TaxTMI 
TaxTMI 
2025 (9) TMI 712
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....sessee through Ground Nos. 1, 2, 11 and 12 are general in nature and therefore, the same do not require any separate adjudication. Likewise, the issue raised by the assessee through Ground No. 10 pertain to the levy of interest under section 234A, 234B and 234C of the Act which is consequential in nature and does not require any separate adjudication. Hence, all these grounds of appeal are hereby dismissed as infructuous. 5. The issue raised by the assessee through Ground Nos. 2 to 6 are interconnected challenging the validity of the assessment. However, we note that issue raised through these grounds of appeal has not been pressed by the ld. AR as per the instruction of the assessee. Hence, we dismiss the same as not pressed. 6. The interconnected issue raised by the assessee through Ground Nos. 7 to 9 pertains to the addition of long-term capital on the transfer of land under JDA for development of residential flats. 7. The relevant facts are that the assessee is an individual. The assessee during the A.Y. 2007-08 has purchased 2 plots of land admeasuring 1 acer and 2183 sq. ft. situated at survey No. 16/1, Nylasandra village, Kengeri Hubli. In the respect of impugned la....
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....,10,000/ as long-term capital arising from JDA and added the same to the total income of the assessee. 11. The aggrieved assessee preferred an appeal before the learned CIT(A) who confirmed the addition made by the AO by observing that assessee during the appellate proceeding not submitted any evidence against the view taken by the AO despite given sufficient opportunity by way of several notices. 12. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 13. The learned AR before us filed paper book running from pages 1 to 140 and submitted that the assessee has merely given permissive possession of land property to the builder under the JDA to carry out development of residential complex. Such permissive possession does not fall under the conditions prescribed for the transfer of property under the provision of section 53A of the Transfer of Property Act and consequently the provision of section 2(47)(v) of the Act is not applicable. The learned AR in this regard emphasized on clause 5 of JDA. Furthermore, the learned AR to buttress his argument placed his reliance on the decision of coordinate bench of this Tribunal in case of DCIT vs. ....
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.... person in lieu of part performance which is legally enforceable under section 53A of the Transfer of Property Act. In this regard we perused the terms of JDA specially clause 5 which reads as under: "5. DELIVERY OF PERMISSIVE POSSESSION : The OWNER has given permission to enter upon the Schedule Property in order to put tip the construction as per sanction obtained by the DEVELOPER over the entire Schedule Property to the DEVELOPER for the purpose of constructing the residential apartments on execution of this agreement. The OWNER has permitted entry to the DEVELOPER into the Schedule property as a pact of the contract granting the DEVELOPER or its nominee/s the right to construct in terms of this agreement for Joint Development. It is specifically understood between the Parties that the permission to enter Schedule Property given to the DEVELOPER is not delivery of possession intended by the OWNER for part performance of this agreement under section 53A of Transfer of Property Act. The permission of construction shall not be construed as delivery of possession referred to under section 53A pf the Transfer of Property Act, read with section 2(47) (V) of ....
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....022, it was held as follows: *************************** 10. In the instant case also we notice that the assessee has given only permissive possession and not legal possession. Accordingly, following the above said decision of the coordinate bench, we hold that transfer has not taken place during the year under consideration. Accordingly, capital gain is not assessable in the hands of the assessee during the year under consideration. We therefore uphold the order of the CIT(A). 16.4 Furthermore, we find that the assessee has offered capital gains to tax in A.Y. 2013-14 when the flats were sold. In our considered view, the tax is to be levied on real income, and unless the transaction is completed, it does not result in accrual or receipt of income, taxation on a notional or deemed basis without actual transfer cannot be sustained in the given facts and circumstances. This principle is well-supported by the settled judicial position and follows the concept of taxation of real income. 16.5 Before parting, we note the AO has placed reliance on the principles laid down by the Hon'ble Bombay High Court in the case Chaturbhuj Dwarkadas Kapadia (supra), which later....
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....ourt emphasised that the agreement must be read as a whole to determine if there was effective transfer of possession and control. 16.11 In the present case, we find no such transfer of possession or control over land happened. Thus, in the absence of delivery of legal possession in part performance of a contract as envisaged in section 53A of the Transfer of property Act, the provisions of section 2(47)(v) are not attracted. 16.12 In light of the above discussion, and respectfully following the decision of the coordinate bench in Sri Sai Lakshmi Industries Pvt. Ltd. (supra), we hold that no transfer had taken place in A.Y. 2010-11 within the meaning of section 2(47)(v) of the Act. Therefore, the addition made by the AO and confirmed by the ld. CIT(A) is not sustainable and deserves to be deleted. Hence, the ground of appeal of the assessee is hereby allowed. 16.13 As the main argument of assessee is allowed, we do not find necessary to adjudicate alternate grounds of appeal. Hence, the alternate ground of appeal and argument advanced for alternate ground of appeal is hereby dismissed as infructuous. Thus, the ground of appeal of the assessee is hereby allowed. 17. In t....
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.... Long term capital gain Rs. 2,41,15,265/- 22. The above computed LTCG was offered by the assessee to tax in the year under consideration. 23. The assessee during the assessment proceedings claimed that for making sale of flats, he incurred commission expenses and legal expense of Rs. 5 lakhs and TDS on the payment of Rs. 1.5 Lakh was also deducted. Likewise, to make the flats marketable, he has carried out certain interior work including installation of kitchen cabinet, wardrobe at a cost of Rs. 5.5. lakh per flats. These works were carried out through contractors namely Muthu Kumar Sawami, Shivam Gowda Patil, Ajay Srinovasan. The assessee in support of his claim also provided their ledger copies. The assessee claimed that all the payments were for interior work and the same paid through banking channel. 24. However, the AO held that the assessee has purchased the land, entered into JDA to develop residential flats and sold the flats. Therefore, such activity amounts to business of land development and the proceeds from the sale of flats are liable to tax under the head income from business. 25. Regarding the claim of commission and legal expenses of Rs. 5 lakhs, ....
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....shakhapatnam in case of MG Gopal vs. DCIT reported in 165 taxmann.com 649. 31. The learned AR further emphasised that the assessee was not subject any entrepreneurial risk associated with development/ construction of the residential complex. All the risk and responsibility associated with the construction or development lies only with the developer. Therefore, in the given facts and circumstances, the assessee cannot be held to be indulged in business activity. 32. The learned AR with respect to the cost of improvement being installation of Kitchen cabinet, wardrobe and woodwork etc submitted these expenses were incurred with a view to make the flats marketable and get better deal. It was submitted that the expenses are genuine expenses paid through banking channel to the contractor after deduction of tax under section 194C of the Act. The learned AR contended that the view taken by AO that improvement of kitchen cabinet or interior work was not mentioned in the sale deed, therefore the same is not allowable is unjustified and flawed for the reasoned there is no legal requirement for showing such interior work in the sale deed. It is part and parcel of flats. Likewise, the se....
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.... documents to show that expenses for improvement-such as installation of kitchen cabinets, wardrobes, and other woodwork-were incurred through proper banking channels and supported by contractor ledgers. Merely because such details are not recorded in the sale deeds does not mean that no such work was done. These are interior additions commonly treated as part of the flat's value. Disallowance merely because they are not mentioned in the registered documents is not justified. Similarly, the claim of selling expenses of Rs. 5 lakhs, including commission and legal charges, was supported by TDS deductions and banking records, and hence ought to have been allowed. 34.5 We also find that the assessee was not exposed to any risks or responsibilities typically associated with a business venture. All obligations relating to construction, marketing, and approvals were handled by the developer. Therefore, the arrangement clearly reflects the character of a capital investment yielding a return in the form of constructed property, rather than an adventure in the nature of trade. 34.6 The decisions relied upon by the assessee, including the judgment of the Hon'ble Madras High Court in CIT....