TMI Blog2022 (7) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... anting license to have ingress and egress into the land proposed to be developed, and accordingly, there is no transfer as defined u/s 2(47) of the I.T.Act. The implementation of the proposed project was legally restrained following the refusal of consent by the Hon ble National Green Tribunal as well as the Karnataka State Pollution Control Board orders dated 04.05.2010 and 05.10.2016, respectively. To revive the abandoned project, the assessee and the developer had entered into an amended relinquishment agreement with Bangalore Development Authority vide agreement dated 09.05.2019 in order to comply with the directions of the Hon ble National Green Tribunal. As per the said agreement, the assessee surrendered the total area of 2.35 acres out of total area of 7.25 acres of land to be utilized for the proposed project. Thus, reducing the available area for the proposed project to only 4.30 acres as against 7.25 acres as originally envisaged. The assessee obtained revised sanction plan from the Bangalore Development Authority vide letter dated 11.11.2019 and a fresh JDA agreement was entered between the developer and the assessee vide agreement dated 27.11.2019. Therefore, fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted by the assessee with the builder/developer, land measuring 7 acres 25 guntas owned by her was allowed to be developed into a residential-cum-commercial space by the builder. The JDA was a registered document. As per the terms of this agreement, the assessee was to get 35% super built up area in the form of apartment and commercial space along with 35% of car parking and other benefits in the constructed area. The assessee also received interest free refundable deposit amounting to Rs.3,90,63,000. The assessee was show caused why the JDA transaction has not resulted in transfer of property and attracts capital gains tax. In response to the show cause notice, the assessee filed letter dated 26.03.2015. The primary contention of the assessee was that the impugned land was an agricultural land not falling with the definition of capital assets u/s 2(14) of the I.T.Act. Further, it was submitted that on reading the JDA-cum-Power of Attorney clearly indicates that what was handed over by the assessee to the builder is only the permissive possession to develop the area and the legal possession was never handed over. It was further contended that mere receipt of refundable interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led the present appeal before the Tribunal. The assessee has filed a paper book comprising of 400 pages enclosing therein copy of the development agreement dated 23.06.2011, copy of the written submissions submitted before the Income Tax Authorities, copy of the refusal order dated 05.10.2016 from the Karnataka State Pollution Control Board, copy of the order of National green Tribunal dated 04.05.2016 declining clearance for establishment of proposed project, the case laws relied on, etc. The learned AR by referring to clause (i) of the JDA, submitted that the builder / developer was only given permission to develop the property. The learned AR reiterated that the legal possession of the property was never handed over to the developer. Therefore, there is no transfer as per section 2(47) of the I.T.Act read with section 53A of the Transfer of Property Act. Further the learned AR by placing reliance on the judgment of the Hon ble Apex Court in the case of CIT v. Balbir Singh Maini reported in (2017) 398 ITR 531 (SC) submitted that the project could not take place for the reason of refusal of consent by the Hon ble National Green Tribunal as well as the Karnataka State Pollution Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in part performance of this agreement under Section 53-A of the Transfer of Property Act or under Section 2(47)(iv) of the Income Tax Act, 1961. 1.2) The Owner hereby agrees not to interfere or interrupt in the course of construction and development of the Schedule Property and/or commit any act or omission having the effect of delaying or stopping the work that has to be done under this Agreement. However, the Owner shall always be entitled to inspect the progress of the work and type of work which is being done on the Schedule Property. .. 9. I have carefully considered the rival submissions. Sec.45 of the Act lays down that profits and gains arising out of transfer of capital asset effected in the previous year shall be chargeable to income tax under the head capital gains and shall be deemed to be the income of the previous year in which the transfer took place. It is thus clear that there should be transfer during the previous year to attract charge to tax on capital gain. Sec.2(47) of the Act defines Transfer for the purpose of the Act. It reads thus: Sec.2 (47) transfer , in relation to a capital asset, includes,-- (i) the sale, exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax on capital gains. It is in order to plug this loophole that cl. (v) was inserted in section 2(47) to lay down that transfer would include any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of Transfer of Property Act. Thus, the Provisions of Sec.53A of the Transfer of Property Act, 1882 stand incorporated into the provisions of the Income Tax Act, 1961. If that be so then the Tax authorities for coming to a conclusion that provisions of Sec.53A of the Transfer of Property Act, 1882 are attracted to a particular transaction have to come to a conclusion the transaction/agreement in question is such that the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee, has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that the assessee has given only a permissive possession and not the legal possession as contemplated within the meaning of section 53A of the Transfer of Property Act. Hence, we are of the view that the provisions of section 53A of the Transfer of Property Act are not applicable to the impugned JDA. In view of the matter, the provision of section 2(47)(vii) of the I.T.Act are also not applicable during the relevant financial year. 12. The judgment of the Hon ble Karnataka High Court in the case of Dr.T.K.Dayalu (supra) relied on by the CIT(A) is distinguishable on facts. In the instant case, the assessee has neither received any non-refundable deposit nor has delivered the possession of the land to the developer, except for granting license to have ingress and egress into the land proposed to be developed, and accordingly, there is no transfer as defined u/s 2(47) of the I.T.Act. 13. Moreover, the implementation of the proposed project was legally restrained following the refusal of consent by the Hon ble National Green Tribunal as well as the Karnataka State Pollution Control Board orders dated 04.05.2010 and 05.10.2016, respectively. To revive the abandoned projec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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