TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 585
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....tities of M/s Sugee Group including the assessee on 12.03.2024. During the course of survey various details and information related to the various real estate projects were called for in order to verify the compliance with regard to the issue of tax deduction under section 194IC. On verification of the documents the AO noticed that the assessee has entered into a development agreement with Shri Premal Dayalal Doshi who was the alleged owner of land on which the building known as Zaver Vihar was constructed. As per the agreement it is noticed by the AO that the owner has allowed the assessee to develop/ construct new buildings and to sell out saleable area to the prospective buyers and the owner was entitled to a share of area out of the total constructed area in the new building. The AO further noticed that the owner was also entitled to receive a certain sum of cash / monetary consideration as per the agreement. The AO also noticed that the assessee has paid the following amounts to Shri Premal Dayalal Doshi during the years under consideration on which the assessee has deducted TDS at 1% as per the provisions of section 194IA of the Act. Assessment Year Amount Paid (in Rs. ) 2....
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....tates that the term 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 land or building or both in consideration of a share being land or building or both in such projects whether with or without payment of part of the consideration in cash. The ld. AR therefore submitted that the ownership of the land / building / both is the criteria which need to be considered for applicability of section 194IC. The ld. AR drew our attention to the relevant clauses in the Joint Development Agreement where it has been stated that Shri Premal Dayalal Doshi has acquired the leasehold right, title and interest in the said property and therefore he is not the owner of the land. Without prejudice the ld. AR argued that the payee Shri Premal Dayalal Doshi has already included the payment as his income and therefore as per the proviso to section 201(1) the assessee cannot be treated as assessee in default. The ld. AR further submitted that the assessee could not furnished the Form 26A before the AO for the reason that Shri Premal Dayalal Doshi has declared the receipts as income based on the Completion Ce....
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....nd the consequential amendment in section 49 and introduction of section 194IC - Special provisions for computation of capital gains in case of joint development agreement Under the existing provisions of section 45, capital gain is chargeable to tax in the year in which transfer takes place except in certain cases. The definition of 'transfer', inter alia, includes any arrangement or transaction where any rights are handed over in execution of part performance of contract, even though the legal title has not been transferred. In such a scenario, execution of Joint Development Agreement between the owner of immovable property and the developer triggers the capital gains tax liability in the hands of the owner in the year in which the possession of immovable property is handed over to the developer for development of a project. With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer, it is proposed to insert a new sub-section (5A) in section 45 so as to provide that in case of an assessee being individual or Hindu undivided family, who enters into a specified agreement for development of a projec....
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....d lead to anomaly that transfer by the lease hold right owner under JDA would go out of the tax net as the transferor is not the owner as mentioned in the definition of specified agreement. Therefore in our considered view the interpretation as argued by the ld AR cannot be accepted since the legislative intent behind introduction of subsection (5A) is to ease the tax burden on the assessee and such beneficial provision if interpreted as not applicable to transferor holding leasehold rights who has transferred under the JDA would go against the legislative intent. Further from the perusal of the JDA entered into by the assessee with Shri Premal Dayalal Doshi, we notice that the land has been given on perpetual lease in the year 1938 since then the land has been held by various persons and Shri Premal Dayalal Doshi has acquired the land along with the conditions as prescribed for the perpetual lease. We also notice that Shri Premal Dayalal Doshi is holding the right to give the land for development and is entitled to receive consideration in monetary as well non-monetary form. Given these facts and the legislative intent as already discussed we are unable to agree with the submissio....