TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1126
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....to tax in their entirety in the year of 'transfer' as was held by the jurisdictional High Court in the case of Sri Potla Nageswara Rao. (d) The learned CIT(A) ought to have confirmed the reassessment through which the Capital Gains that have escaped original assessment were brought to tax". 2. Further, vide letter dated 27.1.2017, the Revenue filed the following additional grounds of appeal: Additional Grounds of Appeal: "1. The learned CIT(A) erred in law and on facts in holding that transfer of property had actually taken place between the owner and the developer by virtue of the Development Agreement dated 12.03.2007 itself as it had been acted upon and if at all any Capital Gains arise as a result thereof, they have to be brought to tax during the financial year relevant to the Asst. Year 2007 -08 and not in the Asst. Year 2009-10 as was done by the Assessing Officer. 2. The above referred decision of the CIT(A) is erroneous on facts as the CIT(A) observed that it was only approval of plans, permissions, etc., that actually had taken place as a consequence of the Development Agreement dated 12.03.2007 and that no other development activity on the subject land h....
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....tracts the liability to tax under the head "Long Term Capital Gains" on receipt basis for the A.Y 2009-10 and that the offering of capital gain to tax in the A.Y 2013-14 was not in order and therefore, not acceptable. A show-cause notice was accordingly issued to the assessee. The Assessee, vide letter dated 6.2.2015, submitted that the development agreement was entered into on 12.03.2007 by virtue of which, the assessee has handed over the physical possession of the property. It was submitted that the subsequent registered agreement cum GPA was in accordance with the agreement dated 12.03.2007 and that there was no further transfer of property during the relevant A.Ys. According to the assessee, the capital gain arises only when the assessee has received constructed flats and also submitted that the assessee has offered the entire capital gain in the year of sale of flats. AO however, held that there is a transfer of rights to the Developers by virtue of registered agreements dated 17.04.2008 and 9.5.2008 by following the decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia vs Commissioner Of Income-Tax reported in 2003 (260 ITR 491 (Bom.) date....
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.... decision of the Hon'ble A.P. High Court in the case of Potla Nageshwara Rao is to be considered as applicable, even then, the capital gain would arise in the year in which the development agreement was entered into i.e on 12.03.2007 relevant to A.Y 2007-08 as the agreement was entered into along with handing over of physical possession as is evident from clause-1 of the development agreement. Therefore, according to him, the capital gain would not arise in the relevant A.Y. before us. He further drew our attention to the computation of income and the return filed by the assessee for the A.Y 2009-10 and in the subsequent assessment years to demonstrate that the assessee has erroneously offered the entire sale consideration to tax and not only the capital gain that has arisen on sale of flats. Therefore, according to him, there was no loss to revenue or escapement of income as far as the assessee is concerned. 9. Having regard to the rival contentions and the material on record, the undisputed facts are that the assessee had filed his return of income for the A.Y 2009-10 on 30.09.2009 admitting an income of Rs. 48,77,000 which comprises of capital gains of Rs. 34,12,000 on sale....
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....ated 12.03.2007 and also the registered Development Agreement-cum-GPA dated 17.04.2008. We find that in the Development Agreement dated 12.03.2007, it is clearly stated that the possession of the property has been handed over on the date of the agreement while in the agreement dated 17.04.2008, it is stated that the owners jointly and severally granted the development rights over a scheduled property to the Developer and entrusted the scheduled property for construction of a modern residential building. Except for these two variations and also the fact that the agreement dated 17.04.2008 is also a GPA, the terms and conditions of both the agreement are one and the same. The sharing ratio of 40:60 is also embedded in both the agreements. The supplementary agreement only had marked the flats to be shared by the assessee and the other owners and the developer. Therefore, the unregistered development agreement dated 12.03.2007 is the first agreement by virtue of which the assessee has entered into an agreement and also handed over the physical possession of the property. Therefore, in our opinion, this agreement is to be considered as the actual development agreement by virtue of which....
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....ection 53-A of the Transfer of Property Act, 1882, which has been engrafted in the aforesaid definition of Section 2(47) of the Income Tax Act, 1961, does not contemplate any payment of consideration. We set out Section 53-A, which reads as under: Part performance Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of 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 where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor 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....