TMI Blog2022 (12) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... thority has treated the JDA as transfer/conveyance. No profits have been earned by the assessee either actual or hypothetical in this case. AO after examination of the facts and circumstances of the case and considering the reply of the assessee has rightly passed the assessment order, and the same in our view, is neither erroneous nor prejudicial to the interest of revenue. The impugned revision order, being bad in law, is hereby quashed. The appeal of the assessee stands allowed. - I.T.A No.299/Kol/2022 - - - Dated:- 22-9-2022 - Shri Sanjay Garg, Judicial Member And Dr. Manish Borad, Accountant Member For the Appellant : Shri S.K. Tulsiyan, Advocate and Mita Rizvi For the Respondent : Shri Biswanath Das, CIT-DR ORDER PER SANJAY GARG, JUDICIAL MEMBER: The present appeal has been preferred by the assessee against the revision order dated 26.03.2022 of the Principal Commissioner of Income Tax (hereinafter referred to as the PCIT ) passed u/s 263 of the Income Tax Act (hereinafter referred to as the Act ). The assessee in this appeal has taken the following grounds of appeal: 1. That, on the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreement since the possession of the land handed over to the Developer, as per the agreement, was only for the limited purpose of development and that the Ld. A.O had accepted this position and as such, the impugned order has not caused any prejudice to the revenue. 5. That, the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds. 2. A perusal of the above grounds of appeal would reveal that the assessee has contested the invocation of jurisdiction by the ld. PCIT u/s 263 of the Act in the facts and circumstances of the case of the assessee. 3. The brief facts of the case are that the assessee filed its return of income for the assessment year under consideration on 09.03.2015, the case was selected for limited scrutiny and thereafter the assessment order u/s 143(3) of the Act was passed by the Assessing Officer vide order dated 16.10.2017. Thereafter, the assessment in the case of the assessee was reopened by the Assessing Officer u/s 148 of the Act observing that the income of the assessee for the assessment year under consideration has escaped assessment. The Assessing Officer, in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid reasons recorded, the assessee made the following submissions: We have received your letter dated 23.04.2019 intimating us the reason recorded by you for initiating re-assessment proceedings against us u/s. 147 of the Income-tax Act for the assessment year 2014-15. In the said reason, you have stated that Capital Gains chargeable to tax on our handing over possession of immovable property (land) to P.S. Group Realty Ltd. pursuant to a development agreement entered into with that company has escaped assessment in our hands during the assessment year 2014-15. This observation made by you in the recorded reason is not correct, as explained below: 1) That income under the head capital gains arises on transfer of a capital asset. 2) That the said land was not a capital asset i.e. not held by us as fixed asset or investment. Consequently, there was no transfer of any capital asset on our handing over possession of land to P.S. Group Realty Ltd. pursuant to the said development agreement. 3) That the said land was our stock in trade and stock-in-trade is not treated as capital asset under the provisions contained in section 2(14) of the Income-tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the aforesaid contention of the assessee, however he had failed to apply the provision of section 43CA of the Act which deals with special provision for full value of consideration for transfer of assets other than capital assets. That, since the Assessing Officer had failed to examine the income of the assessee in the light of the provisions of section 43CA of the Act, such omission on the part of the Assessing Officer to examine the transaction in terms of section 43CA of the Act, prima facie, has caused the assessment order passed u/s 147/143(3) of the Act to be erroneous in so far as it was prejudicial to the interest of Revenue. He accordingly set aside the assessment order and restored the matter to the Assessing Officer for the limited purpose of verification of the applicability of the provisions of section 43CA of the Act to the transaction under JDA. 7. Being aggrieved by the above exercise of revision jurisdiction by the ld. PCIT, the assessee has come in appeal before us. 8. We have heard the rival contentions and gone through the records. Before proceeding further, it will be relevant to reproduce here the relevant provision of section 50C of the Act and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. [Explanation 1]- For the purposes of sub- clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269UA;] [Explanation 2- For the removal of doubts, it is hereby clarified that transfer includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effect or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;] 10. It is pertinent to mention here that there is no definition provided under the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter called the Developer 's Allocation. SECURITY DEPOSIT ADVANCE 1. It is agreed and recorded that the Developer shall deposit with the owner a total sum of Rs.10,00,00,000/- (Rupees ten crores) only as an interest free security deposit which shall be paid in the following manner: i) A sum of Rs.5,00,00,000/- (Rupees five crores) only shall be paid by 30th September 2013. ii) A further sum of Rs.5,00,00,000/- (Rupees five crores) only shall be paid by 31st January 2014. iii) At the time of execution of this presents no payment is being made. 2. It is agreed and recorded that the said interest free security deposit of the said total sum of Rs.10,00,00,000/- (Rupees ten crores) only shall be refunded by the owner to the developer within fortnight from the date of the receipt of the notice of completion of the construction of the said housing complex. TERMINATION It is also agreed and recorded that in case of failure on the part of the Developer to complete the said Housing Complex and/or handover Owner allocation with all common amenities and facilities within the stipulated time of 4 (four) years together with gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni reported in [2017] 86 taxmann.com 94 (SC), while interpreting the provisions of section 2(47) of the Act in respect of transfer of a capital asset, has held as under: 22. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression enabling the enjoyment of takes colour from the earlier expression transferring , so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof 1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 23. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose -the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, W.B. Registration Rules, 1962) Execution is admitted on 17/09/2013 by 1. Mr. Pratik Choraria Director, Emporis Properties Put Ltd., Flat No:5th Floor, 16 A, Braboume Road, Kolkata, Thana: Hare Street, District-Kolkata, WEST BENGAL, Indie, Pin -700001. By Profession: Business 2 Surendra Kumar Dugar Director, P. S. Group Realty Ltd, 83, Topsia Road (S), Kolkata, Thana:-Topsia, Distric-South 24-Parganas, WEST BENGAL, India, Pin -700046 By Profession Others Identified ByDhirajSethia, son of Noratan Mal Sethia, 83, Topsia Road (S), Kolkata, Thana Topsia. District:-South 24-Parganas, WEST BENGAL, India, Pin-700046, By Caste: Hindu, By Profession Service (Rajendra Prasad Upadhyay) DISTRICT SUB-REGISTRAR-III OF SOUTH 24-PARGANAS On 18/09/2013 Certificate of Admissibility (Rule 43, W.B. Registration Rules, 1962) Admissible under rule 21 of West Bengal Registration Rule, 1962 duly stamped under schedule 1A, Article number: 4, 5(f) of Indian Stamp Act 1899. Payment of fees: Amount by cash Rs.21.00/-, on 18/09/2013 (Rajendra Prasad Upadhyay) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property exceeds rupees three crore; Explanation.- The expression Agreement or Memorandum of an Agreement , if relating to a sale shall include an agreement to sell or any memorandum or acknowledgment in relation to transfer or deliver of possession of immovable property with an intent to transfer right, interest in, or title to, such property at any future date. Rupees seventy-five thousand. Exemptions: Agreement or Memorandum of Agreement - (a)for or relating to the sale of goods or merchandise exclusively, not being a note or memorandum chargeable under No. 43; (b)made in the form of tenders to the Government of India for, or relating to, any loan. 15. A perusal of the aforesaid Article No.4, 5(f) of Schedule 1A of Indian Stamp Act as applicable to the State of West Bengal would show that the affidavits and agreements are stamped at a fixed value as mentioned above, and they are not categorized as transfer or conveyance deed of any property. The stamp duty leviable on conveyance/transfer of property has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 5(d) at the time of registration of the agreement or rupees ten, whichever the greater; (b) if the final conveyance is made, beyond the time limit as specified in clause (a), in favour of the original purchaser or in favour of the member(s) of his/her family, the market value of the property shall be reassessed at the time of registration of such conveyance and the stamp-duty to be paid on such conveyance shall be the difference between the duty payable and the duty already paid under the proviso to article 5(d) at the time of registration of the agreement or rupees ten, whichever the greater: Provided further that the above provisions shall not be applicable, if the final conveyance is made in favour of any person or persons other than the original purchaser or the member(s) of his/her family. Explanation.- For the purpose of this article, the expression member of a family shall have the same meaning as defined in article 33. 16. It is pertinent to mention here that each and every document which has been produced before the Registration Authority and which is subject to stamp duty cannot be regarded as a transfer deed or conve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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