TaxTMI 
TaxTMI 
2021 (5) TMI 663
X X X X Extracts X X X X
X X X X Extracts X X X X
....substantive challenges correctness of the impugned short term capital gain addition and latter substantive ground (additional in nature admitted since ancillary to the main issues thereby rejecting the Revenue's technical arguments) pleads that the same ought to have been treated as profit and gain from business since she had transferred the land in issue in the nature of adventure in real estate development only. 3. Coming to the latter AY.2008-09 involving assessee's appeal ITA No.77/Hyd/2018 she has pleaded the following twin substantive grounds: "1.In computing the total income the learned assessing officer and the Hon'ble CIT(A) have erred in rejecting the revised return filed by the assessee u/s.139(5) r.w.s.147 of the Income Tax Act, 1961. 2.The Learned Assessing Officer and the Hon'ble CIT(A) have erred in ot considering the fact that the capital gains on the transfer of land has already been brought to tax in the AY.2005-06." 4. We have given our thoughtful consideration to rival pleadings. Both the learned representatives took us to the CIT(A)'s lower appellate order forming subject matter of AY.2005-06's ITA No.795/Hyd/2015 affirming the Assessing Officer's....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stered as Document No.813/2005 of Sub- Registrar, Kukatpally. After obtaining permission the assessee entered into a supplemental agreement on 01/11/2006 wherein the proposed owner's share of property and builders share of property was identified correctly. Subsequent to this supplement agreement. The builder started discharging his obligations as per the agreements entered in view of the above submissions it is respectfully submitted that no transfer of property has taken place as per the provisions of the section 2(47) of the IT Act, during the period relevant to the assessment year 2005-06. The Learned Assessing Officer on the strength of the development agreement Dt: 19.10.2004, assumed that a transfer of property has taken place as per the provisions of section 2[47] of the IT Act, during the period relevant asst. year 2005-06 and charged the assumed consideration to capital gains tax. It is respectfully submitted that no transfer has taken place as per the provisions of section 2[47] of the IT Act, merely on account of entering into a development agreement with the builder. For the sake of convenience the provision of section 2(47] are reproduced here under: Sec. 2(47) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Hon'ble Bombay High Court when their Lordships observed as follows: "That, in order to attract Section 53A, the following conditions need to be fulfilled. (a) There should be contract for consideration; (b) It should be in writing; (c) It should be signed by the transferor; (d) It should pertain to the transfer of immovable property; (e) The transferee should have taken possession of property; Lastly, transferee should be ready and willing to perform the contract 47. Elaborating upon the scope of expression "has performed or is willing to perform", the oft quoted commentary "Mulla - The Transfer of Property Act" (9th Edn. : Published by Butterworths India), at p. 448, observes that: "The doctrine of readiness and willingness is an emphatic way of expression to establish that the transferee always abides by the terms of the agreement and is willing to perform his part of the contract: Part performance, as a statutory right, is conditioned upon the transferee's willingness to perform his part of the contract in terms covenanted there under. " Willingness to perform the roles ascribed to a party, in a contract is primarily a mental disposition. However, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eager amount as receipt of part of sale consideration. Admittedly, there is no progress in the development agreement in the assessment year under consideration. The Municipal sanction for development was obtained not in this assessment year and it to as obtained only on 17.09.2006 from the Hyderabad Urban Development Authority. The sanction of the building plan is utmost important for the implementation of the agreement entered between the parties. Without sanction of the building plan, the very genesis of the agreement fails. To enable the execution of the agreement, firstly, plan is to be approved by the compete1lt authority. In fact, the building plan was not got approved by the builder in the assessment year under consideration. Until permission is granted, a developer cannot undertake construction. As a result of this lapse by the transferee, the construction was not taken place ill the assessme1lt year under consideration. There is a breach and break down of development agreement in the assessment year under consideration. Nothing is brough on record by authorities to show that there was development activity in the project during the assessment year under consideration and co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on, the handing over of the possession of the property is only one of the condition u/s. 53A of the Transfer of Property Act but it is not the sole and isolated condition. It is necessary to go into whether or not the transferee was 'willing to perform' its obligation under these consent terms. When transferee, by its conduct and by its deeds, demonstrates that it is unwilling to perform its obligations under the agreement in this assessment year, the date of agreement ceases to be relevant. In such a situation, it is only the actual performance of transferee's obligations which can give rise to the situation envisaged in Section 53A of the Transfer of Property Act. On these facts, it is not possible to hold that the transferee was willing to perform its obligations in the financial year in which the capital gains are sought to be taxed by the Revenue. We hold that this condition laid down under Section 53A of the Transfer of Property Act was not satisfied in this assessment year. Once We come to the conclusion that the transferee was not 'willing to perform' as stipulated by and within meanings assigned to this expression under Section 53A of the Transfer of Property Act, its ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidering the facts and circumstances of the present case as discussed above, we are of the considered view that the assessee deserves to succeed on reason that the capital gains could not have been taxed in the in this assessment year in appeal before us. The other grounds raised by the assessees in their appeals have become irrelevant at this point of time as we have held that provisions of section 2(47)(v) will not apply to the assessees in the assessment year under consideration. Consequently, the appeal filed by the revenue in ITA No. 328 to 331/Hyd/2011 have become infructuous and dismissed accordingly. With the above observation the Hon'ble Bench held that there is no transfer to attract the capital gains. In the case of assessee also the so called developer/builder has not initiated any activities for the development of the property during the period relevant to the subject assessment year. The basic requirement for the development of the' property is the obtaining of permission from Appropriate Authorities/HUDA. no such sanction has been obtained by the builder/developer till the end of Oct 2006. In the absence of such permission no further activity towards the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the assessee is regarding the year of assessability. The assessee is not disputing the taxability of income on account of development agreement. The issue raised is regarding the year of taxability. Relying on the decision of the Hon'ble ITAT in the case of Ms. K. Radhika Vs DCIT (ITA No.208 to 211/Hyd/2011) and M/s. Fibars Infratech Pvt. Ltd. (ITA No. 477/Hyd/2013), the assessee's contention is that where there is no willingness on part of the builder, there is no transfer as contemplated u/s. 2(47) of Income tax Act, 1961. In this case the agreement is dated 19/10/2004. The assessee contended that no construction work was started before 14/11/2006 and hence, it cannot be said that the 'transfer' took place during the period relevant to this assessment year ie. 2005-06. 7. In this context it is seen that the assessee has entered into development agreement-nun-general power of attorney on 19/10/2004. The agreement clearly show that possession of the property was handed over to the developer clause 4(c) is reproduced for the sake of easy reference which is as under: "4(C) The owner shall at her cost and expense demolished the existing sheds itc., in the sch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s held that the capital gains arose during the period relevant to A Y 2005-06 and the AO has rightly brought the short term capital gains to tax. The addition made by the AO is confirmed. The grounds of appeal of assessee related to above issue are dismissed". 5. Learned counsel first of all stated very fairly that there is no dispute raised at the assessee's behest regarding correctness of the both the lower authorities' action treating the impugned development agreement dt.15-08-2004 with M/s.Ashwini Abodes for construction of flats and to receive the developed area to this effect having ratio of 44:56; party-wise; respectively as amounting to transfer u/s.2(47)(v) of the Act. We thus affirm the learner lower authorities' action to this effect. 5.1. Learned counsel's next argument is that both the learned lower authorities have erred in law and on facts in adding impugned short term capital gains of Rs. 51,72,920/- thereby ignoring the clinching fact that she had in fact indulged in development of her land in issue in the nature of adventure in real estate. We find no merit in the assessee's instant stand. It emerges from a perusal of pg.16 to 35 in paper book containing the a....