TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 480
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....26% of the super-built up area, which worked out to Rs. 67,297 sq.ft. The assessee's share in that was 12.5%. The A.O. took the view that the assessee is liable to capital gain tax as per the decision rendered by Hon'ble Karnataka High Court in the case of CIT Vs. T.K. Dayalu (2011) 202 Taxmann 531. Accordingly, he computed long term capital gain at Rs. 65,77,117/-. 3. Before Ld. CIT(A) the assessee contended that he has not handed over the possession of the property as per the joint development agreement and hence the decision rendered by the Hon'ble jurisdictional High court in the case of Dr. T.K. Dayalu (supra) will not apply to the assessee. The Ld. CIT(A) did not agree with the contentions of the assessee and accordingly confirmed the addition made by the A.O. 4. The Ld. A.R. submitted that the assessee has not given possession of the property to the builders and he has given only permission to the developer to enter the scheduled property. Accordingly, he submitted that the assessee's case will not fall u/s 53A of the Transfer of Property Act and accordingly decision rendered in Dr. T.K. Dayalu will not apply. In this regard, the assessee placed reliance on the decision re....
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....t. Ltd. However, a careful perusal of the above said clauses would show that the assessee has retained the possession of the scheduled property and it is clearly stated so in clause 11.1 extracted above. It is further stated that the developer shall not claim any right in this regard. In clause 1.1 extracted above also, it is clearly stated that the developer is granted only permission to enter upon the scheduled property. 8. An identical issue was considered by the coordinate bench in the case of Anugraha Shelters Pvt. Ltd. (supra), wherein it was held that there is difference between permissive possession and legal possession. In the case of permissive possession, the developer enters the scheduled property on behalf of the owner and not in the independent capacity of purchaser of the property. For the sake of convenience, we extract below the relevant observations made in the above cited case by the coordinate bench:- "10. We notice that the assessee has entered into a joint development agreement on 29.12.2005 and on the very same day a supplementary joint development agreement was also entered. Both the agreements have been registered with the registration authorities. The l....
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....(47)(v) of the Act, which reads as under:- "2(47) "transfer" in relation to a capital asset includes .................... (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)." The provisions of section 53A of the Transfer of property Act reads as under:- "53A. Part performance.-Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescrib....
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....nsfer of capital asset effected in the previous year shall be chargeable to income tax under the head "capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. It is thus clear that there should be transfer during the previous year to attract charge to tax on capital gain. Sec.2(47) of the Act defines "Transfer" for the purpose of the Act. It reads thus: "Sec.2 (47) "transfer", in relation to a capital asset, includes,-- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in trade of a business carried on by him, such conversion or treatment ; or (iva) the maturity or redemption of a zero coupon bond; or (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) ; or (vi) any transaction (whether by way of becoming a member of,....
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....uestion is such that the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee, has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract. 11. In the present case, the clause in the JDA regarding possession clearly states that what is given is not possession contemplated u/s.53A of the Transfer of Property Act and that it is merely a license to enter the property for the purpose of carrying out development. Further, the subsequent MOU dated 16.8.2006 and delivery of legal possession on 22.4.2006 clearly shows that there was no transfer within the meaning of Sec.2(47)(v) of the Act during the previous year relevant to AY 2006-07. Therefore, invocation of the provisions of Sec.2(47)(v) in the facts and circumstances of the present case on the basis of clause-1 of the JDA, in my view was not proper. The possession in the present is traced to the joint ....