TaxTMI 
TaxTMI 
2014 (3) TMI 575
X X X X Extracts X X X X
X X X X Extracts X X X X
....erence to the assessment of capital gains. 2. The assessee, by virtue of an agreement dated 14/04/2003 handed over possession of 55.219 cents of land to M/s.Abad Builders for a consideration of Rs.8,83,50,400/-. The consideration was paid in a deferred manner starting from April 2003. M/s.Abad builders had constructed an apartment complex in the said property and on the basis of a power of attorney issued by the assessee the undivided share of land and the apartments were sold. The assessee declared a consideration of Rs.3.81 crores during the assessment year for the purpose of computation of long term capital gain. The Assessing Officer held that the total consideration of the transaction was Rs.8,83,50,400/- and the entire consideration ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned counsel for Revenue is that the agreement in question clearly fixes the consideration for the land transferred in favour of the builder and it also clearly indicates transfer of possession. When property is transferred after receiving substantial portion of consideration, the builder is entitled to invoke Section 53A of the Transfer of Property Act. Hence it amounts to a transfer as defined under Section 2(47) of the Income Tax Act and therefore the entire amount is liable to be taxed during the said assessment year itself. The Tribunal came to a finding that in order to attract Section 53A of the Transfer of Property Act, two conditions are to be fulfilled namely transfer of possession and secondly payment of substantial provision o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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." 7. It is therefore clear that if a transaction involves allowing of possession of any immovable property to be retained in part performance of a contract of a nature referred to in Section 53A of Transfer of Property Act it amounts to tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said consideration being the total consideration to be paid by ABAD for being granted the right to construct and sell the built up space in the proposed building, CSE undertakes the following: (i) that CSE will hand over possession of the said property to ABAD, free of all encumbrance, charges, liens etc, immediately on receipt of the first instalment of payment from ABAD for the purpose of construction and sale of the multi storied building as per this Agreement." 8. On a reading of the above provision itself, it is clear that possession of the property has been handed over to the builder immediately on receipt of the first installment of the payment from the builder. As per clause (3), the total consideration is mentioned as Rs.8,83,50,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mance of the obligations under the agreement on the buyer paying a substantial portion of the sale consideration, the contract of sale is treated to be in part performance. Perusal of the agreement in the case clearly indicates such a contract of part performance. The assessee cannot take a contention that the builder is not the buyer. In fact, the terms and conditions of the agreement clearly indicates that the intention of the parties is to sell the property as such to the buyer, or their nominees and a power of attorney is given to enable the buyer to sell the undivided share of land in favour of purchasers of apartments to be constructed by the buyer of the land. The execution of the sale deed is deferred as at the time when the possess....