TaxTMI 
TaxTMI 
2018 (6) TMI 608
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....nnai-49 measuring 3440 sq.ft. As per the joint development agreement, developer was to construct a building and allot 54% of the built up area to the assessee while retaining 46% to itself. Assessee was paid a refundable deposit of Rs. 22,00,000/- by the developer. Possession of the property was handed over on the date of joint development agreement for making construction therein. Ld. Assessing Officer was of the opinion that there was a transfer coming within the meaning of Section 2(47) (v) of the Income Tax Act, 1961 (in short "the Act'') and assessee was liable to pay tax on capital gains arising from such transfer. A show cause notice was issued to the assessee. Its reply went as under;- 1. The land at Villiwakkam has been purchased on 14.09.2006. 2. The land was given for j oint-venture to Mrs. S & S Scapes Pvt Ltd, vide Joint Venture Agreement on 23.01.2009. 3. The land was given for' development on 46:54 basis. Therefore 5 flats are given as the share of the Assessee in exchange for 46% share of land given to the builder. This, agreement is entered on 23.01.2009. 4. The advance given by the Developer has erroneously offset a....
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....e account, since this is a business transaction and the balance apartments are shown in the closing stock during F. Y. 2009-10. These apartments, which is of my share is not my residential purpose and it is for sale. Hence it is shown as business income during the F. Y. 2009-10 to the extent of sale made and the balance is shown as closing stock. During the financial year 2010-11, I have sold my land at plot no. 12/2, 12/3, 12/4 and 12/5 of Kovalam Village, Chenglepet Taluk, Kanchipuram dist. And out of the capital gain I have invested in flat at door no. 100 to 102, Egmore, Egmore nungambakkam Taluk, Chennai. This apartment is meant for my residential purpose. Therefore I have claimed exemption u/s 54F during the F. Y. 2010- 11. Therefore I request you to consider the above facts and request to allow capital gain exemption u/s 54F for the investment made by me for my residential property at Door No.l00 to 102, Egmore, Egmore Nungambakkam Taluk, Chennai." 3. However, ld. Assessing Officer was not impressed by the above replies. According to him, there was a transfer when assessee entered into a joint development agreement and handed over possession to ....
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....t previous year since joint development agreement was not registered. Further, according to her, no power of attorney was executed by the assessee in favour of the developer. Relying on clause No.25 of the joint development agreement, ld. Authorised Representative submitted that assessee remained the sole owner of the property. According to her, vacant possession was given only for developing the property. There being no transfer, as per the ld. Authorised Representative, there could have been no assessment under the head income from capital gains or any other head. Reliance was placed on the judgment of Hon'ble Apex Court in the case of CIT vs. Balbir Singh Maini, 398 ITR 531. 7. We have considered the rival contentions and perused the orders of the authorities below. Fundamental issue which has been raised by the ld. Authorised Representative is that there was no transfer falling within the meaning of Section2(47) of the Act during the relevant assessment year and therefore there could not have been any income for the assessee under the head short term capital gains or for that matter any other head. Reliance has been placed on the judgment of Hon'ble Apex Court in the case of....
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....ct of transferring, or enabling the enjoyment of, any immovable property. 45. Capital gains - (1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place. 48. Mode of computation - The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely: (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto:" 18. Section 53A, as is well known, was inserted by the Transfer of Property Amendment Act, 1929 to import into India the equitable doctrine of part performance. This Court has in Shrimant Shamrao Suryavanshi & Anr. v. Pralhad Bhairoba Suryavanshi (D) by LRs. & Ors., (2002) 3 SCC 676 at 682 stat....
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.... be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then they shall have no effect for the purposes of the said Section 53A." "49. Effect of non-registration of documents required to be registered. No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1887 (1 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument." 20. The effect of the aforesaid amendment is....
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....or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted on the facts of this case, we need not go into any other factual question. 21. However, the High Court has held that Section 2(47)(vi) will not apply for the reason that there was no change in membership of the society, as contemplated. We are afraid that we cannot agree with the High Court on this score. Under Section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property would come within its purview. The High Court has not adverted to the expression "or in any other manner whatsoever" in sub-clause (vi), which would show that it is not necessary that the transaction refers to the membership of a cooperative society. We have, therefore, to see whether the impugned transaction can fall within this provision. 22. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The exp....
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....favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him." 26. This Court, in Commissioner of Income Tax v. Excel Industries, (2014) 13 SCC 459 at 463-464 referred to various judgments on the expression "accrues", and then held: "14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) "... Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in bookkeeping, an entry is made about a 'hypothetical income', which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income c....