act r.w.s 2(47)(v) of the IT Act 1961 in the absence of registration of JDA having been executed after amendment came into force. Relevant portion is reproduced herein below:- Considering these facts, the appeal of the assessee was allowed by the ld. CIT(A) on the following reasoning; 7.2 During appeal proceedings, the Ld. A/R submitted that there are 95 members of the said society who filed appeal on identical facts and the appeal has been decided by Hon'ble Punjab and Haryana High Court in the case of Sh. C.S. Atwal. [ITA No. 200 of 2013J. On perusal of the order it is seen that the additions on account of capital gain were made relying upon the decision of Hon'ble ITAT, Chandigarlt in the case of Sh. Charanjeet Atwal (ITA No. 4481Chd/2011). The assessing officer in this case computed the capital gains at ₹ 1,82,85.429/- by taking into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct would not survive any longer and has been rendered academic. 7. The Tribunal and the authorities below were not right in holding the assesse-appellant to be liable to capital gains tax in respect of remaining land measuring 13-5 acres for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs. Therefore, the appeals are allowed. 9. In the present case as discussed above, an agreement dt. 31-03- 2009 was entered into between the assessee (1st party) and M/s. Bengal Shelter Housing Development Limited (BSHDL) (2nd Party) and it is clear that was executed after the amendment came into force w.e.f 24-09- 2001. The fact remains admitted that it was not registered. Therefore, in our opinion, the order in the case of Shri Harder Singh of ITAT Chandigarh is applicable and we hold that in the absence of registration of agreement dated 31-03-2009 having been executed after 24.09.2001, the agreement does not fall u/s 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply. 10. Further the ld. AR drew our attention to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account. - This pronouncement was applied by the Supreme Court in Godhra Electricity Co. Limited v. CIT, (1997) 225 ITR 746 (SC) and followed by the Calcutta High Court in CIT v. Balarampur Commercial Enterprises Limited,(2003) 262 ITR 439 (CaL). 45. Relying upon decision in Messrs Shoorji Vallabhdas Co. 's case (supra), the Supreme Court in CIT v. Excel Industries Limited (2013) 358 ITR 295 (SC) held that income tax cannot be levied on hypothetical income. Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability, the income is not hypothetical and it has really accrued to the assessee. It was observed as under:- 17. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In Commissioner of Income Tax v. Shoorji Vallabhdas and Co., [1962J 46 ITR 144 (SC) it was held as follows:- Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 53A of 1882 Act were required to be fulfilled. In the absence of registration of JOA dated 25.2.2007 having been executed after 24.9.2001, the agreement does not fall under Section 53A of I 1882 Act and consequently Section 2(47)(v) of the Act does not apply. 5. It was submitted by learned counsel for the assessee-appellant that whatever amount was received from the developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JOA dated 25.2.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand. 6. The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of the Act would not survive any longer and has been rendered academic. 7. The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 53A were satisfied. In other words, the proposition laid down by their Lordships can at best be inferred as that when conditions under Section 53A are satisfied, and when the assessee enters into a contract which is a development agreement, in the garb of agreement of sale, it is the date of this development agreement which is material date to decide the date of transfer. However, by no stretch of logic, this legal precedent can support the proposition that all development agreements, in all situations, satisfy the conditions of Section 53A which is a sine qua non for invoking Section 2(47)(v). 12.4 In order to invoke the principles laid down by the Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia of Bombay (supra), it is, therefore, necessary to demonstrate that the conditions under Section 53A of the Transfer of Property Act are satisfied. This section is reproduced below for ready reference:- Section 53A : Part performance-Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute transfer can be ascertained with reasonable certainty, and the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of JDA, its alleged repudiation etc? ii) Whether possession as envisaged by Section 2(47)(v) and Section 53-A of the Transfer of Property Act, 1982 was delivered, and if so, its nature and legal effect. iii) Whether there was any default on the part of the developers, and if so, its effect on the transactions and on exigibility to tax ? iv) Whether amount yet to be received can be taxed on a hypothetical assumption arising from the amount to be received? 15. The Hon ble Supreme Court held when there is no income on a transaction which never materialized is at best a hypothetical income which cannot be brought to tax. Therefore, respectably following the decisions above referred to and discussed in the aforementioned paragraphs, the addition made by the AO as confirmed by the CIT-A is deleted. Ground no s 1 and 2 raised by the assessee are allowed. 16. Ground No. 3 is relating to confirmation of addition made u/s 40A(3) of the Act in the facts and circumstances of the case. 17. During the course of assessment proceedings the AO found that assessee paid registration fee in cash above ₹ 20,000/-. The assessee explained the said payments made for registration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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