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TaxTMI 
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2018 (5) TMI 1842
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....f Agreement and Joint Development Agreement executed on the application of section 2(47)(v) of the Act in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the presumption of the transfer within the scope of section 2(47)(v) of the Act for justifying the taxation of Long Term Capital Gains in relation thereto was wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) failed to appreciate that the misconstruction of facts and misreading of the provisions governing the reckoning the deemed transfer would vitiate the decision rendered from para 5.3 of the impugned order. 5. The CIT (Appeals) failed to appreciate that in any event the computation of Long Term Capital Gains on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law. 6. The CIT (Appeals) failed to appreciate that the decisions cited were completely overlooked/wrongly rejected incorporating irrelevant reasons and further ought to have appreciated that the decisions applied to sustain the computation of Long Term Capital Gains on the r....
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....neous, unjustified, incorrect and not sustainable in law. It was the submission of the ld. Counsel that the authorities below have misconstructed the facts by misreading of the provisions governing the reckoning of deemed transfer. It was also submitted that the computation of Long Term Capital Gains on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law and prayed for justice by deleting the addition made under long term capital gains. 5. Per contra, by filing detailed written submissions, the ld. DR pleaded for confirmation of orders of authorities below. 6. We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The assessee was engaged in the business of brick manufacture till 1986 and was not functioning due to stoppage of brick manufacture as the available land was fully exploited. The firm had about 35 acres of land and the same was subject of joint development agreement [JDA] with M/s. Brigade Enterprises Ltd. during the year 2012-13 to develop residential flats of superior quality. In this transaction, the assessee has received interest free refundable deposit of Rs..10 c....
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....ed to receive income from the property in his own right and the requirement of registration of the sale deed in the context of Section 22 is not warranted. Moreover, in the absence of any part performance as contemplated under section 53A of Transfer of Property Act, 1882, the Supreme Court held in the case of Suraj Lamp and Industries Ltd. v. State of Haryana [2012] 340 ITR 1 that registration of sale deed alone completes the transfer. The Hon'ble Supreme Court further held in the case of Suraj Lamp and Industries Ltd. (supra) that registration date will be taken as the date of transfer only in the absence of part performance as contemplated under section 53A of Transfer of Property Act. Till 31st March 1988, in the absence of registered conveyance deed if owner of a immovable property had put the purchaser in possession of the immovable property, he was not required to pay capital gains tax. Many owners of immovable property used to take advantage of this legal position by postponing the tax liability by delaying the execution of conveyance deed in favour of the purchasers. Section 2(47) was amended vide Finance Act 1987 w.e.f. 01.04.1988 by rectifying this loophole by insert....
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....ties with builders and under the arrangement with the builders, they used to confer privileges of ownership without executing conveyance and to plug that loophole, section 2(47)(v) came to be introduced in the Act. From the above judgement, the salient feature taken into consideration by the Bombay High Court was that once a limited power of attorney was intended to be given to the developer to deal with the property, then the date of contract, viz., August 18, 1994 would be relevant date to decide the date of transfer under section 2(47)(v) of the Act, and, in which event, the question of substantial performance of the contract thereafter would not arise and accordingly previous year 1994-95 was held to be the year of transaction. Similar to clause 8 of agreement in the case of Chaturbhuj Dwarakdas Kapadia, para 6.3 of JDA in the case of the appellant is relevant wherein, the parties have agreed to execute power of attorney to conveyor transfer the undivided shares in the schedule property. Clause 6.3 of the JDA is reproduced as under: "6.3 In consideration of the Developer agreeing to construct and deliver the Owners' Constructed Area as per clause 6.1 above, the ....
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....these facts, the JDA and GPA entered on 17.09.2012 must be treated as the date of transfer. 6.2 The Authority for Advance Ruling also held that Avoidance or postponement of tax on capital gains by adopting devices such as the enjoyment of property in pursuance of irrevocable power of attorney or part performance of a contract of sale was sought to be arrested by introducing the two clauses, viz. (v) and (vi) in section 2 (47) of the Act. The Authority also held that in order to be a transfer within the meaning of Section 2(47)(v), there must be transaction under which the possession of immovable property is allowed to be taken or allowed to be retained and secondly such taking or retention of possession is a part performance of contract falling within the scope of Section 53A of Transfer of Property Act. The Authority followed the judgement of the Supreme Court in the case of Govindrao Mahadik v Devi Sahai AIR 1982 SC 989, wherein it was held that: "In order to be "transfer" within the meaning of clause (v), there must be a transaction under which the possession of immovable property is allowed to be taken or allowed to be retained. Secondly, such taking or retention of....
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....shrubs and carry out Government Survey & Private Survey, to arrive at the exact extent of land available for development. However, grown up trees shall not be touched/ removed while clearing the site. The Second Party shall, after the survey, put up fence all around the Boundary line with cement post & Barbed wire fence. The above said activities shall be carried out at Second party's cost. First party shall sign the necessary applications, letters, undertakings etc. that may be required to be submitted to enable Second Party to take up the above said activities including the Government survey on behalf of First Party. 9. The first Party/Owner agrees to permit the Second Party/ Developer to enter into the Schedule Properties immediately on execution of this MOA to take up survey, soil testing, planning etc., and permit the development activities simultaneously on execution of Joint Development Agreement and registered Power of Attorney for the purpose of obtaining various approvals by the First Party/ Owner in favour of the Second Party/ Developer. Further, the First Party / Owner agree to execute a separate registered Power of Attorney for the purpose of sale of the u....
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....ompletion certificate or to apply and secure electricity, water and sanitary connection or to engage advocates, etc. The GPA also has been intended to be entered between the parties to conveyor transfer the undivided shares in scheduled property as in clause 6.3 of the Joint Venture Agreement. 6.4 The Authority also contemplated the situation as to what will happen if during the year following the one in which the deemed transfer took place, the proposed venture collapses for reasons such as refusal of permissions, the developer facing financial crunch etc. By that time, the owner would have received only a part of the agreed consideration, but he is obliged to file the return showing the entire capital gain based on the full sale price whether or not received during the year of deemed transfer. In such an eventuality, hardship may be caused to the owner who would have paid full tax. No doubt, such a situation could be avoided if the contention of the applicant is accepted. On deep consideration, however, we find that the construction of the relevant provision should not be controlled by giving undue importance to such hypothetical situations. Normally, the owner executes a powe....
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....me will be handed over to the buyers/allottees as and when the undivided share of land in this Schedule Property is conveyed in favour of the buyers/allottees of the built up space." 6.7 In view of the insertion of the above clarification, the ld. CIT(A) opined that it was purposefully put in clause 2.1 of the JDA with a view to avoid taxation, whereas the intended purpose is to hand over possession as it could be seen in several clauses referred in the JDA. 6.8 Before the ld. CIT(A) the assessee contended in its written submission that the requisite conditions for fulfilling part performance in terms of Section 53A of the Transfer of Property Act have not been met and argued that there should be a consideration for transfer of its capital asset to bring the same as transfer within the meaning of section 53A of the Transfer of Property Act. According to the assessee no consideration was received. The amount of Rs..30 crores as per clause 14 of the JDA was an interest free refundable deposit, which is stated to be not a consideration for the transfer of the property. After considering the above submission, the ld. CIT(A) observed that it was not the case of the department that....
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....rty Act is invoked. What is required is possession and control of the property and not the ownership of the property. The appellant dearly admitted that the developer is having the right to enter the property, conduct survey, do measurement and is having the right to commence development and to do various works and things as per the JDA. This itself proves that the developer is having a control over the property to carry out the developmental activities, that right to carry out such works are unbridled rights and the owner of the land has no right to stop the developer not to enter or to carry out the developmental activities until otherwise the JDA is terminated which is possible only under special circumstances. As per clause 16 of JDA, it is only the developer who has the sole discretion to terminate the JDA for false representation or breach of the terms of the JDA by the owner, deficit in the ownership title etc. The owner is not given such sole discretion to terminate the JDA. As per clause 3.2 of JDA, if the statutory approvals are not obtained within the stipulated period the parties shall mutually agree on the future course of action including the extension of time require....
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....l as contended by the assessee in para 5.4 of the written submission. Failure of plan approval arises only if the competent authorities reject the request of approval. Such thing was not happened in this case. The JDA is subsisting and it is not cancelled even on the ground that the plan approval has been delayed. The assessee has been proceeding and acting in a manner with a view to complete the contractual obligation as per the JDA and nowhere it even evinced slightest of the doubt to terminate the contract. 6.13 Against the dispute of the assessee that the developer is never the owner of the property and as per the JDA the land owner and developer perform construction project by joining together by way of owner providing the land and the developer constructing the building, which will be ultimately sold to the buyers on the completion of the project and therefore it was contended that the developer is never entitled to be a buyer and the property is never transferred to him as the owner. In this regard, the ld. CIT(A) observed that the developer became the owner of the land, not by registration, but as per the part performance of a contract as provided under section 53A of th....
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....ore, the assessee argued that in its case that by jointly entering into an agreement with the developer to develop the property, it has carried on business activity and therefore land must be treated as conversion of capital asset into stock in trade and the provisions of section 45(2) of the Act will be applicable in its case. Against the above submissions, the ld. CIT(A) observed that first of all as per the JDA, the assessee is not carrying on any business activity. The business activity was carried on only by the developer and the land owner is a mere spectator. The owner has no role other than handing over the possession of the land to the developer. He can merely inspect the progress of work and require the developer to properly implement the work of owners constructed area and in this regard, the decision of the architect as to the quality of the material and work, the rate of progress shall be final and binding. The limited role of the owner is restricted to inspect the progress of work that too limited to its share of super structure is to only fulfil its part of the contract and this activity in no way can be equated with the business activity of the assessee. The assesse....
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...., the fair market value of the said asset on the date of transfer shall be deemed to be the full value of the consideration received or accruing as a result of such transfer. So, in this case also the consideration is in kind which is in the nature of allotment in the super structure to be constructed for transfer of the land. Since the super structure has not come into existence there is difficulty in quantification of the consideration received and therefore the section provides for the fair market value of the asset in question must be deemed to be the full value of consideration received or accrued as a result of transfer. 6.16 Against the submissions of the assessee that as per Section 50C the date of transfer will be the date of agreement of sale for the purposes of calculation of capital gain and placed reliance in the case of Modipon Ltd., 57 taxmann.com 360 and therefore the assessee contended that 31.01.2000 on which date the MOA was effected must be taken as the date of agreement of sale and not the date on which the JDA was entered. The ld CIT(A) was of the view that the Memorandum of Agreement was in a nascent stage which got fructified and fortified by the Joint De....
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....evant paras 3.2, 14.3 and 16.2 are reproduced as under: "3.2 If the statutory Approvals are not obtained within fifteen (15) to eighteen (18) months from the date of the Owners fulfilling the Conditions Precedent, the Owners and the Developer hereby agree that if there is any delay beyond the time fixed under the JDA, the Parties shall mutually agree on the future course of action including extensions of the time required for plan sanction. Substantial completion of plan sanction process within the time fixed under the JDA (or extended period as may be mutually agree upon) shall be taken into consideration while taking a decision on the future course of action in this regard. In the event of the Parties mutually agreeing to terminate the JDA in writing, the Owners shall refund within 30 days of such notice to terminate, (a) all the Refundable Deposits received by them from the Developer without any interest (b) all amounts paid by the Developer towards the Owner's share of vacant land tax, if any, as provided under clause 11.2 and (c) any other amount paid or advanced by the Developer to the Owners. 14.3 The Developer will have first charge over the Schedule Prope....
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....entered is the date on which the transfer took place as per Section 2(47)(v) of the Act and the guideline value must be adopted as the consideration for computing capital gains u/s 45(1) of the Act and accordingly the guideline value adopted by AO of Rs. 511,02,41,400/- is hereby upheld." 7. Before us, the ld. Counsel for the assessee has filed detailed submissions and the specific submissions before the Tribunal are reproduced hereunder: "4. SUBMISSIONS OF THE APPELLANT BEFORE THE Hon. ITAT: 1. Both MOA and JDA are unregistered documents and therefore the decision of the Hon. Supreme Court in CIT Vs Balbir Singh Maini (2017) is applicable. 4.1.1. The Hon Supreme Court In CIT Vs. Balbir Singh Maini dated Oct4 2017, has held that if an agreement, like JDA in the present case, is not registered then it shall have no effect in law for the purpose of Sec 53A of the TOPA. The Hon SC in Para No.20 has observed as under: 20. the effect of the aforesaid amendment is that, on and after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes....
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....5. This Court in E. D. Sassoon & Co. Ltd. V. CIT. (1955) 1 SCR 313 at 343 held: It is clear therefore that income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in present solvendum in futuro; See W. S. Try Ltd. V. Johnson (Inspector of Taxes) ((1946) 1 AER 532 at p. 539], and Web V. Stenton, Garnishees (11 QBD 518 at p. 522 and 527). Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he 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 referrred to various judgements on the expression 'accrues' and then held: "14. First of all, it is now well settled that income tax cannot be levied on hyp....
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.... imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is, therefore, not the income of the assessee." 28. In the present case, the appellant did not acquire any right to receive income in as much as such alleged right was dependent on necessary permissions being obtained. This being the case, in this circumstances, no debt owed to the assessee by the developers and therefore the appellant have not acquired any right to receive any income under the JDA and therefore no profit and gain arose from "transfer" of capital assets so as to attract sec 45 and sec48 of the Income tax act. 4.2.4. As the JDA entered into by the appellant pan material, the same as cited in the above decision, there is no real income earned by the appellant and therefore capital gains does not arise. 3. APPLICABILITY OF SEC. 45(2) - BRICK CHAMBER LANDS OWNED BY THE FIRM AS A BUSINESS ASSET CONVERTED INTO STOCK - IN -TRADE. 4.3.1 In this respect we submit that the capital asset of land belonging to the assessee Firm was treated a....
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....evelopment agreement was entered into. Reference can be made to the decision of Chennai Bench in the case of P. Gopinath v. ACIT 42 DTR 127 which has taken such view. Section 45(2) therefore is relevant. 4.3.4 The capital gains as on conversion can be offered in the year of actual sale and the difference in sale price and market value on conversion will be offered as business profits. Looking at the situation independently, one can say that the provision of section 45(2) could be relevant and appropriate. The fact of entering into agreements for development of land through such arrangements reflects that the character of holding of land changes factually. What was held as capital asset changes colour especially after the arrangement with the developer (if not before) is made for construction and then sale to the buyers. The interpretation of the words 'or otherwise' would not be required as the agreement provide for sale of constructed units to the prospective buyers and therefore the year of charging capital gains would be taken to be year of 'sale' as provided in section 45(2). This is important more so as the rights in land remain with the land owner till they are sold ....
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....JDA Page No.23. Paper book page.No.43- Vol.1.) The Developer is hereby granted leave and license to enter the Sch. Property pursuant to the execution of this JDA and shall thereafter be entitled to commence and complete development of the schedule property in accordance with the approvals and licenses. It is hereby clarified that such permission to develop the schedule property shall not be construed as delivery of possession u/s 53-A of TOPA rws 2(47) (v) of the I.T. Act, 1961. Subject to the developer being in compliance with their obligations under the JDA the permission is granted in favour of the developer to develop the schedule property shall be kept valid and subsisting by the owners till the Developer completes the development and transfers or otherwise disposes of their share of built-up space as per the JD. The possession of the Schedule property shall continue to be retained by the Owners and the same will be handed over to the buyers! allottees as and when the undivided share of the land in the Schedule property is conveyed in favour of buyers/allottees of the built up space. Commencement and completion of construction: Para 7 (page no.34 of ....
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.... inter alia to do all or any of the acts, deeds and things, jointly or severally, that is to say: (1) To sell or otherwise dispose of by way of sale, gift, lease, mortgage, exchange or otherwise, saleable built up area to the extent of 60% of the total saleable built up area ... Provided however, the Attorney/s shall be entitled to convey and transfer saleable built up area to the extent of 60% of total saleable built up area, in whole or in portions and proportionate undivided share, right, title, interest and ownership in the Schedule property only after plan sanctions are obtained for the entire project. 4.4.3. From the cumulative reading of various clauses in the joint development agreement and in the power of attorney, it is abundantly clear that the possession in the property was not handed over to the developer and that he was granted the permission to develop and it was expressly agreed that such permission shall not be construed as delivery of possession or part performance contemplated under 53A of the TP Act and that the developer is entitled to sell only after obtaining the plan permissions. Therefore there is no possession granted to the developer even if the ....
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....ed (as on 01/04/2012) was found to be very high. These issues were not factored by the AC while arriving at the Market value of the property and the AC has simply adopted the guideline value based on the sq. feet basis fixed by the Govt. Had these factors were considered, the guideline value for the saleable area would have been reduced to 40% as compared to the value adopted by the AC as detailed below by an example. 1. The initial extent of the land(say) 100 2. Less:OSR@10% 10 3. Balance available(1-2) 90 4. Less: Deduction for Roads @ 1/3 of (3) above 30 5. Balance available (3-4) 60 6. Less: Reduction in Guideline value in June, 2017 @1/3 of (5) above 20 7. Therefore Intrinsic Guideline value as a percentage of the original Value works out to 40 7. No Revenue impact and no dispute in determination of tax liability except the year of taxation: 7.1 It is submitted that there is no dispute on the payment of tax or determination of tax liability, whether under capital gains (long or short) or business income. Only the assessment year in which the income is chargeable to tax is the issue. The large resi....
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....roject. 3. It was also stated that the developer exercised lien over the property for the deposit paid by it to the appellant. 4. It is also to be noticed that para 9 of the MOA(at page 10 of Vol-1) stated that the appellant agreed to permit the developer to enter into the scheduled properties immediately on execution of MOA to take up survey, soil testing, planning, etc., and permit the development activities simultaneously on execution of JDA and registered Power of Attorney. 5. It is further agreed to execute a separate registered Power of Attorney for the purpose of sale of the undivided shares in the property, as per the terms and conditions mutually agreed between parties, simultaneous to the execution of JDA. (Please see para 9 at page 10 of Vol-1) II. Joint Development Agreement: 6. On 17.09.2012, the appellant entered into JDA with the developer M/s. Brigade Enterprises Ltd. The terms agreed upon in the JDA starts at Page 43 of the Vol-1. 2. Permission to Develop: 3. Statutory Approvals 4. Construction 5. Cost of Construction 6. Sharing of Built up area and car parking area 7....
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....ppellant filed its return of income for the assessment year 2013-14 on 19.07.2013, admitting the total income of Rs. 44,04,628/- . The return of income was processed under section 143(1) of the income tax act, 1961(herein after referred to as 'the Act'). The case was selected for scrutiny and the notice u/s.143(2) dated 02.09.2014 was served on the appellant. Subsequently, a notice u/s.142(1) was issued on 25.06.2015 and duly served on the appellant. As per the provisions u/s.2(47)(v) of the Act, read with the provisions of Section 50C of the Act, it was made clear that the appellant had agreed to transfer/sell its 60% of total land of 35 acres to Developer M/s. Brigade Enterprises Ltd for a consideration which would be equivalent to the cost of 40% of total constructed area forming part of 35 acres residential project. Accordingly, the appellant was requested to explain the applicability of capital gain provisions as per the Act as the same stands accrued to assessee as per the JDA coupled with registered General Powers of Attorney entered in the AY 2013-14. V. Submissions of the Appellant/Assessee during Assessment: 11. The appellant vide letter dated 14.07.2016....
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....veloped property as agreed with the appellant. b. The contention that JDA do not constitute part performance as per Section 53A of the transfer of property Act is not acceptable as the land as existing has changed in character, tenor and nature in the hands of developer and appellant himself cannot cancel the JDA without the concurrence of developer. c. Contract exists for a consideration. The Assessing Officer observed that the appellant/assessee had agreed to transfer/sell its 60% of total land of 35 acres to M/s. Brigade Enterprises Ltd., for a consideration which would be equivalent to 40% of total constructed area. d. Agreements signed by the transferor as owner of immovable property and are ascertainable with reasonable certainty/protection to transferor. e. Doctrine of readiness and continuous willingness is intrinsic to JDA. f. Transferor has given access leading to possession to carry out the works vide registered GPA dated 17.09.2012 i.e., on the date of JDA. g. The contention that 50C provision if applied also, the stamp valuation rate as available as on date of MOA to be taken into consideration is not acceptable, as....
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....DA and in furtherance of such contract the developer took possession of the property, carried out survey, cleared the area by removing the bushes, shrubs, put up fence all around the boundary line and carried out various developmental activities, and the appellant also fulfilled its part of the contract by giving possession of land to the developer and also by handing over the original title deed to the developer, and further a sum of Rs. 10 Cr was paid by the developer to the appellant as interest free deposit and another sum of Rs. 20 Cr was agreed to be paid, and although approvals are delayed but now such approvals are in final stages and for the reason that at no time the JDA was cancelled but in fact the contract was extended and the same is subsisting and first charge is always vested with the developer during the subsistence of the contract. 19. Further aggrieved, the appellant/assessee has preferred this appeal before the Hon'ble Income Tax Appellate Tribunal. B. Respondent humbly submits: 20. That the order of the learned CIT(A) affirming the order of the Assessing Officer with a detailed reasoning being consistent with the legislative mandate a....
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....That the MOA does not have an independent existence. As soon as the GPA is entered, the MOA merges with GPA. In clause 7 of the MOA, it is mentioned that both the parties are entering into this MOA with an understanding to subsequently enter into JDA. In clause 9 of the MOA, it is mentioned that POA will be executed simultaneously on execution of JDA, which shows that power of attorney for obtaining approvals as well as for transferring the undivided share in land will take place only if JDA is entered. 26. Further, in clause 15B of MOA, it is mentioned that in the event of parties not able to convert the transaction into JDA, the MOA executed between the parties stands automatically cancelled. Therefore, the respondent humbly submits that the MOA does not have an independent existence. MOA leads into JDA and merges with it. If JDA is not entered, MOA stands cancelled. Title documents are in custody of the developer: 27. It is submitted that the title document is in the custody of the developer who has been given the right of possession of the original title document and also to hypothecate the same to the financial institutions. The respondent relies on ....
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....n view of the letter dated 05.05.2017 from the developer M/s. Brigade Enterprises Ltd(Vol-2 page 79), the developer confirms that the possession of the subject property was taken over on the execution of MOA on 30.01.2012 satisfying the main postulate of Section 53A of the TP Act. Although, the date of reckoning for the purpose of computing capital gains u/s.50C would the date of registration of GPA entered simultaneously along with JDA i.e., on 17.09.2012. 33. In this regard, the respondent relies on Kasturi D. Vs. CIT 323 ITR 40(Mad) wherein the Madras High Court held that where assessee had executed agreement for transfer in respect of property and given possession to party and received consideration, doctrine of part performance as per section 53A of Transfer of Property Act was rightly invoked. 34. The respondent also relies on the decisions Chaturbhuj Dwarakdas Kapadia [2003] 260 ITR 491(Bom), Potla Nageswara Rao v. Dy. CIT/[2014] 365 ITR 249 (Andhra Pradesh), CIT v. Dr. T. K. Dayalu [2011] 202 Taxman 531/14 taxmann.com 120 (Kar.), Dr. Maya Shenoy v. Asstt. CIT [2009] 124 TTJ (Hyd) 692, Madras High Court in CIT v. Jeelani Basha [2002] 256 ITR 282/122 Taxman ....
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....e statute. 38. Therefore, in view of above facts discussed, submissions made, judicial precedents relied upon, the respondent humbly prays that the appeal of the assessee may be dismissed and orders of the lower authorities may be confirmed." 7.1.1 We have also perused the submissions made by the ld. Counsel for the assessee against the above submissions of the ld. Jr. Standing Counsel on behalf of the Department. We have considered by the written submissions of the assessee as well as Department. First, we shall proceed to discuss about the submissions of the assessee. 7.1.2 By relying on the decision in the case of CIT v. Balbir Singh Maini (supra), it was the submission of the assessee's counsel that both the MOA and JDA are unregistered documents and therefore, the decision of the Hon'ble Supreme Court in the above case is squarely applicable and moreover, it shall have no effect in law for the purpose of section 53A of the TOPA. 7.1.3 The assessee is a partnership firm engaged in the business of brick manufacture. The assessee entered into Memorandum of Agreement(herein after referred to as MOA) dated 30.01.2012 with M/s. Brigade Enterprises....
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....eveloper. Further, the First Party/Owner agree to execute a separate registered Power of Attorney for the purpose of sale of the undivided shares in the property, as per the terms and conditions mutually agreed between the parties, simultaneous to the execution of Joint Development Agreement." From the above, it is amply clear that the above MoA has no validity until the GPA and JDA are executed by the assessee. Accordingly, the assessee executed registered GPA on 17.09.2012 [Document No. 604/2012] in favour of the developer for the purpose of obtaining various approvals. Subsequently, vide another registered GPA dated 17.09.2012 [Document No. 603/2012]. The salient terms given in the GPA vide document No. 604/2012 dated 17.09.2012 are as under: 1. To appear for and represent the principals before the Village Panchayats, Municipal Councils, etc., all offices of State and Central Government and apply for and obtain necessary plans, licenses, sanctions. 2. To apply for and obtain occupation certificates or completion certificates in respect of buildings to be constructed. 3. To apply for and secure electricity, water and sanitary connections. ....
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....in para-1 above 4. To present any agreement/s to sell, agreement/s to lease, sale deed/s, lease deed in respect of the Schedule Property or portions thereof for registration to the extent referred to above in para-1, admit execution and receipt of consideration before the Sub-Registrar having authority and get the same registered and to do all acts, deeds and things which our said Attorney/s shall consider necessary for conveying the Schedule Property to the said purchaser/s and/or and /or his/her/their/ its nominee/s assignee/s or in any other manner as the Attorney/s may deem/s it fit as fully and effectually in all respects as the Principals could do the same. 5. To sign and execute necessary documents, declarations, affidavits undertakings and other documents required for completion of sale, lease and/or transfer and/or alienation of the Schedule Property to the extent referred to in para-1 above or in respect of any matter relating to the Schedule Property and to do all other acts, deeds and things that may be necessary for achieving the purposes mentioned herein. 6. And Generally to do all such acts, deeds and things in connection with the above mat....
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....xecution of GPA vide document No. 603/2012 dated 17.09.2012, the developer conferred entire possession of the property for the purposes as mentioned and reproduced hereinabove and legalized the MOU and JDA. The developer also confirmed the possession of the property taken over by it on the execution of MOA on 30.01.2012, even though it was not registered, but as has been envisaged under para 9 of the MOU, the assessee has executed registered GPAs 17.09.2012, very well satisfying the main postulate of section 53A of the TOPA, the developed confirmed absolute right from the date of execution of registered GPAs w.e.f. 17.09.2012. 7.1.8 If the assessee has not executed and registered the GPA, the execution of MOU and JDA become invalid since the execution of MOA does not have an independent existence and the assessee was liable to refund the amount received by it. In this case, neither the assessee refunded the amount received by it nor the execution of MOU and JDA become invalid. 7.2 It was the submission of the assessee that the capital asset of land belonging to the assessee firm was treated as stock-in-trade in the year 1996-1997 itself as per section 45(2) of the Act (....
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....ent with a developer. The assessee offered capital gain on the land during the year in which he sold the built up area. The Assessing Officer did not accept the assessee's computation. The Assessing Officer was of the view that the long term capital gain on transfer of land was assessable in the year in which the assessee handed over the possession of the land to the developer in pursuance of the agreement. In that case, there was no dispute as to whether the assessee was carrying on business or whether such conversion of capital asset into stock in trade took place. It was an accepted fact in that case that there was a conversion of capital asset into stock in trade and the assessee was carrying on business. Therefore, in that view of facts relevant to that case, the Tribunal held that section 45(2) of the Act is applicable and not Section 53A of the Transfer of Property Act. Only when Section 53A of the Transfer of Property Act is applicable, that the year in which the JDA was entered giving the right of possession to the developer is considered as the year of transfer in which the incidence of capital gain tax arises. In the case of R. Gopinath, there was a conversion of capital....
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...., it clearly confers the developer, the complete transfer of total rights of the assessee over the above landed property to the developer and the relevant terms are once again reproduced as under for ready reference: "1. To sell or otherwise dispose of by way of sale, gift, lease, mortgage, exchange or otherwise, saleable built up area to the extent of 60% of total saleable built up area, or such other additional extent of total saleable built-up area as agreed to by the Principals, in whole or in portions and proportionate undivided share, right title, interest and ownership in the Schedule Property on such terms and conditions as our Attorney/s deem/s it fit in favor of any purchaser/s or in favor of and/or his/her/their/its nominee/s or assignee/s. Provided however, the Attorney/s shall be entitled to convey and transfer saleable built up area to the extent of 60% of total saleable built up area, in whole or in portions and proportionate undivided share, right title, interest and ownership in the Schedule Property only after plan sanctions are obtained for the entire project. 2. To receive advances and balance of sale price from any purchaser/s, transferee/s, l....
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....ommencement and completion of construction" of the written submission that the owners have permitted the developer to enter and exit the Schedule property for the purpose of development only. Provided always that the same shall not be construed as delivery of possession or part performance contemplated under section 53A of the TOPA. The owners hereby permit and authorize the developer to enter upon the Schedule property only for the purposes of development. The above submission is not acceptable because, upon execution of registered GPA vide document No. 603/2012 dated 17.09.2012, and upon obtaining statutory approvals, the developer shall be entitled to sell convey or deal in any manner with the 60% undivided share or such proportionate share in the schedule property by using the GPA granted by the assessee to the owner. In this case, the developer did not came out due to delay in obtaining statutory approvals from authorities and more so, once the registered GPA alone confers entitlement to the developer to sell, convey or deal in any manner with the 60% undivided share or etc. it shall very well be construed as nothing but transfer of property within the meaning of section 2(47)....
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....RULE 29 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 In the above mentioned appeal proceedings before the Bench, the Petitioner/Appellant is placing on record a paper book marked as Volume - II in 79 pages on this date and in the said paper book, Volume - II, SI.Nos.2 to 13 are not part of the records of the Respondent/the Assessing Officer. In such circumstances, the Petitioner/Appellant is moving this petition for admission of those additional/fresh evidence for proper adjudication of the issue posed for the consideration of the Bench. Under MOA and followed up with JDA, the property owned by the Petitioner/Appellant was subjected to development of a housing project and the issue was with regard to the interpretation of section 2(47)(v) of the Act. According to the Petitioner/Appellant, the provisions of section 45(2) of the Act would fortify the reckoning of the transfer as well as for computing the Long Term Capital Gains for taxation under the said JDA should be taken at the points of sale and such reckoning could not be pressed into service based on possession/deemed transfer as per section 2(47)(v) of the Act. The stand of the Petitioner....