TMI Blog2023 (12) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... -Revenue and accordingly, the members of the AOP became the owner of the property in question qua their respective shares in which the allotment was done by the AOP. Therefore it cannot be said that the AOP continued to be the owner of the property as Association of Person is formed by the members for their joint interest in the property and accordingly, once the share of the respective member is allotted by the AOP then the AOP cease to be the owner of the property in question from the year 1999 with respect to the shares which were allotted by issuing the allotment letter. No substantial question of law arising out of the impugned order passed by the Tribunal. No substantial question of law arises. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA MR.VARUN K.PATEL(3802) FOR THE APPELLANT(S) NO. 1 ORDER ( PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA ) 1. By this Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short the Act ), the Revenue has proposed following substantial question of law, arising out of the order of the Income Tax Appellate Tribunal, D Bench Ahmedabad in ITA No.636/Ahd/2017 for the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent-assessee also entered into the agreement for construction with Shri Ami Infrastructure for the construction of the Office building on 31.10.2006 and thereafter agreement for sale was executed on 10.01.2007 between the members of the AOP as vendors and M/s CMS Computer Limited as buyer for the sale of the property for total consideration of Rs.5,87,00,000/-. 2.2. It also appears that the respondentassessee was a confirming party in the agreement to sale. The final conveyance deed was executed on 22.05.2007 between the members of the AOP as vendors and the assessee as a confirming party and M/s CMS Computer Ltd as buyers. 2.3. The members of the AOP offered the sale of property as capital gains in their respective hands in proportion to their holdings in the return of income for the financial year 2007-08 relevant to assessment year 2008-09. 2.4. During the course of the assessment, the Assessing Officer observed that since the AOP was restrained from carrying out any commercial activity which rendered profit, the said activity was done by the AOP through its members by allotting shares to its members and entering into construction agreement and thereafter on completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the actual owner is NTC not the members of the NTC. 2.6. The CIT (Appeal) also held with regard to the taxability of income as business income or capital gain, in favour of the assessee holding that the AOP failed to establish any positive evidence that the purchase and sale of the property was with a view to make profits to trading transaction. It was also found by the CIT as a matter of fact that the assessee was not in the activity of purchasing and selling the property and it is not an organized business activity of the AOP. With regard to the question of year of taxability also, the CIT (Appeal) observed that the members of the AOP had entered into sale deed on 22.05.2007 and at that time full sale consideration was received and the possession was also given to the buyer and therefore, the transfer had taken place with the execution of the sale deed by handing over the possession on 22.05.2007 relevant to the Assessment Year 2008-09. Therefore the CIT (Appeal) held that the transaction was rightly offered to capital gains by the members of the AOP for the Assessment Year 2008-09. 2.7. Being aggrieved by the order passed by the CIT (Appeal), the Revenue preferred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members to whom apartments were allotted. The Members were in possession and enjoyment of flats and paid no rent to company. The FIAT held that assessee company could not be held to be owner of flats on ground that title to land remained with assessee and, hence, it could be assessed on notional annual letting value of flats. While holding so, the ITAT made the following observations: From the memorandum of association of the company and other documents, it could be found that the owners/purchasers of the apartments became members of the company. In other words, the flats or the space in the multi- storeyed building stood allotted to the members only and not to any outsiders. The members of the company had acquired the flats or apartments or space on payment of proportionate cost to the builders under instructions from the assessee. In fact, one of the members, who had acquired the flat by paying up the construction cost, had in turn sold the same to another by agreeing to transfer his membership and shares in the assessee- company to and in favour of the vendee. The memorandum of association of the assessee- company authorised the assessee to enable its members to acquire fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat), the Gujarat High Court held that an agreement to sell cannot be equated with transfer of property without there being anything more. In the case of Ushaben Jayantilal Sodhan [2018] 93 taxmann.com 453 (Gujarat), the Gujarat High Court held that transfer of immovable property takes place on execution of sale deed and, therefore, to hold that upon mere execution of agreement to sell, immovable property gets transferred to purchaser, even within extended definition of section 2(47), would be incorrect. In the case of Godha Realtors (P.) Ltd. [2022] 135 taxmann.com 24 (Bangalore Trib.), ITAT held that where assessee merely entered into an agreement to sell immovable property without giving possession to buyer, there was no extinguishment of rights in capital asset by assessee, and thus, agreement to sell would not result in transfer of asset, under section 2(47). In the case of Abdul Wahab[2015] 57 taxmann.com 27 (Bangalore - Trib.), the ITAT held that where there was nothing to show that possession was ever delivered by assessee to purchaser in part performance of agreement for sale, there was no transfer within meaning of section 2(47)(v) of the Act. 11.1 Accordingly, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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