TaxTMI 
TaxTMI 
TaxTMI 
2014 (4) TMI 1100
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.... same to be out of time. Appellant prays for determination of date of transfer as 1st March 2008 and allowing the deduction U/s 54EC. 2) CIT(A) has erred in holding that rent paid by Rudra Buildcon Pvt. Ltd. Rs. 2,55,000/- towards alternate accommodation is part of Consideration for transfer. Appellant prays for deletion of the same. 3) CIT(A) has erred in confirming addition/ disallowance undue section 14A of Rs. 36,024/- same may please be cancelled. 4) Appellant prays for Just and Equitable relief." 3. The appellant before us is an in2d ividual who filed a return of income for the assessment year 2008-09 declaring incomes on account of long term capital gain on sale of property; from business & profession of medical practitioner; and, other sources. In the scrutiny assessment, the total income has been assessed at Rs. 3,50,17,100/- as against the returned income of Rs. 2,12,15,713/. The substantive dispute is with regard to a part disallowance of exemption claimed by the assessee u/s 54EC of the Act while computing long term capital gain on sale of immovable property, which is manifested in Ground of Appeal No.1 above. 4. In brief, the facts relevant to consider the controv....
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.....2008 was denied. The CIT(A) has also sustained the action of the Assessing Officer on the ground that the investment made in the bond of REC Ltd. of Rs. 50,00,000/- on 22.08.2008 was not within six months from the date of transfer of asset, and accordingly claim of Rs. 50,00,000/- was denied. The assessee is in appeal before us on the aforesaid issue. 6. The aforesaid dispute hinges around the date of transfer of asset i.e. the land sold by the assessee which has resulted in capital gains accruing to the assessee. The assessee entered into an agreement with M/s Rudra Buildcon Pvt. Ltd. on 13.09.2007 whereby it assigned the development rights in respect of the aforestated land for a total consideration of Rs. 5,32,00,000/-. The Assessee contended that the date of transfer of asset was 01.03.2008, when he gave physical possession of the land to the developer i.e. M/s Rudra Buildcon Pvt. Ltd. and accordingly it was canvassed that the investment made on 22.08.2008 of Rs. 50,00,000/- in th4e bonds of REC Ltd. was within the period prescribed in section 54EC of the Act. The Assessing Officer, on the other hand, observed that having regard to the provisions of section 2(47)(v) r.w....
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.... with reference to the agreement that the entire consideration was not received within the period prescribed in the agreement and in-fact dispute with the developer still continues on account of nonrecovery of the full consideration. Therefore, according to the learned counsel, the giving of possession in terms of the agreement was subject to a condition, which was not complied with and therefore according to him, there could not be a 'transfer' within the meaning of clause (v) of section 2(47) of the Act. It was explained that though the agreement was registered on 14.09.2007, but the physical possession of the property was given on 01.03.2008 and therefore the date of transfer was rightly considered by the assessee to be 01.03.2008. In support of his proposition, the learned counsel has relied on the following decisions : (i) CIT vs. Geetadevi Pasari, (2009) 17 DTR 280 (Bom); (ii) ACIT vs. Mrs. Geetadevi Pasari, 104 TTJ 375 (Mum); and, (iii) Mr. Sadiq Shaikh & another vs. DCIT vide ITA Nos. 87 & 88/PNJ/2013 order dated 31.07.2013 of the Panaji Bench of the Tribunal. 9. On the other hand, the learned Departmental Representative appearing for the Revenue pointed out that on the da....
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....ed development rights in respect of his land to the developer in term of agreement dated 13.09.2007. It is also7 made out that an irrecoverable Power of Attorney has also been executed by the assessee in favour of the developer. The said Power of Attorney was given to carry on all such works and perform such acts as listed out in paragraph 3 of the agreement that were needed to complete the development of the property and it was to remain in existence till the completion of the development. The relevant clauses of the agreement in this context have been reproduced by the CIT(A) in para 3.3 of his order and the same are not being repeated here for the sake of brevity. The case made out by the Revenue is that such clauses in the development agreement indicate that there was passing or transfer of control over the property in favour of the developer on the date of agreement i.e. 13.09.2007 itself which was registered on 14.09.2007. Reliance has been placed by the Revenue on the decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra) to say that once under some clause of the agreement a limited Power of Attorney is intended to be given to the devel....
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....lects that the possession which is said to have been given to the developer was subject to the realization of the cheques and the final payment of consideration mentioned therein. We are only trying to point out that the possession understood by the Assessing Officer by a reading of the development agreement is a conditional possession. 15. At this point, we may also refer to the plea of the Revenue that the assessee had authorized the developer to carry out certain acts in relation to the development of the property and for that matter a reference has been made to para 3.3 of the order of the CIT(A) where the relevant clauses of the agreement have been extracted. No doubt the assessee authorized the developer to undertook development and other steps stipulated in the agreement. So however, following clauses would show :- "d. After the full paym9 ent of consideration to undertake the development of the said properties and construct thereupon the permissible tenements and buildings in accordance with the approved scheme and plans and in accordance with the terms and conditions laid down by the concerned authority from time to time; To sell/ lease/ allot/ alienate or in any way dea....
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....ition, which was not fulfilled at that stage. Therefore, under these circumstances, the date of development agreement i.e. 13.09.2007, could not be the date on which assessee passed or transferred complete control over the property in favour of the de1v0eloper. Pertinently, when the full consideration was not paid and the handing-over of vacant and absolute possession of the property was subject to full and final payment of consideration, which did not happen on the date of development agreement, thus the same would not be said to be the date of 'transfer' even in terms of section 2(47)(v) of the Act. A somewhat similar situation had arisen in the case of Geetadevi Pasari (supra) before the Mumbai bench of the Tribunal. In the said case, the assessee and the co-owners entered into a development agreement with the developer for development of the property on 29.03.1994 and on that date a sum of Rs. 30,00,000/- was paid by the developer as earnest money. Possession of property was handed-over to the developer on 10.04.1998 when the balance consideration was paid. Accordingly, assessee treated the date of transfer as 10.04.1998 and offered to tax long term capital gain in assessment y....
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.... facts and circumstances of the case ?" 3. Mr. Gopal, the learned counsel for the respondent, pointed out that in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT (2003) 180 CTR (Bom) 107 : (2003) 260 ITR 491 (Bom) wherein almost identical issues were involved and the same was also relied upon by the Tribunal in its order. 4. In the aforesaid judgment, this Court had clearly taken a view that the relevant assessment year for the purpose of computation of capital gains will be the assessment year in which the assessee was actually physically put in possession and in the instant case, there is no dispute that though the agreement was entered into on 29th March, 1994, the assessee (sicpurchaser) was put j in possession only in the year (on) 10th April, 1998. 5. In view thereof, the assessee will be liable for being assessed for capital gains only in the asst. yr. 1999-2000. Under these circumstances we do not find any substantial question of law involved in the above appeal. The appeal is devoid of merits and the same stands dismissed." 17. The aforesaid precedent, in our view, fully covers the present situation inasmuch as in the present case also though the agreement was entered....
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....ance deed. Section 53A of the Transfer of Property Act deals with the doctrine of the part performance of a contract and as per the Hon'ble Delhi High Court in the case of CIT vs. Reliance International Corporation Pvt. Ltd., 211 ITR 666 (Del), the aforesaid provision of the Transfer of Property Act does not confer title on the transferee on possession but merely imposes a statutory bar on the transferor. In other words, the doctrine of part performance is a defense and it is a right to protect the transferee's possession against any challenge to it by the transferor contrary to the terms of the contract. 1T3he moot question is, in case a contract of the aforesaid nature provides a conditional possession, can it still be considered as a 'transfer' for the purposes of section 2(47) of the Act. A perusal of sub-clause (v) of section 2(47) of the Act and section 53A of the Transfer of Property Act would reveal that in order to attract the said provisions, there must be an agreement to sell and part performance of the contract which is covered by section 53A of the Transfer of Property of Act by giving possession of the property. It is also well-understood that section 53A of the Trans....
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....nt of the land development agreement entered by the assessee with Rudra Buildcon Pvt. Ltd.. In terms of the said development agreement apart from the cash consideration, the developer also offered to the assessee a separate tenement which was to be constructed by the developer on its own cost. Till developer was to construct and put the assessee in possession of such tenement, the developer was to provide an alternative and suitable accommodation to the assessee and the expense on providing of such alternate accommodation was also to be borne by the developer. The Assessing Officer noticed that in this context the developer had incurred a sum of Rs. 2,55,000/- on account of leave and license agreement for the alternate accommodation provided to the assessee. The Assessing Officer was of the view that the same was part of the consideration and alternatively, since the amount has been received without any corresponding liability, it was liable to be taxed as a revenue receipt. The CIT(A) has also affirmed the action of the Assessing Officer, against which assessee in appeal before us. 22. Before us, the issue raised by th15e assessee is that the cost of providing alternate accommoda....
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....on 14A of the Act. 26. In brief, the facts are that assessee was found to have earned certain incomes which did not form part of the total income under the Act and accordingly the Assessing Officer invoked section 14A of the Act and sought to disallow such expenditure which was incurred in relation to earning such incomes. The Assessing Officer noted that assessee had made substantial investments in shares and out of the expenditure incurred on account of bank charges, Telephones, vehicle, petrol, salary, etc. certain portion thereof would be attributable to the earning of the exempt income which was disallowable u/s 14A of the Act. By applying rule 8D of the Income Tax Rules, 1962, the Assessing officer made a disallowance of Rs. 41,389/-, which was carried in appeal before the CIT(A). 27. The CIT(A) has upheld the action of the Assessing Officer in-principle. However, the CIT(A) found merit in the plea of the assessee that the disallowance of interest expenditure of Rs. 5,365/- computed by the Assessing Officer was unjust and since the entire expenditure was debited to the capital account of the assessee and not claimed as an expenditure against any income. Accordingly, he reta....