2009 (1) TMI 873
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.... CIT(A) erred in disregarding the statutory provision of discounting the apparent consideration as per section 269UC of the Act in computing the capital gains chargeable to tax. 2. On perusal of the assessment order, it is found that the return of income, declaring total income of ₹ 5,61,00,480, was filed on 31-12-2004. The assessee had declared incomes under various heads including the head of "Capital gains" in respect of his 44 per cent share in a plot of land admeasuring 1034.07 sq.mts. and located at 23, Barakhamba Road, New Delhi. This income was declared in view of the agreement with M/s. Som Dutt Builders (P.) Ltd. ('Som Dutt'). The capital gains were worked at ₹ 5,03,59,209. However, in the note appended to computation of income, it was mentioned that the agreement by way of collaboration for development of the property was signed on 2-5-1987 and Form No. 37-I under section 269UC was filed before the appropriate authority, declaring the consideration at ₹ 6,76,45,500. As against the aforesaid, the transfer consideration was valued at ₹ 5,99,34,697 based upon the Land & Development Office ("L&DO" for short) rate. Since the assess....
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....ructed area on the plot was to be retained by him. In view of this agreement, Form No. 37-I was filed before the appropriate authority on 18-5-1987, in which the apparent consideration was stated to be at ₹ 6,76,45,500, based upon the projected covered area 120550 sq. ft. This also included the basement area, which was intended to be sold. However, on completion of the building, it was found that the basement was required to be used mandatorily for various utilities. Therefore, the covered area was limited to 82807 sq. ft. The assessee's share in the area was worked out to 46371 sq. ft. The building plan was submitted to the NDMC for approval. The sanction was accorded on 21-11-1989 subject to certain conditions. These conditions were not acceptable to the assessee. Therefore, litigation ensued in the High Court and the plans were finally sanctioned on 6-11-1992 as per the order of Hon'ble High Court. Thereafter, the assessee allowed Som Dutt to book the area for sale out of their allocation and waived the condition of maintaining an escrow account for deposit of the sale proceeds therein. The work of construction started in February, 1992, when the possession of the plot was....
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.... depends upon the interpretation of section 2(47) and this is the crux of the matter in appeal before us. In this connection, he filed a chronology of events in respect of the transaction, which is stated as under:- Sl. No. Event Date (i) Collaboration agreement with Som Dutt 2-5-1987 (ii) Filing of Form No. 37-I 18-5-1987 (iii) Power of Attorney issued in favour of Som Dutt 4-6-1987 (iv) Sanction of building plan 21-11-1989 (v) High Court order allowing construction 16-1-1992 ( vi) Letter from Som Dutt intimating the start of the construction work 25-2-1992 (vii) Provisional allocation of area 20-3-1992 (viii) Completion of Narain Manjil Complex 9-6-2000 ( ix) Irrevocable power of attorney in favour of Som Dutt to sell the area 10-9-2003 (x) Booking of flats by the Som Dutt 1988-89 (xi) Confirmation Certificate by the Som Dutt 22-12-2006 4.1 It was his case that section 2(47) of the Act contains an extended definition of the term "transfer" which includes within its ambit any transaction which has the effect of transferring or enabling the enjoyment of any immovable property, as referred to in its clause (vi). The assessee handed over....
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....mba Road, New Delhi. On the basis of this clause in the agreement, the case of the learned DR was that it was not a case of transfer of any property to the Som Dutt but a case of development of multi-storeyed commercial building by the Som Dutt, the assessee and his HUF. Therefore, there could have been no question of any transfer taking place as a consequence of this memorandum, which could be done only on final allocation of the area after which the final power of attorney was executed in favour of Som Dutt to sell his portion of the constructed property. Further, it was pointed out that although it was a case of joint development of the property, the same was not transferred in the books of account of the assessee as stock-in-trade in the year ended on 31-3-1992, as can be seen from pages 17 to 19 of the paper book. It was also pointed out that there were disputes regarding the property which was settled by the order of Hon'ble Supreme Court on 7-7-1997 as the petition of Malvinder Kaur (sic) was dismissed as withdrawn. Therefore, his case was that the transfer took place on 10-9-2003 when the assessee issued a final power of attorney in favour of Som Dutt to do all or any of th....
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....ependent use. For the purposes of the agreement, certain terms were defined in it. "Transfer of plot" meant and included the ultimate transfer by the owner of the perpetual lease hold rights in favour of a co-operative society/a limited company, association of buyers etc., for which the cost was to be borne by the transferee(s). The Som Dutt was required to take all steps for obtaining all clearances for the construction but could make any change in the sanctioned plan only with the previous written consent of the assessee. It was required to complete the construction within 36 months from the date of sanction of the plans. The assessee granted Som Dutt general or Special Power of Attorney to enable it to carry out its obligation under the agreement, including inter alia for submitting on behalf of the assessee any building plan, its revision or modification. The assessee was required to execute any deed or document at the time of conveyance of any space falling to the share of Som Dutt. In case of acquisition of the property, the assessee was entitled to receive the compensation amount. 5.2 The case of the learned counsel was that transfer of the immovable property took....
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....e on 2-5-1987. 5.3 From the perusal of the agreement dated 2-5-1987, it is clear that the assessee appointed an architect and a builder, Som Dutt, for construction of Narain Manjil. There was no transfer of any capital asset on this date to Som Dutt. The assessee filed Form No. 37-I on 18-5-1987. In paragraph 10, the assessee mentioned that the transfer, if any, will be registered with Sub-Registrar, New Delhi. The case of the ld. counsel was that the provision contained in section 2(47)( vi) and section 269 UA(f)( ii) are in pari materia and, therefore, since there was a transfer within the meaning of section 269U(f)( ii), there was also a transfer within the meaning of section 2(47)( vi) of the Act. In this connection, it was pointed out that Som Dutt has started booking the flats and a sample copy of the allotment letter dated 6-1-1989 issued by Som Dutt to Shri Punit Chadha was placed on record. Under this letter, flat No. 3 with approximate area of 300 sq. ft. was provisionally allotted at the rate of ₹ 2,250 per sq. ft. The provisional allotment was subject to various conditions including -(i) reduction or increase of area on increase or decrease or location, depending....
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....lan was amended and ultimately the power of attorney was executed on 12-3-1999. The dispute in the case was whether capital gains were taxable in assessment year 1996-97 as per the department or in assessment year 1999-2000 as per the assessee. The assessee had shown capital gains in assessment year 1999-2000 and the tax was paid in that year. The Hon'ble Court referred to the amendment made in section 2(47) with effect from 1-4-1988, wherein clauses (v) and (vi ) were inserted in the section. The case of the assessee was that the date on which the possession was parted by the transferor is the relevant date for determining the year of taxation. The irrevocable licence was given in the financial year ending on 31-3-1999 and, therefore, the transfer had taken in this year and not the year ending on 31-3-1996. On the other hand, the revenue argued that the date of transfer has to be decided on the basis when developer substantially performed the contract. Since most of the payments were made in the financial year ending on 31-3-1996 and majority of permissions were obtained in that year, the capital gains were taxable in assessment year 1996-97. The Hon'ble Court came to the conclusi....
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....esented that he may be allowed to proceed with the construction work at the site according to building plans sanctioned by the NDMC at his own risk and subject to the final outcome of the writ petition. The Hon'ble Court passed the orders accordingly on 16-1-1992. It is also seen that the litigation in respect of Malvinder Kaur & Another was decided by the Hon'ble Supreme Court on 7-7-1997. The petition of Malvinder Kaur & Another was dismissed as withdrawn. The appeal was withdrawn as a consequence of settlement between various parties. Finally, the construction of Narain Manjil was completed on 9-6-2003 as certified by the architect. Built-up area of 46371 sq. ft. was allocated to the assessee and 36436 sq. ft. to Som Dutt. The assessee issued a power of attorney, being in the nature of irrevocable power of attorney, on 10-9-2003 to Som Dutt. Under this power of attorney, Som Dutt was appointed true and lawful attorney to do all or any of the acts, deeds and things in respect of 44 per cent of built-up area allotted to it inter alia in respect of -(i) booking for sale or on lease-hold basis the space at its own risk, cost and responsibility; (ii) receiving sale consideration from....