TMI Blog2023 (5) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 - Shri. Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri V. Srinivasan, Advocate For the Revenue : Shri Sankar Ganesh K, Addl. CIT (DR) ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 05/01/2023 passed by NFAC, Delhi for A.Y. 2011-12 on following grounds of appeal: 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in upholding the addition of a sum of Rs. 21,54,040/- as Income from Short term Capital Gains upholding the view that the date of entering into the joint development agreement i.e., 16/09/2010 would be the date of transfer of the said capital asset under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A] is not justified in sustaining the addition of a sum of Rs. 37,05,858/- as Income from Long term Capital Gains upholding the view that the date of entering into the joint development agreement i.e., 16/09/2010 would be the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avadi Village, Kasaba Hobli, Srirangapatna Taluk, Mandya District. During the course of assessment proceedings in the assessee's case for the A.Y. 2012-13, it was seen that the assessee has entered into a Joint Development Agreement on 16.09.2010 with M/s. Dhatri Properties, a partnership firm having its office at No.S, 5-17, Budda Marga, siddhartha Nagar, Mysuru, as per which the assessee has agreed to sell 48% of the afore said lands to M/s. Dhatri Properties for a consideration of Rs.10,00,000/- and to retain 52% of the lands. The agreement entered into between the assessee and M/s. Dhatri Properties amounts to transfer as envisaged in section 2(47)(v) of the Income tax Act,1961. Since the assessee has derived capital gains during the year relevant to A.Y. 2011-12 and has not declared the same in the return of income filed on 29.11.2011. I have reason to believe that the income chargeable to tax has escaped assessment within the meaning of Section 147 of the Income Tax Act 1961. 2.3 The assessee owned 9 acres 12 guntas of Agricultural land bearing Survey Nos. 331, 367 and 373 at Belawadi Village, Kasaba Hobli, Srirangapatna Taluk, Mandya District. 2.4 The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the JDA made between the taxpayer and M/s Dhatri Properties was signed on 16.09.2010. The assessing officer during the course of assessment proceedings sought directions u/s 144A and the Addl. CIT, Range 2, Mysore held as under; On perusal of the JDA it is noticed that the assessee had granted an unqualified, uninterrupted and irrecoverable right over the land in question to the developer to commence and complete the development of the property and also the right to apply for alienation of the property after paying the conversion charges. Further, the development agreement is silent about any specific date on which the transfer shall take place. Under the circumstances, on the basis of the facts and figures available on records, it has to be assumed that the transfer of rights of the property had happened as per the provisions of section 2(47)(v) of the Act on the day on which the JDSA was entered into and accordingly the capital gain has to be taxed in that financial year only . Considering the fact that the JDA signed on 16.09.2010 had given specific rights to the developer in Para 5.1 that, the owner gives permission to the developer to enter upon the schedule proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etained in part performance of the contract of the nature referred to in section 53A of the Transfer of Property Act . 4.1 He submitted that section 2(47)(v) was introduced in the Act w.e.f. A.Y 1988-89 because prior thereto, in most cases, it was argued on behalf of the assessee that no transfer took place till execution of conveyance. It was thus noted that, in such scenario, assessee s used to enter into agreements for developing properties with the builders and under arrangement with the builders, they used to confer privileges of ownership without executing conveyance, and to plug that loophole, section 2(47)(v) came to be introduced in the Act. 4.2 The Ld.AR submitted that, facts of this case would show that the transferee had not performed his obligation under the agreement till 03.12.2012 and the Ld.AO taxed the capital gains in the hands of the assessee based on the date of JDA being 16.09.2010. 4.3 It is submitted that the transferee, only by his conduct and by his deeds, demonstrates that he is unwilling to perform his obligations under the agreement, then the date of agreement ceases to be relevant. In such situation, it is only the actual performance of transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that, capital gains will arise in the year in which full control and possession of land in question is given. It is the submission of the Ld.AR that, this particular observation of Hon'ble Karnataka High Court eventually favours the assessee in the present facts of the case, as the full possession was handed over to the transferee developer on 03.12.2012 on fulfillment of the requirement of conversion of the land into non-agricultural in nature. 10. A reference was also made to the decision of Hon ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia vs. CIT reported in (2003) 260 ITR 491 which was followed by Hon'ble Karnataka High Court in case of CIT vs. Dr. T.K. Dayalu (supra) in arriving at this conclusion. 11. On the contrary, the Ld.DR relied on the decisions of Hon'ble Karnataka High Court in case of CIT vs. Dr. T.K. Dayalu (supra) as well as the decision of Chaturbhuj Dwarkadas Kapadia vs. CIT (supra). We have perused the submission advanced by both sides in light of records placed before us. 12. Sec.45 of the Act lays down that profits and gains arising out of transfer of capital asset effected in the previous year s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore 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. 14. The clause that was invoked by the revenue authorities in the case of the Assessee is Sec.2(47)(v) of the Act r.w 53A of Transfer of Property Act, 1882. According to the revenue authorities, the possession of land has been handed over by the assessee to the developer on execution of the agreement dated 16/09/2010, the transfer of property have taken place in view of the section 2(47)( v ) of the Act r.w. section 53A of the Transfer of Property Act, 1882. In this regard, the Ld.AR contended that perusal of the agreement executed by the assessee with the developer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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. 18. In the present facts of the case, the clause 5.1 in the JDA regarding possession clearly states that what is given is not possession contemplated u/s. 53A of the Transfer of Property Act and that it is merely a license to enter the property for the purpose of carrying out development. Therefore, invocation of the provisions of Sec.2(47)(v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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