TaxTMI 
TaxTMI 
2007 (12) TMI 323
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....onal ground moved in this regard (copy enclosed) without due notice to the assessee. The innocent failure to file a petition under section 46A by an illiterate agriculturist not exposed to income-tax should not have been used to deny relief. That the assessment order made for the assessment year 1998-99 is illegal. It should have been made for the assessment year 1995-96 when the joint development was entered into. The computation of capital gains and exemption granted under section 54 are not correct and opposed to law and decisions of the Hon'ble Tribunal, Bangalore Bench reported in : (i) D. Anand Basappa v. ITO [2005] 92 TTJ (Bang.) 597 : [2004] 91 ITD 53 (Bang.); (ii) R. Devaraj (ITA No. 982/Bang/2002 dated 5-11-2003); (iii) Dy. CIT v. Late Sarojama (ITA No. 613/Bang/100-1993-94); (iv)CBDT Circular No. 346, dated 30-6-1982 [[1982] 31 CTR (TLT) 12 : [1982] 138 ITR (St) 10]" 3. The only issue involved in this appeal is in respect of capital gains and exemption in respect of a property given to a builder for development against which cash and a few flats were received by the assessee. The Assessing Officer did not agree with the contention of the assessee and....
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....of the constructed portion received by the assessee and filed the relevant copy of the memorandum of understanding between the assessee and M/s. Skylark Mansion (P.) Ltd., who accepted to develop the property. As per this agreement, the assessee had agreed to transfer an undivided 66 per cent share of the schedule property including the super built up area therein to the builder and the developer agreed to construct and deliver 34 per cent of the super built up area in the apartment building to be constructed on the schedule property for the absolute use or benefit and ownership of the assessee. On such agreed proposition, the assessee entered into a development agreement and received refundable deposit of Rs. 2 lakhs as non-refundable. Further, the developer has agreed to pay a sum of Rs. 1 lakh as non-refundable for incidental expenses. Further, as per the agreement it was also agreed that on the day of executing the memorandum of understanding the balance amount of Rs. 95,000 would be paid at the time of signing the joint development agreement. The details of the property are mentioned are the schedule as under : "All that property consisting of land with building situated at....
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....t the Assessing Officer had rightly concluded. 11. We have heard the rival submissions and perused the records. The fact that the assessee entered into memorandum of understanding is not in dispute. So also the fact that the assessee entered into joint development agreement is also not in dispute. The authorities below were completely put on notice about these two deeds for their consideration. In the second page of the joint development agreement the following recital is very important for considering the actual transactions which reads as under : "The first party is in possession of a major portion of the schedule property but the remaining portion is tenanted; The first party shall arrange for getting vacant possession of the tenanted portion from the tenants and deliver vacant possession of the entire schedule property of the second party for the purpose of development within August. In the event of the first party failing to get such vacant possession from the tenants on or before 31-8-1995 the first party will pay interest thereon at 21 per cent per annum till the date of handing over the possession. On such delivery, the first party permits and authorises the sec....
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....ty and land appurtenant thereto is arrived at on the basis of following facts........" Further on scrutiny of details filed by the assessee, it is observed that what was transferred is the vacant land and not the house property. This observation made by the Assessing Officer clearly reveals that the transfer of the vacant land has taken place only in the assessment year 1995-96. Therefore, in our view, charging of capital gains tax in the year under consideration is not justified as the transfer of the vacant land had taken place in the assessment year 1995-96 towards part performance of the contract on the basis of the joint development agreement. At this juncture, we may refer to the relevant provision of section 45(1) which reads as under : "Any profits or gains arising from the transfer of a capital asset effected in the previous year shall save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54F, 54G and 54H 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." 14. A cursory perusal of the aforesaid provision would show that for charging capital gains tax, the ....