TaxTMI 
TaxTMI 
2016 (4) TMI 646
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....2. Even though both the parties have urged grounds relating to computation of capital gains in the original grounds of appeal, they have filed an additional ground contesting therein the capital gains is not assessable in AY 2007-08, since the transfer has taken place in the year relevant to the assessment year 2003-04 in terms of sec. 2(47) of the Act. Since this additional ground goes to the root of the matter, we admit the same and proceed to dispose of the same. 3. The facts relating to the case are discussed in brief. Both the assessees have inherited a land from their father named Shri Laxmi Singh Udit Singh. After the death of Shri Laxmi Singh Udit Singh in the year 1986, the land was inherited by his five sons. The daughters of Shr....
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....h of them. 5. The main contention urged in the additional ground filed by these assessees is that the "transfer" of property took place in the year relevant to the assessment year 2003-04 and hence the capital gains assessed in AY 2007-08 was not in accordance with the law. It was further submitted that there is no estoppel against the law and hence, even if the assessee has erroneously offered the capital gains in AY 2007-08, the same cannot be assessed in that year. 6. On the contrary, the Ld D.R placed strong reliance on the orders passed by tax authorities. He further submitted that the assessees have got their respective share only in the year relevant to the AY 2007-08 and they have also declared the same in their respective returns....
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....3A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in a co-operative society, company or other association of persons or by way of agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. In the instant case, by virtue of development agreement, the assessee has handed over the possession of the impugned land during the FY 2002-03. Hence, in terms of sec.2(47)(v) and 2(47)(vi) of the Act, the taxability of Capital gain has to be considered in AY 2003-04. Our view gets support from the decision rendered by Hon'ble Bombay High Court in the case of Chaturbhu ....
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....h LJ 131). It is precisely for this reason that the legislature has introduced section 2(47(v) read with section 45 which indicates that capital gains is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. In this case that test has not been applied by the department. No reason has been given why that test has not been applied, particularly when the agreement in question, read as a whole, shows that it is a development agreement. There is a difference between the contract on one hand and the performance on the other hand. In this case, the Tribunal as well as the department have come to the conclusion that the transfer took place durin....
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....case, the court should go by the date on which irrevocable licence was given." 10. We feel it necessary to discuss about the facts of the case of Charubhuj Dwarkadas Kapadia, referred supra, in order to understand the legal proposition laid down by the Hon'ble Bombay High Court. In that case, the assessee entered into an agreement on 18.8.1994 to sell the property to a builder for a consideration of Rs. 1.85 crores with a right to the builder to develop the property in accordance with the relevant rules. The assessee shall grant an irrevocable license to enter upon the assessee's share of the property upon receipt of necessary permissions and approvals and also the NOC under Chapter XXC of the Income tax Act. By 31.3.1996, the builder obta....