TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 1935
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....ng both the parties on 31-08- 2017 directed the ld. DR to produce relevant assessment record to verify the letter dt. 23-12-2011. On the other hand, the ld.AR filed said letter in the paper book at pages 13 to16 and argued that there was no admission in the said letter that the assessee handed over the possession of land to the developer. Relevant portion of assessee's letter dt. 23-12-2011 is reproduced herein below:- "Clause no. 1. Development right agreement with Bengal Shelter Housing Development Ltd Rs. 50.17 crores. Already we have filed with the copy of the development right and a supplementary agreement where the terms and conditions are stated clearly. Our Authorised Representative filed with you on 21.12.2011 when he received the above memo the explanations why the amount received in part amounting to Rs. 21.66 crores are not considered as the income of the year and it is very much clear that we disclosed in our books of Rs. 21.66 core as our liability which will be treated as income along with the balance amount in the coming year/s only when both the parties complied with the terms stated therein. The amount received against development in Gouripur Mouza, 24 Pgs (No....
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....DL the agreement dt. 31-03-2009 was cancelled and as such no possession of land was given to developer i.e M/s. BSHDL and no income was accrued to the accounts of assessee. The amounts in question were repaid to the developer by cheques. 8. The ld. AR placed reliance in the case of Shri Harder Singh of ITAT Chandigarh and referred to para 4 at page-3 of the said order and submitted, the amendment of section 53A of Transfer of Property Act came into force w.e.f 24-09-2001 and the registration of an agreement is mandatory from 24-09-2001. The Tribunal held the said agreement does not fall u/s. 53A of Transfer of Property Act r.w.s 2(47)(v) of the IT Act 1961 in the absence of registration of JDA having been executed after amendment came into force. Relevant portion is reproduced herein below:- Considering these facts, the appeal of the assessee was allowed by the ld. CIT(A) on the following reasoning; "7.2 During appeal proceedings, the Ld. A/R submitted that there are 95 members of the said society who filed appeal on identical facts and the appeal has been decided by Hon'ble Punjab and Haryana High Court in the case of Sh. C.S. Atwal. [ITA No. 200 of 2013J. On perusal of t....
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....e aforesaid stand, while disposing of the appeals., we observe that the assesse appellants shall remain bound by their said stand. 6. The issue of exigibility to capital gains tax having been decided in favour of the assesse, the question of exemption u/s. 54F of the Act would not survive any longer and has been rendered academic. 7. The Tribunal and the authorities below were not right in holding the assesse-appellant to be liable to capital gains tax in respect of remaining land measuring 13-5 acres for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs. Therefore, the appeals are allowed. " 9. In the present case as discussed above, an agreement dt. 31-03- 2009 was entered into between the assessee (1st party) and M/s. Bengal Shelter Housing Development Limited (BSHDL) (2nd Party) and it is clear that was executed after the amendment came into force w.e.f 24-09- 2001. The fact remains admitted that it was not registered. Therefore, in our opinion, the order in the case of Shri Harder Singh of ITAT Chandigarh is applicable and we hold that in t....
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....en though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor/ receipt of income, even though an entry to that effect might, incineration circumstances, have been made in the books of account." - This pronouncement was applied by the Supreme Court in Godhra Electricity Co. Limited v. CIT, (1997) 225 ITR 746 (SC) and followed by the Calcutta High Court in CIT v. Balarampur Commercial Enterprises Limited,(2003) 262 ITR 439 (CaL). 45. Relying upon decision in Messrs Shoorji Vallabhdas & Co. 's case (supra), the Supreme Court in CIT v. Excel Industries Limited (2013) 358 ITR 295 (SC) held that income tax cannot be levied on hypothetical income. Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability, the income is not hypothetical and it has really accrued to the assessee. It was observed as under:- "17. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In Commissioner of Income Tax v. Shoorji Vallabhdas and ....
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.... delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transfree. 4. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JOA dated 25.2.2007 having been executed after 24.9.2001, the agreement does not fall under Section 53A of I 1882 Act and consequently Section 2(47)(v) of the Act does not apply. 5. It was submitted by learned counsel for the assessee-appellant that whatever amount was received from the developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JOA dated 25.2.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand. 6. The issue of exigibility to capital gains tax having been decided in fa....
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....efers to possession to be taken or retained in part performance of the contract of the nature referred to in Section 53A of the Transfer of Property Act and in the case before Hon'ble Bombay High Court, there was no dispute that the conditions of Section 53A were satisfied. In other words, the proposition laid down by their Lordships can at best be inferred as that when conditions under Section 53A are satisfied, and when the assessee enters into a contract which is a development agreement, in the garb of agreement of sale, it is the date of this development agreement which is material date to decide the date of transfer. However, by no stretch of logic, this legal precedent can support the proposition that all development agreements, in all situations, satisfy the conditions of Section 53A which is a sine qua non for invoking Section 2(47)(v). 12.4 In order to invoke the principles laid down by the Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia of Bombay (supra), it is, therefore, necessary to demonstrate that the conditions under Section 53A of the Transfer of Property Act are satisfied. This section is reproduced below for ready reference:- "Section 5....
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.... tax by reference to Section 2(47)9v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882? i) Whether the Income Tax Appellate Tribunal, has ignored rights emanating from the JDA, legal effect of non-registration of JDA, its alleged repudiation etc? ii) Whether "possession"as envisaged by Section 2(47)(v) and Section 53-A of the Transfer of Property Act, 1982 was delivered, and if so, its nature and legal effect. iii) Whether there was any default on the part of the developers, and if so, its effect on the transactions and on exigibility to tax ? iv) Whether amount yet to be received can be taxed on a hypothetical assumption arising from the amount to be received? " 15. The Hon'ble Supreme Court held when there is no income on a transaction which never materialized is at best a hypothetical income which cannot be brought to tax. Therefore, respectably following the decisions above referred to and discussed in the aforementioned paragraphs, the addition made by the AO as confirmed by the CIT-A is deleted. Ground no's 1 and 2 raised by the assessee are allowed. 16. Ground No. 3 is relating to confirmation of addition made u/s 40A(3) of t....