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2024 (7) TMI 1179
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....mstances of the case and in law, the Learned. CIT(A) has erred in holding that in the year under consideration, there being no transfer of capital asset no liability to pay capital gain tax arises. 3. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that Sec.2(47)(v) read with section 45 which indicates that capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. 4. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that in terms of Section 45(1) of the Act, transfer of capital asset would attract the capital gains tax, the amount to be taxes u/s 45(1) is not dependent upon the receipt of the consideration. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee has correctly declared the capital gains on sale of immovable property in the assessment year 2017-18. 6. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that the facts of the ca....
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....39;ble ITAT Bench. 2. The brief history of the case is as under. 3. During the course of search proceedings in the case of M/s Concrete Developers certain documents were found and seized. The description of the documents is as under: Bundle No. Page No. Description & Remarks Asstt. Year B-47 Seized on 04,12,2015 from the premises of Concrete Developers Gauri Heights Plot No. 19, Ground Floor, Kachipura, Ramdaspeth, Nagpur 72 to 102 Agreement of Joint Development of Construction and sale dated 05.08.2011 between Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi and M/s Concrete Developers. For development of land at Mouza Somalwada CTS No. 504, Nagpur 2012-13 4. On verification of the seized material, it was seen that the Joint Development Agreement was made between the three brothers Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi, and M/s Concrete Developers on 05.08.2011 for property at Mouza Somalwada CTS No. 504, Nagpur. The Stamp duty value of the property as per the Joint Development Agreement was Rs. 9,62,2....
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....al power of attorney in favour of Shri Sanjay Nagorao Paidlewar partner in M/s Concrete Developers for various acts deeds and things in respect of the property. 7. On perusal of the Joint Development Agreement it is seen that the assessee has transferred the development right to the developer. This fact is clearly brought out in para 3 of the Joint Development Agreement dated 05.08.2011. 3] THAT, in consideration of the OWNER transferring development right and authority to the DEVELOPER to deal with the said property, the DEVELOPER shall construct a portion of the building for the OWNER'S which shall be in proportion of 42.5% out of the total built up area of the proposed building, from and out of his own expenses and in accordance with the same amenities and attached specifications as would be made available to the remaining portion of the building. The said portion of the building to be constructed by the DEVELOPER for the OWNERS equal to 42.5% shall be the full and final consideration to be paid by the DEVELOPER to the OWNERS for giving unfettered and absolute authority for development and sale of the remaining portion of the building equal to 57.5% along w....
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.... the schedule as the remaining 42.5% of built- up area shall be the property of the OWNERS and the DEVELOPER hereby indemnifies and keep indemnified the OWNERS from and against all actions, suits, proceedings, fines, penalties, architect's fees and all costs, charges, expenses, and damages incurred or suffered by the OWNERS due to the use of the said power of attorney by the DEVELOPER. 9] THAT, the parties hereby agrees that after the sanction of building plan is received by the DEVELOPER by the Nagpur Improvement Trust the OWNERS shall have first choice of reserving their 42.5% of built-up area from the buildings to be sanctioned on the same property with a condition that the said choice shall be taken by the OWNERS from one side only and in continuation. 10] THAT the OWNERS hereby permits the DEVELOPER to commence, carry on and to complete development in accordance with the building plans that will be sanctioned on the said property by the concerned authority by loading the permissible T.D.R/F.S.I. on the said land. It will be responsibility of the DEVELOPER to obtain sanction of the building plans on the land of OWNERS. The Development of the property as pe....
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....of the plot has given possession to the developer as licensee for development, construction of building etc. As per clause No. 10 of the development agreement the owner of the plot has given entire rights to the developer in respect of the plot of land. He has also given rights in respect of construction and sale of flats. As per clause 20 of the agreement the owner has also given right to the developer to mortgage the land to financial institutions for raising the finance. It is also mentioned that at the time of development of plot the owner is not required to attend in person hence general power of attorney is given to Shri Sanjay Paidlewar, partner in M/s Concrete developer. 12. The possession was given to the builder by the assessee under G.P.A. The assessee acted upon the agreement and received the security deposit of Rs. 1,31,00,000/-, Based on facts on record, all the conditions of sub-clause (v) of section 2(47) are satisfied in the case and therefore it had to be inferred that a transfer did take place within the meaning of Sec. 2(47) (v). 13. It is not clear LTCG shown in return of income for AY 2017-18, the amount of Rs. 3.40 Crore is the value of land....
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....red the right to receive the profits and it is not necessary that the assessee should have actually received the profits. * Sec. 2(47)(v) read with section 45 which indicates that capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law- * In terms of section 45(1) of the Act, transfer of capital asset would attract the capital gains tax, the amount to be taxed u/s 45(1) is not dependent upon the receipt of the consideration. * The facts of the case were similar to the facts in the case of CIT vs. V. K. Jeelani Basha, 256 ITR 282 (Mad) wherein Hon'ble High Court after analyzing the provisions of section 2(47)(v) has held that once the possession even for a part of property was handed over to the transferee for purpose of section 2(47)(v) r.w.s. 45, the transfer was complete. * The Finance Act, 2017 has inserted sub-section (5A) to Section 45 of the IT Act, 1961. As per the said sub section Capital Gain on transfer of land or building or both in the case of Individual or HUF shall be taxable in the previous year relevant to asse....
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....en during the time of construction. Therefore, it is crystal clear that 57.5% of the land share has been sold in the year of transfer, i.e. FY 2011-12 and hence capital gain is chargeable in this year only. 20. Further, as per the decision of the Hon'ble ITAT, Hyderabad in the case of Shri Akkimeni Nagarjun Rao TS-248 - ITAT-2012 (HYD). Development Agreement giving right to receive fixed share in built up area and putting the developer in possession of land constitutes transfer u/s 2(47). Capital gains is taxable in the year in which development agreement is entered. 21. In the case of Chemosyn Ltd., the Hon'ble Court has held that no income is accrued or received on the value of 18,000 sq. ft. of constructed area under the development agreement because the said agreement was not acted upon as it came to be superseded / modified by the Tripartite agreement. This was the position when the return of income was filed. Therefore, the Hon'ble Court held that no income has accrued or arisen to the assessee on constructed are of 18,000 sq. ft. But, in the instant case, there is no tripartite agreement. The appellant at the time of filing or return of income. ....
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....ment Agreement executed or in the year where the assessee received his share in the form of constructed area which was offered to tax in A.Y. 2018-19. On perusal of the modified Joint Development Agreement as placed on record by the ld. DR, clause 3 reads that in consideration of the owner transferring development right and authority to the developer to deal with the said property, the developer shall construct a portion of the building for the owner's which shall be in proportion of 42.5% out of the total built-up area of the proposed building, from and out of his own expenses and in accordance with the same amenities and attached specifications as would be made available to the remaining portion of the building. We note it is clear from the above narration where the donor has given a property for development to the developer and the developer shall construct building for owners with his own expenses which clearly establishes that no consideration was paid on to the assessee in the year under consideration and the assesses will get his share only the constructed area. The CIT(A) observed that in the impugned order that the developer has given possession of constructed area to ....
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....tion 53A. It was held: "11. In order that the provisions of Section 53A of the T.P. Act be attracted, 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 must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case. 12. On a reading of the agreement to sell dated 15-5-1998, what is clear is that both the parties are entitled to specific performance. (See clause 14) 13. Clause 16 is crucial, and the expression used in clause 16 is that the party of the first part hereby gives 'permission' to the party of the second pat to start construction on the land. 14. Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of developing the land into flats and selling the same. Such license cannot be said to be 'possession' within the meaning of Section 53A, which is a legal concept, and which denotes c....
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....nt of Joint Development, Construction and Sale clearly shows that the owners which includes the assessee confirmed the license and permission given to the developer by the previous owner to enter into upon the said property. The said license to the developer is personal) and under no circumstances the developer shall transfer the same to any third party. Therefore, the argument of ld. DR is not acceptable that the license and permission is a right itself gives rise transfer of property u/s. 2(47)(v) of the Act. Further, clause 3 of the said agreement establishes that the developer shall construct a portion of building for the owners in proportion of 42.5% out of total built up area of the proposed building which supports the case of the assessee no capital gain arose in the year under consideration, but it could be in the year in which possession of share of assessee in the proposed building is given. Further, clause 7 reads that the owners including the assessee given a registered power of attorney to the developer, in order to obtain the sanction of layout, building plan and to appear before various authorities for mutation on behalf of the owners and to do all general acts, deed....
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....f the said certificate, of his share, being land or building or both in the project, as increased by [the consideration received in cash, if any,] shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. Provided that the provisions of this sub-section shall not apply where the assessee transfers his share in the project on or before the date of issue of the said certificate of completion, and the capital gains shall be deemed to be the income of the previous year in which such transfer takes place and the provisions of this Act, other than the provisions of this sub-section, shall apply for the purpose of determination of full value of consideration received or accruing as a result of such transfer. Explanation. For the purposes of this sub-section, the expression- (i) "competent authority" means the authority empowered to approve the building plan by or under any law for the time being in force; (ii) "specified agreement" means a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such la....
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....that a sum of Rs. 73,612/- may be sustained as addition. Such rental income was included in the sum of Rs. 3,65,425/-, considered as unexplained deposit (supra). 8. The Ld.DR in all fairness accepted to this proposition. Accordingly, we direct the addition of Rs. 73,612/- as income from house property. Thereafter, Shri Hirani also submitted that Rs. 1,70,000/- has been received by the assessee from his daughter and wife. The bank statement of daughter was enclosed. Thus, the genuineness, identity and correctworthyness is never in doubt. However, as far as his wife is concerned, he could not submit any document. But, in view of the fact that it is a loan from his own wife, we accept the same to be duly explained in view of the fact that the amount is negligible and further normally wives help husband in distress. 9. Now, there remains an unexplained balance of Rs. 90,625/-. Shri Hirani fairly submitted that Rs. 16,625/- may be added and balance sum of Rs. 74,000/- is out of accumulated past capital. Keeping in view the status of the assessee, his age and his financial position, this sum of Rs. 74,000/- can be ascribed to his past savings which has been accumulated from years t....