TaxTMI 
TaxTMI 
2022 (7) TMI 322
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....ground is additional ground No.2, which reads as follows:- "2. That in the facts and circumstances in the case, following the refusal of the consent by the Hon'ble National Green Tribunal as well as the Karnataka State Pollution Control Board vide orders dated 04.05.2016 and 05.10.2016, respectively, the appellant / the developer M/s.Ramky Estate Farms Limited were legally restrained from implementing the proposed project, resulting in the entire project falling through and consequently provisions of section 45 were not attracted to the issue under agitation, following the law laid down by Hon'ble Supreme Court in the case of CIT vs. Balbir Singh Maini." 3. The brief facts of the case are as follows: The assessee is an individual. There was a search and seizure operation u/s 132 of the I.T.Act in the premises of M/s.Ramky Infrastructure Limited Group on 07.02.2013. During the course of search and seizure operation, a Joint Development Agreement-cum-Power of Attorney dated 23.06.2011 executed by the assessee and M/s.Ramky Infrastructure Limited was found and seized. As per the JDA executed by the assessee with the builder/developer, land measuring 7 acres 25 guntas owned by her ....
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.... transfer in terms of section 2(47) of the I.T.Act on execution of JDA when the builder will provide the constructed portion to the assessee. It was further held that as per the terms of the agreement, the assessee agreed to transfer the undivided share of land and the assessee will be delivered by the builder 35% of the super built-up area in the form of an apartment, commercial space and other benefits in the constructed area. The CIT(A) after referring the judgment of the Hon'ble Karnataka High Court in the case of CIT v. Dr.T.K.Dayalu reported in 202 taxmann.com 531 held that the assessee is liable for capital gains for the relevant assessment year. Further, it was held that the impugned land falls within the definition of urban land and irrespective whether it is agricultural land or not would come within the definition of capital assets u/s 2(14) of the I.T.Act. 6. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The assessee has filed a paper book comprising of 400 pages enclosing therein copy of the development agreement dated 23.06.2011, copy of the written submissions submitted before the Income Tax Authorities, copy of....
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.... is no transfer of property, consequently, no capital gains can be computed for the year in which year the JDA is executed:- (i) M/s.Anugraha Shelters (P) Ltd. v. DCIT [ITA No.2314/Bang/2016 (order dated 22.11.2021)] (ii) Dr.Krishna Prasad Mikkilineni v. DCIT [ITA No.929/Bang/2018 (order dated 31.01.2022)] (iii) Smt.Lakshmi Swarupa v. ITO [ITA No.2278/Bang/2018 (order dated 12.10.2018)] 10. The relevant finding of the Bangalore Bench of the Tribunal in the case of Smt.Lakshmi Swarupa v. ITO (supra) reads as follows:- "4. Clause 1 of the JDA provides as follows: "1) PERMISSION FOR DEVELOPMENT: 1.1) The Owner is in possession and enjoyment of the Schedule Property. The Owner hereby authorize the Promoter for the purpose of development, to enter upon the Schedule Property and develop the same, however the authority so granted does not in any manner be construed as delivery of possession by the Owner in part performance of this agreement under Section 53-A of the Transfer of Property Act or under Section 2(47)(iv) of the Income Tax Act, 1961. 1.2) The Owner hereby agrees not to interfere or interrupt in the course of construction and development of the Schedule Property ....
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.... the transferee although transferee might have paid entire consideration and/or obtained possession from the transferor in pursuance of contract of sale. "Transfer" in section 2(47) also envisaged execution of registered deed in such circumstances. Capital gains become liable to be charged to tax only if they arise as a result of "transfer" of capital asset and the date on which they arise is date of "transfer". If as a result of mutual arrangement by parties or otherwise, no registered deed is executed even after transaction is completed by delivery of possession and receipt of consideration, capital gains tax would escape assessment altogether or if such execution of registered sale-deed is postponed, the capital gains tax would also be postponed. In several cases it suited the parties to complete such transactions without execution of registered deed and thereby evade payment of tax on capital gains. It is in order to plug this loophole that cl. (v) was inserted in section 2(47) to lay down that transfer would include any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in s....
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....e, capital gain on transfer of the property cannot be assessed in AY 2006-07. The assessment of capital gain in AY 2006-07 is therefore held to be bad and deleted." 13. In the instant case also, we have noticed that the assessee has given permissive possession and not "legal possession" as contemplated within the meaning of sec.53A of the Transfer of Property Act. Hence we hold that the provisions of sec.53A of the Transfer of Property Act are not applicable to the impugned Joint Development Agreement. In this view of the matter, the provisions of sec.2(47)(v) of the Act are also not applicable. Hence the tax authorities are not justified in invoking the above said provision and consequently, the capital gains assessed in the hands of the assessee is liable to be deleted." 11. In the instant case, as mentioned earlier, in view of the various clauses in the JDA, it is clear that the assessee has given only a permissive possession and not the legal possession as contemplated within the meaning of section 53A of the Transfer of Property Act. Hence, we are of the view that the provisions of section 53A of the Transfer of Property Act are not applicable to the impugned JDA. In view o....