TaxTMI 
TaxTMI 
2013 (6) TMI 424
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.... the case the Commissioner of Income-tax ought not to have denied the assessee's objection that the reopening of the assessment is not valid in law and therefore the finding of the Hon'ble Commissioner of Income Tax in this regard is not justified. II. Grounds as to the nature of document: a) The learned Commissioner of Income Tax (Appeals)-I, Hyderabad failed to note that the document executed on 28/2/2006 was not a development agreement but an agreement of settlement of rights amongst the legal heirs of Late S. Hanumanth Reddy executed consequent to his death and, therefore, erred in holding to the contrary and the conclusion thereon in holding that there was a transfer within the meaning of Sec. 2(47) of the I.T. Act, 1961 is clearly unsustainable in law. b) No municipal sanctions for the development of property having been obtained based on the agreement dated 28/02/2006, the learned Commissioner of Income Tax (Appeals)-I, Hyderabad failed to note that the Agreement did not contemplate an exchange of properties and, therefore, the agreement does not by itself constitute a "Transfer" within the meaning of Section 2(47) of the I. T. Act, 1961. c) The learned Commissio....
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.... of Execution of Development Agreement is clearly unsustainable. f) The order of the Commissioner of Income Tax (Appeals)-IV, Hyderabad in holding that the consideration accruing or arising on the date of execution of the document of 28/2/2006 was Rs. 3,71,24,400/- is unsustainable as the built up area to be allotted to the assessee was non- existing on the date of execution of the agreement and therefore erred in adjudging the aforesaid sum as consideration while computing capital gains. IV. Ground as to the nature of capital gain: a) The order of the Commissioner of Income Tax (Appeals)-IV, Hyderabad in assessing the period of holding of the land as "Short - term" in nature is totally contrary to the facts and evidence on record and is therefore clearly unsustainable. b) The order of the Commissioner of Income Tax (Appeals)-IV, Hyderabad in computing the short term capital gains at Rs. 3,26,44,819 /- and the adoption of cost of acquisition is disputed being contrary to the facts and evidence on record. V. The Assessee denies his liability to be assessed for Interest u/s 234B of the I. T. Act, 1961. 3. Brief facts of the case are that the assessee filed return of income for ....
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....lopment Agreement, the Assessing Officer further noticed that both the parties had jointly obtained a layout permission from HUDA for development of 95 plots, agreeing that M/s. Lumbini Construction P. Ltd. would develop and construct houses over the said 95 plots at its cost. Besides, it was also mentioned that construction should be done by the second party only. Besides, the Assessing Officer noticed the following features of the transaction between them. i) As per para 9, M/s. Lumbini Constructions P Ltd. allowed 24 plots to the owners, out of which plot Nos. 11, 54, 95, 75, 81, 3, 67 and 72, besides, the joint ownership of plot No. 7 was allowed to the assessee, the developers got 69 plots. ii) As per para 16, the entire construction cost was to be borne by the developers. iii) The agreement showed that it was in the nature of a development agreement and the fact that M/s. Lumbini Construction P Ltd. had also contributed certain plots of land to the project could not change its character. iv) The fact that some of the family members of the assessee were shareholders in M/s. Lumbini Constructions P Ltd. could not prove that the agreement was a family settlement as the devel....
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....re, the total land admeasuring Ac. 14.32 gts. was contemplated for joint development by all the land owners in the year 2004. Therefore, all the land owners jointly obtained the layout permission from HUDA, which goes to show that there was no development agreement per se that all the parties are the owners of the land. He explained that one of the owners, M/s. Lumbini Constructions, who possess the major extent of land, undertook the construction work. Accordingly, the extent of land in the layout for each owner duly stand registered by the joint owners represented through M/ s. Lumbini Constructions, who is also the owner. The assessee submitted that M/s. Lumbini Constructions admitted Income both from the sale of land and the construction work for which it was entitled to as one of the joint owners. Accordingly, it was contended that the venture was the development of the layout in their land by the joint owners. 8. The CIT(A) observed that it is the main contention of the assessee that the document titled as "Development Agreement" is in fact not a Development Agreement as such, but a settlement amongst the family members after the death of Late Sri S. Hanumanth Reddy. It has ....
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....ayan Reddy, Daughter Smt. K. Kavita and another son, Sri. S. Ranjith Reddy, the parties of the first party became the legal heirs, succeeding the land owned and possessed by Late Sri S. Hanumanth Reddy. As mentioned above, the above parties therefore owned 14 acres 32 gts. of land taken together. As per the agreement, with a view to develop into a residential township, they reached an agreement, whereby, the first party agreed to give the property owned by it "for development" by the second party. The Development Agreement specifically stipulates the intention of the above persons to construct a township and necessary permission for the development of 95 plots thereon was also obtained by the other persons jointly. 11. The CIT(A) further observed that, in terms of the said agreement, M/ s Lumbini Constructions Pvt. Ltd, the second party, had agreed to construct houses on the said 95 plots at their own cost. It had been specifically mentioned that construction would be mandatorily done by them only. The second party also issued the "Lumbini SLN Springs" brochure, which forms a part of the agreement. The agreement, on page 6, specifically mentions that the parties, " .... shall also....
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....f built up area, as per the Annexure 1 to the brochure. Additional work was to be paid by the first party to the second party @ Rs. 850/- per sq. ft. In view of the above, it becomes clear that the "Development Agreement under consideration" cannot be considered as a mere 'license' or even as a 'family settlement'. On going through the features of the agreement, it was observed by the CIT(A) that there is no mistake in the nomenclature, while terming it as a 'Development Agreement'. The terms of the said agreement clearly show that this is a conscious agreement for development of land entered into between the "owner" and "the Developer", wherein all the aspects of the transaction have been duly and specifically mentioned. 14. The CIT(A) observed that merely because the developer also owned part of the total land, it cannot be said that it was only a license granted to one of the land owners to enter the premises and construct the houses. There can be no dispute that the persons constituting the first party were taxable entities different from the company, M/s. Lumbini Constructions P Ltd., which is an independent taxable entity itself. The mere fact that so....
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....cunderabad in ITA No. 266/Hyd/2005 dtd. 24.10.2008. Accordingly, capital gains on such transfer has been rightly held as arising in the A.Y. 2006-07, as the assessee has received the developed plots in terms of the agreement mentioned above. Since the assessee received total built up area of 30,937 sq. ft. in terms of the said agreement, and the cost of construction thereof as per the assessee himself was Rs. 1200 per sq. ft., the determination of the short term capital gains of Rs. 3,26,44,819 by the Assessing Officer is upheld. Against this, the assessee is in appeal before us through various grounds as reproduced in Para 2 of this order. 18. At the outset the learned AR objected reopening of the assessment by way of additional grounds as follows: (1) The assessee having disclosed full and complete information and material facts relating to the transaction with M/s. Lumbini Constructions in the original returns filed on 31/10/2006, and therefore, the entire reopening of proceedings u/s. 147 is illegal, bad in law and, therefore, the entire assessment is to be quashed. (2) The reasons recorded for reopening of assessment was fully appended by way of notes in the statement of to....
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....ited as evidenced by the Development Agreement dated 28 February 2006, duly registered with the office of Sub-Registrar, Moosapet on 13 March, 2006 vide document No. 5630/2006 and the assessee is entitled for 9 plots bearing numbers 3, 11, 54, 67, 72, 75, 85, and 95 on which houses will be constructed and in one plot the assessee is an equal co-owner with his elder brother S. Narayan Reddy in layout number 7. The AR contended that the fact of entering into Development Agreement was very much disclosed to the Assessing Officer. If the Assessing Officer failed to act on the material facts which were on record at the time of original assessment, he cannot reopen the assessment on the basis of same documents which is nothing but change of opinion. According to the learned AR when there is no tangible fresh material, the Assessing Officer cannot come to the conclusion that there is escapement of income from assessment; a mere change of opinion on the part of the Assessing Officer in the course of assessment cannot be a legitimate reason for reopening of the assessment which was already concluded. According to the AR the assessee in the present case made a full disclosure in the note for....
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....ssee filed return of income on 31.10.2006 for A.Y. 2006-07 declaring income of Rs. 11,13,651. The return of income was processed u/s. 143(1) of the Act. During the course of proceedings u/s 143(3) for the A.Y. 2007-08, it is noticed from the information submitted by the assessee that he has entered into a development agreement with M/s Lumbini Constructions on 28.02.2006 and handed over Ac. 6-4.8 guntas of land at Gachibowli for development. Accordingly, he recorded the reasons for reopening assessment as follows. The assessee received developed plot Nos. 11, 54, 95, 75, 81, 3, 67 and 72 in lieu of the land given for development. The developed plots received are taxable in the year of execution of development agreement as it is like an agreement for sale and the transfer of land is transfer as per section 2( 47)(v) of the IT Act. As held in the case of Chathurbhuj Dwarakadas Kapadia vs. CIT (260 ITR 491), the date of transfer for capital gains calculation purpose is the date of effective possession. The Tribunal Hyderabad Bench 'A' has also reiterated the same view in a recent decision rendered in the case of Dr. Maya Shenoy, Secunderabad in ITA No. 266/Hyd/2005, dt. 24.10.....
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....on of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe". Parliament introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. 28. Now, undoubtedly an order of the assessment which has been passed in subsequent assessment year may furnish a foundation to reopen an assessment for an earlier assessment year. However, there must be some new facts which come to light in the course of assessment for the subsequent assessment year which emerge in the order of the assessment. Otherwise, a mere change of opinion on the part of the Assessing Officer in the course of assessment for a subsequent assessment year would not by itself legitimise reopening of assessment for an earlier year. The point, we make it clear herein is that whether in the course of assessment proceedings for subseq....
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....period from 08-07-2005 to 31-03-2006. (b) Under my late father S. Hanumanth Reddy's HUF status as per the Hindu Succession Act, as legal heir per Schedule I, I became entitled to 1/4th of 1/3rd share of his total HUF property, interest and agricultural income. Accordingly the property and interest income declared in an amount of Rs. 25,821/- and agricultural income of Rs. 15,833/- thus represents my 1/4th Share of 1/3rd share as one of the legal heirs of my late father Sri S. Hanumanth Reddy. 3. (a) As a consequence of death of my father I became one of the successor to the interests and rights in the layout at Gachibowli village, Serilingampally Mandal, R.R. District, entrusted for development to M/s. Lumbini Constructions Ltd, as evidenced by the Development Agreement dated 28th February 2006, duly registered with the office of Sub-Registrar, Moosapet on 31st March 2006 (Vide Document No. 5630/2006). I became entitled to 9 plots (bearing Nos. 3, 11, 54, 67, 72, 75, 85 & 95) on which houses shall be constructed and in one plot I am an equal co- owner with my older brother S. Narayan Reddy in the layout (bearing No. 7) in the project that is in progress. (b) On one such allo....
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....as processed for A.Y. 2006-07 or before the expiry of time limit to complete the assessment for A.Y. 2006-07 in regular course. That indeed is not the case of the Revenue. All the material which was relevant to determine the income were available with the Assessing Officer when the regular assessment was to be completed for A.Y. 2006-07. There is requisite material to complete the assessment, the Assessing Officer has not considered the same and there was no assessment. Consequently, mere formation of another view in the course of assessment proceedings for A.Y. 2007-08 would not justify the Revenue for reopening the assessment for A.Y. 2006-07 though the reopening of assessment has taken place within the period of 4 years. The power to reopen assessment is structured by law. Guiding principles which were laid down by the Supreme Court in the case of Kelvinator of India Ltd. (supra) must be fulfilled. In the present case, there is no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment for A.Y. 2007-08 to justify reopening of assessment for A.Y. 2006-07. The Department Representative taken a plea before us that in vie....
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....der section 148 even in the absence of a live link between the reasons recorded and the formation of the belief would be to make the conditions of section 147 and section 148 as regards notices of reopening issued in cases where the return was originally processed under section 143(1). There is no exclusion in section 147 to the effect that where the return was earlier processed under section 143(1} it is not necessary for the Assessing Officer to hold or entertain a belief that income chargeable to tax had escaped assessment for the reasons recorded by him. Therefore, the condition that the Assessing Officer must have reason to believe and the further condition that those reasons must have a live link with the formation of the belief is applicable equally to cases where the return was processed under section 143(1) as also to cases where the return was examined and an assessment was made by a speaking order under section 143(3). The only distinction recognized in section 147 between the two is where it is provided by the proviso that where the earlier assessment was made under section 143(3), no action for reopening the assessment can be taken after the expiry of four years from t....
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.... nexus with the formation of such belief or that the reasons are based on gossip or rumour or were a mere pretence. This is made clear by the observations of the Court at page 512 of the report where it was held' that "so long as the ingredients of section 147 are fulfilled" the Assessing Officer can reopen the proceedings even where intimation under section 143(1) had been issued. Thus fulfilment of the conditions of section 147, including the one that there should be "reason to believe", is essential for the validity of the notice under section 148. It is while expounding the words "reason to believe" that the Supreme Court in the later judgment in CIT vs. Kelvinator of India Ltd. (supra) held that there should be "tangible material" to come to the conclusion that income had escaped assessment. Thus, while resorting to section 147 even in a case where only an intimation had been issued under section 143(1)(a) it is essential that the Assessing Officer should have before him tangible material justifying his reason to believe that income had escaped assessment. 31. The assessee contended before us that there was no such tangible material before the Assessing Officer from which....
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....ly filed for the year under consideration on 18.10.2001, exemption was claimed by the assessee in respect of interest income as per provisions of Article-7 of Indo-US treaty and this fact was clearly mentioned in the Note (copy placed at page No .16 of the paper book) filed along with the said return. The said return was initially processed by the Assessing Officer u/s. 143(1) on 2.1.2003. Subsequently, he however reopened the assessment for the following reasons recorded u/s. 148(2) "30.9.2005: The assessee filed its return of income on 18.10.2001, declaring NIL income. The return was processed u/: 143(1)(a) of the 1 T Act, 1961 on 2.1.2003, accepting the Nil income declared by the assessee and a refund of Rs. 1,58,701/- was determined and issued to the assessee. The assessee has received interest which is not connected with operation of aircrafts but claimed exemption on all income under Article 8 of Indo-US DTAA, and that the interest should be taxed under Article 11 of the DTAA @ 15%. Since no prima facie adjustment can be made under the statutory provisions hence the retuned income was accepted while processing the return. However, remedial action by reopening the assessment u....
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....ny new material coming to the possession of the Assessing Officer if the reasons recorded for reopening of assessment are otherwise valid. The learned counsel for the assessee, on the other hand, has relied on Third Member decision of the Tribunal in the case of Telco Dadaji Dhackjee Ltd. (supra) stating that a similar issue involved in the said case has been decided by the Third Member in favour of the assessee after taking into consideration the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) relied upon by the learned OR. In the said case, the return filed by the assessee was originally accepted u/s. 143(1). In the said return the assessee had claimed deduction for payment of non-compete fees of Rs. 75 lakhs which included payment of Rs. 15 lakhs to Directors. The assessee had also claimed depreciation of Rs. 1,41,848/ - on lease premises. The Assessing Officer issued notice u/s 148 on the ground that these were not allowable expenses and income chargeable to tax had escaped assessment. He accordingly disallowed both the items in the reassessment order. When the matter reached to the Tribunal, the learned Judicial Member took th....
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....sing Officer should have before him tangible material justifying his reason to believe that income had escaped assessment. Since there was no such tangible material before the AO from which he could entertain the belief that income of the assessee chargeable to tax had escaped assessment, the Third Member held that reassessment proceedings initiated by the Assessing Officer were liable to be quashed on the ground that there was no tangible material before the Assessing Officer even though the assessment was completed originally u/s 143(1). In our opinion, the Third Member decision of the Tribunal in the case of Telco Dadajee Dhackjee Ltd. (supra) is squarely applicable in the present case and respectfully following the same, we hold that the initiation of reassessment proceedings by the Assessing Officer itself was bad in law and the reassessment completed in pursuance thereof is liable to be quashed being invalid. We order accordingly and allow ground No. 1 of the assessee's appeal. 11. As a result of our decision rendered above on the preliminary issue quashing/cancelling the assessment made by the Assessing Officer u/s. 143(3) read with section 147, the other issues raised ....
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....onstructed and the entire construction cost is to be borne by the developer. Assessee and his family members are entitled to get 24 independent houses out of the above and assessee's individual share is 10 independent houses. The total construction area of the above houses is 4,500 sq. yards. The land was plotted accordingly and the assessee had sold plot No. 76 admeasuring 366 sq. yards with constructed area of 3057 sq. feet for a consideration of Rs. 62 lakhs vide page Nos. 192 to 212 of A/MALLIFX/1 of the seized documents. Further, AO observed that assessee was in receipt of advances towards sale of houses whereas assessee admitted short term capital gain only in respect of plot No. 5 of Rs. 10,01,250/ - which represents land cost only. The AO was of the view that capital gain should be computed in respect of all the 10 independent houses. He relied on the ratio laid down by the various appellate authorities including this Tribunal in the case of M/s. Shantha Vidyasagar Annam vs. ITO and also Bombay High Court decision in the case of Chaturbhuj Dwarakadas Kapadia (cited supra) and concluded that in the present case, assessee was liable to capital gain basing on the develop....
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....ssee and other family members and in lieu of such transfer of land the assessee is to receive the consideration in the form of constructed built up area. Hence, all the ingredients of the transfer as embedded in sec. 2(47)(v) are very much visible in the transaction entered into by the assessee. There is a written agreement in respect of the immovable property owned by the assessee, there is consideration in the form of construction of superstructures, there is handing over of physical possession of the land and there is performance on the part of the developer M/s. Lumbini Constructions (P.) Ltd to carry out the construction activity out of its own funds. In view of satisfaction of all the characteristics of transfer, the case clearly falls u/s. 2(47)(v) of the I.T. Act. As regards the contention of the assessee that it is only a family arrangement amongst the members of the family is concerned, there is no merit in such plea of the assessee. Here, family of the assessee entered into a development agreement with a developer by name M/s. Lumbini Constructions (P.) Ltd. He could not agree with the contention of the assessee that M/s. Lumbini Constructions (P.) Ltd., is part of the f....
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....virtue of the above regd. document. The cost of construction of built up area measuring 31,819 sft. to be the sale value which was passed on to the assessee in lieu of the land foregone or transferred for the purpose of development. Considering the nature of construction as well as the period under which the construction has been undertaken, the CIT(A) was of the opinion that the cost of construction per sft would be around Rs. 1200/- which is a reasonable estimate. The same was multiplied with the quantum of built up area received by the assessee. i.e. 1200 x 31,819 = Rs. 3,81,82,800. This value represents the consideration received by the assessee in lieu of the land admeasuring 7,377 sq. yards which was transferred by the assessee vide agreement dated 28.2.2006. From this sale consideration, the land cost to the assessee is to be deducted @ Rs. 1170 per sq. yard which comes to Rs. 86,31,090/- (7377 x 1170). Thereby the short term capital gain derived by the assessee in this year is Rs. 2,95,51,710/- (Rs. 3,81,82,800 - Rs. 86,31,090) was determined. 40. The AO has calculated the short term capital gain by taking the land measuring 4500 which represents the land retained by the a....
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....ntion of the learned AR before us is that the order of the CIT(A) is unsustainable both on facts and in law. He failed to note that the document executed on 28/2/2006 was not a development agreement but an agreement of settlement of rights amongst the legal heirs of Late S. Hanumanth Reddy executed as a consequent to his death and therefore erred in holding to the contrary and the conclusion thereon in holding that there was a transfer within the meaning of Sec. 2(47) of the I.T. Act, 1961. The AR submitted that no municipal sanctions for the development of property having been obtained based on the agreement dated 28/02/2006. The Agreement did not contemplate an exchange of properties and therefore the agreement does not by itself constitute a "Transfer" within the meaning of Section 2(47) of the I.T. Act, 1961. He submitted that the CIT(A) failed to note that the concept of Transfer as envisaged in Section 2(47)(v) of the I.T. Act, 1961 did not cover Development Agreement and much less the document in question does not fall under the category of development agreement and, therefore, the CIT(A) erred in holding that there was a "Transfer" in terms of the execution of the said Agre....
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....R submitted that the order of the CIT(A) in computing the short term capital gains at Rs. 2,95,51,710/- and the adoption of cost of acquisition is disputed being contrary to the facts and evidence on record. The assessee denies his liability to be assessed for Interest u/s 234B of the I.T. Act, 1961. The AR relied on the Third Member decision of Tribunal Chennai Bench in the case of Vijaya Productions (P.) Ltd. v. Addl. CIT (134 ITD 19). 44. On the other hand, the learned DR submitted that the concept of land retained by the assessee brought out by the CIT(A) is also ill-founded. Assessee didn't retain any land in the instant case, he had transferred his share of land to the builder and in lieu of that received 10 houses constructed in 4504 sq. yards of land with built up space of 31819 sq. ft. He submitted that the CIT(A) also erred on basic scheme of computation of capital gains and ignored the cost of the land received by the assessee and taken only the cost of construction of built up space received by the assessee in computing capital gains arising on account of transfer of land for development. The method of computation of capital gains followed by the CIT(A) is not corr....
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....d by it. In return the assessee-company is getting 50 per cent of the total built up area 31,819 sq.ft. of the undivided right in the landat 4504 sq. yard in pursuance of the above agreement. 49. The joint venture project as far as the impugned previous year is concerned, was only in a nascent stage. As per the agreement, M/s Lumbini Constructions (P.) Ltd. is to construct the building at its own cost. All the above features make out a case of a JV for developing and reconstructing houses by adjusting rights in the immovable properties by providing the vacant land and in return getting a share in the undivided right over the land as well as in the built up area. 50. As far as the previous year relevant to the impugned assessment year is concerned, nothing has happened other than the execution of the agreements. The transfer of an immovable property always contemplates transfer of an existing property, i.e. a property in praesenti. The question in the present case is whether there is a property existing to be transferred by the assessee-company. As far as the land of 6 acres and 4.8 guntas is concerned there is only an agreement. The proposed project is still to be born as the off....
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....pose of development is a transfer. It is to be seen that the consent given by the assessee-company to provide its land for developing the housing project is one of the necessary stipulations of the whole scheme. There cannot be an independent agreement per se, in assessee-company permitting somebody to construct a housing project on its land. The provision made for 6 acres and 4.8 guntas to facilitate the implementation of the JV is to be read always along with equally important other stipulations of the agreement. 53. All these matters bring home an important point that the expectations and contemplations incorporated in the agreements are the business propositions made by the concerned parties, which have been deduced into enforceable agreements. Even though the agreements are enforceable, they themselves do not take the character of immovable properties. 54. The execution of the development agreement do not bring into existence any tangible asset that could be transferred between the parties. The agreements speak about the intentions of the parties. Their future action plans are based on the agreements. Once the project is completed and all the stipulations are satisfied, the ....
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....t term capital gains. According to the DR computation of capital gain does not fail. Being so, the judgement of co-ordinate Bench in the case of Dr. Maya Shenoy (supra) and the judgement of Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra) has to be applied. 57. In this case, admittedly, assessee's father late Sri Hanumanth Reddy, along with another purchased 6 acres and 4.8 guntas of land. Another piece of land, 8 acres 27/2 guntas, was purchased by M/s. Lumbini Constructions (P.) Ltd. and Sri B. Laxman Reddy. The layout permission was jointly obtained for 14 acres 32 guntas. The development work was undertaken by M/s. Lumbini Constructions. There was a development agreement with these parties vide registered document No. 5630/06 dated 28.2.2006. On the basis of this agreement, the Department took a view that on signing the agreement there was a transfer u/s. 2(47) of the Act. The assessee admitted capital gain on sale of land. The Assessing Officer has computed the capital gain for 4500 sqy at Rs. 17000 per sqy. Gross consideration was worked out at Rs. 7.65 crores. Out of this he has deducted cost of acquisition at Rs. 52,65,000 (total short term capital....
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....f the contract of the nature referred to in Section 53A of the Transfer of Property Act would come within the ambit of Section 2(47)(v). That, in order to attract Section 53A, the following conditions need to be fulfilled. There should be contract for consideration; it should be in writing; it should be signed by the transferor; it should pertain to the transfer of immovable property; the transferee should have taken possession of property; lastly, transferee should be ready and willing to perform the contract. That even arrangements confirming privileges of ownership, without transfer of title, could fall under Section 2(47)(v)". 59. Their Lordships, having made the above observations, took note of the fact that Section 2(47)(v) was introduced in the Act w.e.f. asst. yr. 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 also noted by their Lordships that, in this scenario, assessee 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 t....
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....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 thereof 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 the right specifically 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. (Emphasis, italicized in print, supplied by us now) 63. A plain reading of the Section 53A of the Transfer of Property Act shows that in order that a contract can be termed to be "of ....
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....ligations. Unless the party has performed or is willing to perform its obligations under the contract, and in the same sequence in which these are to be performed, it cannot be said that the provisions of Section 53A of the Transfer of Property Act will come into play on the facts of that case. It is only elementary that, unless provisions of Section 53A of the Transfer of Property Act are satisfied on the facts of a case, the transaction in question cannot fall within the scope of deemed transfer under Section 2(47)(v) of the IT Act. Let us therefore consider whether the transferee, on the facts of the present case, can be said to have 'performed or is willing to perform' its obligations under the agreement. 66. In the light of the above, we have examined the development agreement dated 28.2.2006. As per this development agreement land owner gets his share of plots on construction and consideration is quantified in terms of money. Also the handing over of possession in the development agreement is missing. Both the developer and the assessee having the landed property. They pooled together the landed property along with some other parties who are owners of some other land....