TaxTMI 
TaxTMI 
2008 (11) TMI 310
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....995-96. 3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in law and on merit in not accepting and admitting the claim of the assessee to deduct from the full value of consideration, the value @ Rs. 440 per sq. ft. of the FSI of 19,187.50 sq. ft. which the assessee has retained for self consumption as per the development agreement dt. 30th Nov., 1994. 4. On the facts and in the circumstances of the case, the learned C1T(A) has erred in law and on merit in upholding charging of interest of Rs. 75,46,787 levied by the learned AO under s. 234B of the IT Act." 3. Apropos ground No. 1 of the concise grounds; learned Authorised Representative Shri Sunil Pathak has expressed at the outset not to press the same. This ground is therefore dismissed being not pressed. 4. Apropos ground No. 2; facts in brief as emerged from the corresponding assessment order passed under s. 143(3) r/w s. 147, dt. 30th Nov., 2000 were that the appellant had undivided 29.68 per cent share in an ancestral property identified as serial No. 592/2, Mauje Munjir, Taluka Haveli, District Pune admeasuring 58,500 sq. mtrs. A development agreement dt. 30th Nov., 1994 was execu....
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....ivity essential steps required to be taken are such as no objection from the concerned authorities, approval of development plans, actual construction activity and finally a completion certificate. To accomplish the development the assessee had given restricted power of attorney to the said developer. An another factual finding has also been recorded by the AO on p. 3 of the impugned assessment order; quote, "in accordance with the terms of development agreement entered into by the assessee and other co-owners the land is under development and construction is going on", unquote. After recording these findings on facts he has opined that s. 2 (47)(v) of the Act was applicable since the asset was handed in part performance of a contract. On narrating few more happening of events the AO has given one more factual finding; quote from p. 9: "Thus it is found that necessary conditions for handing over the property to the developer for development purpose is met in the month of March itself. Therefore, the conveyance of development right to the developer took place in the month of March, 1995", unquote. It was concluded that assessee could have asked for the specific performance of the co....
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....E FOR GIRIRAJ' were erected on 6th Dec., 1994 on the suit property which are prominently displayed on the site and are very much there to dale. It is to be mentioned that M/s Giriraj Associates are an associate concern of M/s Lunkad Associates and they together were developing the property. It is thus apparent from the affidavit filed by the appellant in a suit before the Court of Civil Judge, Pune that the appellant had allowed the developers lo develop the property in accordance with his respective share in the year 1994 itself and that a 'Bhumi Pujan' was performed on 6th Dec., 1994 and two large eye catching hoardings of 'SITE FOR GIRIRAJ' were erected on the properly and were also present at the site till the date on which the affidavit was sworn." 6. According to learned CIT(A) there was no adverse effect on the deal even after the said dispute since the assessee had allowed the developers to develop the properly. In one of the paras he has observed; quote "Subsequent events of litigation would not affect the taxability of this income in the year under consideration for what is imperative to decide is whether as on 31st March, 1995 transfer has taken place in respect of a ....
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....s. 2 (47)(v) the possession should be in terms of the conditions prescribed in s. 53A. For this proposition strong reliance was placed on General Glass Co. (P) Ltd. vs. Dy. CIT (2007) 108 TTJ (Mumbai) 854 : (2007) 14 SOT 32 (Mumbai). There was reference of some later developments according to which a fresh agreement was executed with an another party viz., Giriraj Associates; however a portion was to be retained by the earlier developer M/s Lunkad Associates. According to him the previous agreement was not acted upon and on account a subsequent letter of agreement the assessee has shown capital gain in the asst. yr. 2004-05 at high figure of Rs. 5,53,90,500 + Rs. 3,91,87,500 totalling Rs. 9,45,78,000. In his view if the action of the AO be affirmed then it would be double taxation of the capital gain. Placing strong reliance on General Glass Co. (P) Ltd.; he has concluded that the subsequent litigation has established that there was no willingness on the part of the vendee to perform his part of obligations hence s. 53A had no role to play; consequent thereupon out of the ambits of s. 2(47)(v) of the Act. 8. From the side of the Revenue learned Departmental Representative, Shri ....
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....tment of an another builder. According to learned Authorised Representative the capital gain was neither taxable in asst. yr. 1995-96 nor in 1996-97, as protectively assessed, but to be taxed in the year asst. yr. 2004-05 as it was offered by the assessee. 10. Heard at length the pleadings of both the sides. Also perused the case-record in the light of the compilation filed and precedents cited. On that basis it can be observed, at the outset, that the issue of chargeability of capital gain tax in the assessment year under consideration is not a new issue but already dealt with by the Hon'ble Courts in the past, however, still needs detailed deliberation mainly due to the complexity of the facts as also the law involved. 11. The start point of the arising of this controversy was the introduction of a clause in s. 2(47) as follows: "(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882. (4 of 1882)" 11.1 The importance of the word "transfer" is due to the reason that in the charging s. 45 the capital gain is ....
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.... requisite to deal with the relevant section contained in Transfer of Property Act. 13. Transfer of Property Act contains s. 53A under the heading "Part performance" and for deciding the case in hand it is necessary to quote the impugned section verbatim as follows: "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 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, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred ....
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....ure referred are not required to be registered under Registration Act, 1908. Such arrangement does not include transfer of certain rights vesting to a purchaser, however such "transfer" does confer certain privileges of constructive ownership with connected bundle of rights. Indeed it is a departure from the commonly understood meaning of the definition "transfer" while interpreting this term for tax purpose. On the facts of this case the developer has got bundle of rights and thereupon entered into the property. Undisputedly flats have also been constructed by M/s Lunkad Associates. Thus under the provision of IT Act a "transfer" has definitely took place. s(c) The existence of the "consideration" is the essence of the contract. Accepted factual position is that a huge sum of Rs. 2 crores was transferred during financial year under consideration, barring delay of few days of a nominal amount, but that too has not effected the other terms of the contract. Rest part of the consideration was in kind i.e. the flats to be constructed by the developers to be handed over to the owners. Facts have revealed that later on the consideration has also gone high and assessee's share in the c....
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....re is no warrant to postpone the operation of cl. (v) to that point of time when the concurrent possession would become exclusive possession of the developer. Any other interpretation i.e., possession means exclusive possession, shall defeat the purpose of amendment. The possibility of staggering of payment linked with possession is ruled out by this amendment so that the taxability of gain may not be shifted to an uncertain distant date. We have no hesitation in saying that even if some part of consideration remains to be paid leading to a dispute; the transaction shall not affect the liability of capital gain so as to postpone indefinitely. Rather the infinity of the facts have revealed that the assessee had made the agreement with M/s Lunkad Associates while other co-owners have entered into the agreement with M/s Giriraj Developers who had ultimately taken up the entire project; however both are the sister concerns. The practical aspect is that such dispute shall not be profitable for the developer to allow this stalemate to linger for long causing delay in transfer of flats to the prospective purchasers. What is meant in cl. (v) is the "transfer" which involves allowing the po....
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....ontinued with the owners to be transferred to the society at a future distant date really does not affect the applicability of s. 2(47)(v) as per the reasons assigned hereinabove. The transferee was undisputedly willing to perform his part of the contract even though a dispute had cropped up but that subsequent event had not adversely effected the main agreement rather the confirmity of events and thereafter series of developments have further admittedly strengthened the amount of consideration. Entering into the property and handing over of the possession was instantaneous thus entire conspectus of the case has attracted the provision of s. 45 of the Act. We have arrived at the above conclusion by respectfully following a decision and the law laid down by the Hon'ble jurisdictional High Court delivered in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT. In the result ground No. 2 is dismissed. 15, Apropos ground No. 3 of the concise grounds; as per the notes submitted by learned Authorised Representative vide para No. 20 it has been specifically mentioned not to press this ground. It is also clarified that it was as per the grounds of appeal attached with memorandum of appe....
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....0. Since the value is based on the same adopted by the DVO, it will be prudent to adopt the same. The AO is, therefore, directed to adopt the cost of acquisition at Rs. 11,97,000. This cost of acquisition is for the entire property as has been worked out by the DVO." 17.2 Since a view had already been taken by the predecessor of learned CIT(A) on identical facts in the case of Shri T.H. Poonawala therefore following the same view learned CIT(A) has held that the indexed cost of acquisition would be Rs. 43,62,005. The AO was accordingly directed to substitute the said figure of cost of acquisition since substantial relief was granted therefore now the Revenue is aggrieved. 18. Heard the submissions of the both the sides and perused the orders. At the outset it has been informed that Tribunal 'B' Bench, Pune in ITA No. 866/Pn/1999 for asst. yr. 1996-97 in the case of Jt. CIT vs. T.H. Poonawala, order dt. 24th March, 2006 has dismissed the ground of the Revenue by making this observations that quote "We have a strong reason for drawing this inference because the wealth-tax is a repetitive tax and the valuation is sometimes also meant only for that other purpose, but the capital ....
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....h has already taken a view in favour of the assessee and the facts are pari materia with the facts of cited decision has also been recognized by learned CIT(A) hence this ground of the Revenue is hereby dismissed. In the result, Revenue's appeal is dismissed. (e) ITA No. 429/Pn/2003; Revenue's appeal 19. Grounds raised are reproduced below: "1. On the facts and in the circumstances of the case, the CIT(A)-II, Pune, erred in deleting the capital gains arising on transfer of development rights in the property of the assessee when the final payment of Rs. 25 lakhs was received/encashed on 5th April, 1995 by the assessee i.e., in financial year 1995-96. 2. On the facts and in the circumstances of the case, the CIT(A) erred in holding that the capital gains on transfer of development rights are not assessable in asst. yr. 1996-97 when the second power of attorney was executed on 19th April, 1995 (i.e. in financial year 1995-96) in favour of the developer to enter the property and also to take several actions including to develop and sell the developed property. 3. On the facts and in the circumstances of the case, the CIT(A) erred in holding that the capital gains on transfe....