TaxTMI 
TaxTMI 
2023 (5) TMI 1104
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3. The learned CIT[A] is not justified in sustaining the addition of a sum of Rs. 37,05,858/- as Income from Long term Capital Gains upholding the view that the date of entering into the joint development agreement i.e., 16/09/2010 would be the date of transfer of the said capital asset under the facts and in the circumstances of the appellant's case. 4. The learned CIT[A] ought to have appreciated that the provision of section 2[47][v] of the Act were not applicable to the appellant's case for the year under appeal since the appellant had given possession over the agricultural lands to the Developer on 20/12/2012 that too after conversion of the said lands for non-agricultural purposes on 03/12/2012 and accordingly, the appellant had recognized transfer of the capital assets in the return of income filed for the assessment year 2013-14 and thus. the additions made in respect of long-term & short-term capital gains ought to have been deleted. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, which under the facts and in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment within the meaning of Section 147 of the Income Tax Act 1961." 2.3 The assessee owned 9 acres 12 guntas of Agricultural land bearing Survey Nos. 331, 367 and 373 at Belawadi Village, Kasaba Hobli, Srirangapatna Taluk, Mandya District. 2.4 The assessee had entered into a Development Agreement with M/s. Dhatri Properties, Sidhartha Nagar, Mysore (Developer) vide registered agreement dated 16.09.2010 in respect of the said lands for formation of sites. A sum of Rs. 10,00,000/- had been received as refundable interest free deposit. 2.5 During the assessment proceedings, the assessee submitted that he did not give possession of the lands for commencement of any work on entering into Joint Development Agreement, as the lands continued to be Agricultural lands, and under Karnataka Land Reforms Act, unless lands were converted into non-agricultural purposes, the lands could not have been put to any non-agricultural use. It was submitted that the assessee received orders for conversion issued by Deputy Commissioner, Mandya District on 03.12.2012 in respect of the subject lands and on receipt of the orders, possession of the lands were given to the developer. The assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... into and accordingly the capital gain has to be taxed in that financial year only". Considering the fact that the JDA signed on 16.09.2010 had given specific rights to the developer in Para 5.1 that, the owner gives permission to the developer to enter upon the schedule property with full right and authority to commence, carry on and complete development thereof in accordance with the permissions herein mentioned. This shall not be construed as delivery of possession under Section 53A of the Transfer of Property Act, 1882. The owner shall continue to be in possession of the schedule property till such time as the contract is discharged by performance and the developer will have only the right of entry to the schedule property for the purpose of this contract The developer was also allowed to bring in machineries, equipments, tools, Tachies, labour force on the schedule property for carrying out the development work. The developer was also permitted to store the materials required for the development work. Since the decisions in the case of Charanjit Singh Atwal v ITO Ward - VI (1) Ludhiyana, Dr T Achyutha v Asstt.CIT (2007) 108 TTJ (Hyd), CIT v. Dr. T.K. Dayalu [....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A being 16.09.2010. 4.3 It is submitted that the transferee, only by his conduct and by his deeds, demonstrates that he is unwilling to perform his obligations under the agreement, then the date of agreement ceases to be relevant. In such 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. 4.4 It was submitted that, the condition laid down under s.53A of the Transfer of Property Act was not satisfied during the year under consideration and, therefore it is the submission of the Ld.AR that, no transfer effectuated for the year under consideration. 4.5 Referring to para 5.1, the Ld.AR submitted that the possession of the property was permissible in nature, to the extent to fulfill the necessary obligations of the transferee for conversion of the land from agricultural to non-agricultural nature. The said clause 5.1 is reproduced as under: "5.1 That, the OWNER gives permission to the DEVELOPER to enter upon the schedule property with full right and authority to commence, carry on and complete development thereof in accordance with the permissions herein....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of Chaturbhuj Dwarkadas Kapadia vs. CIT (supra). We have perused the submission advanced by both sides in light of records placed before us. 12. Sec.45 of the Act lays down that profits and gains arising out of transfer 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to the developer on execution of the agreement dated 16/09/2010, the transfer of property have taken place in view of the section 2(47)(v) of the Act r.w. section 53A of the Transfer of Property Act, 1882. In this regard, the Ld.AR contended that perusal of the agreement executed by the assessee with the developer would reveal that, there was no transfer of a capital assets in view of the provisions of section 2(47)(v) of the Act r.w. section 53A of the Transfer Of Property Act. 15. In our view, in order to attract provisions of section 53A of the Transfer Of Property Act, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee (developer) must have performed or be willing to perform his part of the agreement. It is only when these two important conditions, among others, are satisfied that the provisions of section 53A of the Transfer of Property Act can be said to be attracted on the facts of a given case. We refer to the decision of Hon'ble Supreme Court in case of Seshasayee Steels (P.) Ltd. v. AIT reported in (2020) 115 taxmann.com 5. 16. We also note that under....