2019 (7) TMI 540

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....S.Premalatha, learned Standing Counsel for respondent/Revenue on the above submission. 5.Accordingly, the re-framed substantial questions of law are as hereunder:- "(i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in interpreting the terms of development agreement and rejecting the contention that the entire transfer took place in an earlier year and no portion of capital gains is taxable this year. (ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the cost of construction incurred by the developer should be adopted for the purpose of computing capital gains by ignoring the value agreed to between the assessee and the developer as accepted by the appropriate Authority of the Income Tax Department while granting No Objection Certificates for the transfer as per the Development Agreement? (iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the entire damages, entire deposit and the entire value of rent free accommodation provided by....

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....er which was executed by the assessee and other co-owners. The assessee filed return of income on 06.11.2011 admitting long term capital gains of Rs. 88,12,774/- for the assessment year 2001-2002. The capital gains which was offered by the assessee was only in respect of the land proportionate to the nine flats which fell to the share of the developer under the development agreement. The return filed by the assessee was subject matter of scrutiny and the Assessing Officer proceeded on the basis that the entire undivided share of land was to be deemed as transfer having taken place this year and computed capital gains, accordingly. Further, the Assessing Officer adopted the cost of construction as Rs. 817/- per sq.ft., incurred by the developer as sale consideration for transfer of undivided share. The assessee made a claim of exemption under Section 54 of the Act because, the assessee had transferred only land and not building and thereby computed long term capital gain and short term capital gain. 10.Aggrieved by such assessment order, the assessee filed appeal before the Commissioner of Income Tax (Appeals)-XII, Chennai (for brevity, "the CIT(A)"), in I.T.A.No.39/2004-05. The ....

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.... of the Act, which reads as follows:- "Section 2(47):- ................ ................ Section 2(47)(v):- any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882)." 14.We need to see as to whether the nature of transaction between the assessee and the developer would fall within the definition of "transfer" as defined under sub-Clause (v) of Section 2(47) of the Act. In terms of the above provision, any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (hereinafter referred to as "the TP Act"), would qualify for a transfer. Section 53A of the TP Act deals with "part performance" and it reads as follows:- "Section 53A. 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 constitu....

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....ever, in the said agreement, there was no building. These agreements were considered by the Appropriate Authority and noting there is an agreement to transfer property with reasonable certainty and on being satisfied about the apparent sale consideration, no objection was granted. Therefore, it would be incorrect to state that the development agreement do not contemplate transfer of immovable property, but we may say that there is a clear certainty in the extent to be transferred. Therefore, in our considered view, the transaction would continue to qualify under the definition of 'transfer' as defined under Section 2(47)(v) of Act. 19.In the light of the above discussion, the order passed by the Tribunal requires to be set aside and the first substantial question of law is answered in favour of the assessee. 20.With regard to the second substantial question of law regarding the value of cost of construction, the appellate authority reckoned the delay in completing the project, obtained information from the developer and uniformly fixed the cost at Rs. 717/- per sq.ft., for both the agreements as against Rs. 450 per sq.ft., and Rs. 550/- per sq.ft., respectively, as me....