TaxTMI 
TaxTMI 
2021 (2) TMI 1144
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....le Power of Attorney, as per the jurisdiction High Court order, in the case of Dr. Dayalu and others, transfer having taken place as per provisions of Sec.2(47)(v), the capital gains should have been brought to tax during Asst. Year 2008-09 and not during Asst.Year 2012-13. 3. The learned Commissioner of Income Tax erred in not considering the fact that the Developer for the purpose of their Bank requirement, registered the same land, which was taken under Joint Development Agreement, for which the Stamp Duty & Registration charges was paid based on the guideline value as per Karnataka Stamp Act. Therefore, there cannot be tax payable twice on the sale of same land. 4. The learned Commissioner of Income Tax ought to have noticed that there was no consideration paid while registering the Sale Deed and in the Sale Deed there has been a reference to Joint Development Agreement. Hence once the Capital Gain Tax is payable at the time of Joint Development Agreement, there cannot be again Capital Gain tax at the time of executing Sale Deed. 5. The learned Commissioner of Income Tax vas wrong in confirming that the capital gain arises during Asst. Year 2012-13 based on the fact th....
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.... advantage of the assessee should have been considered on priority. Now, while taxing Capital Gains during Asst. Year 2012-13, it is quite prejudicial to the interest of the assessee because Guideline Value of the property under consideration is substantially more than deemed consideration said to have been passed on to the assessee. The Developer had already registered Joint Development Agreement (JDA) & since the intention of the assessee & Developer is only to hold land & building and share the rent received equally, there was no need to register any Sale Deed. But the Developer in order to get his name recorded with the Sub-Registrar's record, registered the Sale Deed on 18.07.2011, wherein the valuation as per Guideline issued by Government of Karnataka is Rs. 3,50,90,000/- and the same has been adopted for the purpose of Capital Gain. By virtue of provisions of Sec.2(47)(v) read with Transfer of Properties Act 1953, the Joint Developer has already become part owner on the date of execution of Joint Development Agreement. 6. Therefore, the assessee submitted that the capital gains should have been taxed in the year of commencement of construction after registering the Joi....
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....n of the ld. AR is that the assessee had a land & factory building at BSK II Stage, Bangalore. It entered into a Joint Development Agreement on 24.10.2007 in respect of the land & factory building with one, M/s. Park Inc. for demolishing the land & building and constructing the commercial complex on a joint development basis. As per Joint Development Agreement, the Developer is allowed to have 50% of the land and on the balance 50% of the land a commercial complex is constructed to be handed over to the asse company and as per the further understanding, both Developer and Appellant will rent out the constructed property on rental basis. Due to various constraints, the developer could only get the Plan approved for demolishing the old building and constructing the commercial complex during September 2008. Therefore, as per provisions of Sec.2(47)(v), the Joint Development Agreement has come into effect in September 2008. If at all any capital gains is required to be taxed, as per the jurisdiction High Court order in the case of CIT v. Dr. Dr. T.K. Dayalu, (2011) 202 Taxman 531 (Kar), the capital gains would arise only during Asst. Year 2009-10. The property, after development, was h....
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....e 2.2 of JDA, this permission cannot be construed as delivery of possession u/s. 53A of the Transfer of Property act r.w.s. 2(47)(v) of the I.T. Act. As per clause 7.1.1, the assessee is entitled for a sum of Rs. 75 lakhs interest free refundable deposit which has been paid by the developer to the assessee as follows:- Rs. 40,00,000 by Cheque bearing No.354583 dated 27.8.2007 Rs. 35,00,000 by Cheque bearing No.561730 dated 12.7.2007 both cheques on HDFC Bank. 15. As per clause 8.1, commencement of construction should start not later than 60 days from the date of execution of allocation agreement. As per clause 8.2, the construction should be completed within 24 months from the date of issue of Commencement Certificate by BBMP. However, as per clause 8.4, the grace period to start construction has been given as 3 months. 16. There is a GPA dated 24.10.2007 in favour of the Developer wherein as per clause 8 the assessee has given the authority to appear before various authorities so as to get the required permission for construction. By Clause 9 of GPA, assessee has given right to the developer to sell or dispose by way of sale, lease, mortgage, exchange or otherwise 50% undi....
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....pect of the Schedule Property or portions thereof for registration to the extent referred to in clause 9, admit execution and receipt of consideration before the Sub- Registrar having authority for and to get the same registered in the manner required under law and to do all acts, deeds and things which our said attorney shall consider necessary by way of Lease or otherwise to the said Transferee/s or in any other manner as our attorneys may deem it fit as fully and effectually in all respects as we could do the same ourselves. 21. To realise rents, issues and other profits and accept Surrender of Leases and tenancies and to evict all trespassers and unauthorised occupants and tenants of the aforesaid share referred to in Clause 9 in respect of the Schedule Property. 22. To sign and give notice/s to tenants/ Lessee/s and other occupants of the Schedule Property in the aforesaid part of the Schedule Property referred to in para-9 with or without building thereof enforcing the rights under Lease Deeds if any and/or enforce rights of a Lessor under Transfer of Property Act or under any other Rent Control and other enactments including for his eviction and to repair or abate any ....
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....d for doing some preliminary act in relation to the development work, but the power of control of the land which is an incidence of possession has been conveyed to the Developer under the GPA. The Developer having duly registered GPA cannot be regarded as merely a licensee or an agent subject to the control of the Owner. His possession cannot be characterized as precarious or tentative in nature. The fact that the GPA and JDA being registered is an express declaration to the effect found in the GPA itself is not without significance. The Developer's rights under GPA shows that the Developer has better control and possession in the said property which on a higher pedestal than a mere Developer who apportions built-up area with the land Owner. The Developer has better right to enter the land and control the same which he derived from the GPA. The land owner may have a right to inspect the land to oversee the construction which is only to the limited extent, compared to the Developer's rights. Exclusive possession is not necessary for the purpose of satisfying the condition laid down in section 2(47)(v) of the Act. In our opinion, the registered GPA executed by the assessee along with....
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....ement also received on that date, appropriate assessment year in which the capital gain is to be taxed is 1997- 98 and not in the year when the entire project was completed in 2003-04." 21. The Hon'ble jurisdictional High Court in the case of Dr. T.K. Dayalu (supra) further held as follows:- "The Hon'ble Supreme Court (sic) has referred to the contention of the assessee and the earlier judgments of the Supreme Court cited by him and held that those judgments were prior to introduction of the concept of deemed transfer under section 2(47)(v) of the Act and if the contract, read as a whole, indicates passing of or transferring of complete control over the property in favour of the developer, then the date of the contract would be relevant to decide the year of chargeability. Therefore, in these appeals, we hold that capital gain is to be taxed in the year 1997- 98 and not in the year 2003-04 as contended by the assessee. Accordingly, we answer the substantial questions of law framed in ITA No.3209/2005 in favour of the revenue and substantial questions of law framed in ITA No.3105/2005 against the assessee ...... " 22. The Hon'ble Bombay High Court in Chaturbhuj Dwarkad....
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....f income for a particular year, it could not confer jurisdiction to the department to tax that income in that assessment year, even though legally such income did not pertain to that year. 24. It is pertinent to mention the CBDT Circular No. 14(XL-35) of 1955, dated 11.4.1955 as per which the lower authorities should have guided the assessee as to the correct proposition of the law regarding taxability of capital gain. For clarity, we reproduce the contents of the said Circular:- " Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, of....
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....income." 28. Further, in the present case, only for the purpose of loan required from the Bank, the Developer registered a Sale Deed on 18.07.2011, wherein it is also clearly mentioned that the property is already in Developer's possession as per the Registered Development Agreement dated 24.10.2007 and the present Sale Deed made was only for confirming the right already held by the Joint Developer by executing the Sale Deed. The Sub-Registrar while registering the Sale Deed adopted the Guideline value to determine stamp duty and Registration charges. However, since tax on capital gain on the same property transaction would be for assessment year 2008-09 as per provisions of Income Tax Act, no capital gain arises out of the impugned JDA/GPA during Asst. Year 2012-13. 29. In view of the above, this ground of the assessee is allowed. 30. The next ground is with regard to grant of deduction 54G of the Act. The facts are that the assessee company in order to shift the factory from the present place, which is almost in the heart of the city, entered into Development Agreement for constructing commercial complex. But to continue manufacturing activity, the assessee purchased an i....