AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1765
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....ssment order either about the facts of the case or about the contentions of the assessee and therefore ought not to have held action of the assessing officer as proper and valid. 3. The Hon'ble CIT(A) ought to have observed that the assessing officer without appreciating the relevant provisions in a proper manner rejected the claim of the assessee u/s.54F of the IT Act in respect of investment made in a house property and therefore the action of the assessing officer ought to have been held as improper. 4. The Hon'ble CIT(A) ought to have observed that the assessing officer erred in ignoring the provisions of the Act in making the addition of Long Term Capital Gains and therefore the action of the assessing officer is improper and liable for deletion. 5. Any other ground will be raised at the time of hearing. 3. The assessee also raised additional grounds of appeal as under : 1. Without prejudice to any of the below mentioned grounds. The Ld. CIT(A)-12, Hyderabad ought to have held that the capital gains accrues U/s. 45(5A) of the IT Act, 1961 only as and when the possession of the villa is given and occupancy certificate is given by the a....
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.... Vishal Projects Limited for development. Apart from the development agreement, gold and jewellery of 2,480.05 gms was also found from the residence of the assessee which was valued by the government valuer at Rs. 1,06,83,964/-. Consequently, the Assessing Officer issued notice u/s. 153A on 30.01.2018, but the assessee did not file any Return of Income in response to the notice. The Assessing Officer framed the assessment u/143(3) r.w.s. 153A r.w.s. 153B of the Act thereby an addition of Long Term Capital Gain for transfer of land under the development agreement was made to the tune of Rs. 82,84,130/-. A similar addition was made by the Ld. AO for the A.Y. 2017-18 along with addition on account of unexplained investment in jewellery of Rs. 25,51,325/-. The assessee filed appeal before the Ld. CIT(A) but could not succeed. 5. Before the Tribunal, the Ld. Authorised Representative submitted that the additional ground raised by the assessee are legal in nature and can be decided on the basis of the fact and material already available on record and therefore, it does not require any fresh verification or investigation of any fact. Thus, he has submitted that in view of the judgment ....
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....ble to income tax as income of the previous year, in which the certificate of completion for the whole or part of the project is issued by the competent authority. Further, it is provided that for the purpose of section 48, the stamp duty value on the date of issue of said certificate, of his share, being land or building or both, in the project shall be deemed to be full value of consideration received or accruing as a result of transfer of the capital asset. The Ld. AR has submitted that sub-section (5A) of section 45 has been inserted by the Finance Act, 2017 to remove the hardship faced by the individuals and HUF, tax payers in respect of the development agreement entered into by such assessee. Therefore, the said amendment would be applicable with retrospective effect. In support of his contention, he has relied on the judgement of Hon'ble Supreme Court in the case of CIT Vs. Vatika Township P. Ltd 367 ITR 466 (SC). The Ld. AR submitted that the Hon'ble Supreme Court has observed that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corr....
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....itted that as per the terms and conditions of the development agreement, the owners of the land were having only the share in the developed project and no separate consideration was paid or to be paid to the owners of the land. In support of his contention, he has relied upon the following decisions : i) Motilal Chhadami Lal Jain vs Commissioner of Income Tax 456 ITR 68 (SC) ii) Mrs. Margrit Goverdhan Vs. ITO (023) 458 ITR 91 (Kar) iii) Ld. PCIT(C) Vs. Sri Sai Lakshmi Industries Pvt. Ltd. (2003) 458 ITR 373 (Kar) iv) Darshana Anand Damle Vs. DCIT (2023) 459 ITR 60 (Bom) He submitted that on identical facts and identical clauses of the JDA, the Hon'ble High Courts have held that handing over the possession of the land to the developer under the development agreement cannot be considered as transfer of land as the possession was not handed over under the agreement to sell and against the consideration. He has also relied upon the judgment of Hon'ble Supreme Court in the case of Bharat Jayantilal Patel Vs. DCIT 462 ITR 455 (SC). 9. On the other hand, the Ld. DR has submitted that the amendment in the provisions of section 45(5A) of the....
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....e JDA would constitute transfer of the land in question. The intention of the parties can be ascertained from the terms and conditions as agreed between the parties to the JDA dated 10.07.2014/19.11.2014. Clause 3.1 of the agreement specifically mentioned the purpose of the agreement between the parties as under : 3.1 It is specifically agreed between the parties that the proposed Development Agreement cum General Power of Attorney is agreed to be executed by the OWNERS on an express and specific condition that the DEVELOPER shall obtain permissions from HMDA and other authorities concerned for enabling it to commence the construction activity within a period of 9 (nine) months from the date of handing over of signed plans by the OWNERS to the DEVELOPER. The DEVELOPER shall be entitled to a further grace period of 3 (three) months. Thus, it is contemplated under the above clause that the proposed development agreement cum GPA was entered into by the owners of the land on an expressed and specific condition that the developer, shall obtain permission from HMDA and other authorities for enabling it to construction activity within a period of 9 months from the date of hand....
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....art performance of agreement to sell. Though the assessee has relied upon various judgments on this point including the Hon'ble Supreme Court in the case of CIT Vs. Balbir Singh 398 ITR 531 (SC) however, in the recent judgment of Hon'ble jurisdictional High Court dated 07.01.2025 in the case of Smt. Shantha Vidyasagar Annam Vs. ITO, Ward 4(2), Hyderabad in ITTA No.527 of 2006 [170 Taxmann.com 754 (Telangana)] has considered an identical issue of assessment of capital gain by the Assessing Officer based on the development agreement in paras 10 to 19 are as under : "10. We have considered the rival submissions on both sides and have perused the record. 11. Before proceeding further, it is apposite to take note of relevant statutory provisions of the Income Tax Act, 1961. Section 2(47) defines the expression 'transfer' in relation to capital assets. The aforesaid definition is inclusive in nature and reads as under: "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 u....
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....mance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof." 13. Thus, it is evident that in order to attract the applicability of Section 53A of the Transfer of Property Act, 1882, as held by the Supreme Court in Shrimant Shamrao Suryavanshi vs. Prahlad Bhairoba Sur....
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....r area as also the other areas like Balcony, Staircase, Lifts, Corridors, and other common spaces etc. Similarly, apart from this, 40% of the Car Park area shall be given to the First Party, all these will be clearly demarcated on the plan after obtaining sanction from the MCH or Government. 8. The owner shall be liable to pay Municipal taxes, non-agriculture and other charges and duties relating to the schedule property upto the date of delivery of possession to the developers. " 15. The assessee vide letter dated 11.05.1996 handed over the possession of the land to the developer. The relevant extract of the aforesaid letter, which is referred to by the assessing officer in para 5.5 of the order reads as under: "5.5 By virtue of a Possession Letter dated 11.05.1996 the assessee handed over possession of the said land to the Developer, which reads as under: "In pursuance of the 'DEVELOPMENT AGREEMENT' dated 4th May, 1996, at Hyderabad by and between, I have handed over this day vacant possession of the schedule land mentioned below to the Developers for the purpose of carrying out the development works."" 16. Thereafter, a supplementary agreement....
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....property was handed over under Section 53A of the Transfer of Property Act, 1882. Therefore, the aforesaid decision also has no application to the fact situation of the case. 19. However, the finding has been recorded by the Tribunal that the appellant has handed over the possession of the entire property enabling the developer to enjoy 60% of the constructed area of the building cannot, but be said to be perverse. Similarly, the finding that the assessee is liable to pay capital gains tax during the assessment year 1997-98 also cannot be sustained." 13. Thus the Hon'ble jurisdictional High Court has decided this issue by considering an identical development agreement as well as supplementary agreement between the parites and also by considering the earlier judgment in the case of Kotla Nageswara Rao Vs. DCIT and held that for attracting the applicability of section 53A of Transfer of Property Act, 1882, there must be contract to transfer for consideration of any immovable property. The terms of the contract necessary to construe the transfer and the transferee must be in part performance of the contract take possession of the property. The amount deposited by the d....
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.... therefore the action of the assessing officer is improper and liable for deletion. 5. The Hon'ble CIT(A) ought to have observed that the assessing officer erred in making addition of 898 grams of gold valued at Rs. 25,51,325/- by ignoring the fact that the affidavit filed by Sri D Kotha Srinivas Reddy and therefore the action of the assessing officer is improper and liable for deletion. 6. The Hon'ble CIT(A) ought to have observed that the assessing officer has ignored the preliminary statement as well as affidavit filed while rejecting the explanation of the assessee. 7. Any other ground will be raised at the time of hearing." The assessee also raised the additional grounds as under : 1. The Ld. CIT(A)-12, Hyderabad ought to have held that the capital gains accrue U/s. 45(5A) of the IT Act, 1961 only as and when the possession of the villa is given and occupancy certificate is given by the appropriate authority. 2. The liability to capital gains in the case of the appellant arises only when both the conditions in section 2(47)(v) of the IT Act, 1961 are satisfied. 3. The liability to capital gains arising out of dev....
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....unt of unexplained investment in gold jewellery and submitted that the said jewellery belongs to brother-in-law of assessee Dr. K. Srinivas Reddy, a resident of United Kingdom. The assessee also filed an affidavit and confirmation from Dr. K. Srinivas Reddy who is citizen of UK. However, the Ld. CIT(A) was not impressed with the explanation of the assessee and confirmed the addition made by the Assessing Officer. 17. Before the Tribunal, the Ld. AR of the assessee submitted that at the time of recording the statement u/s.132(4) of the Act, the assessee explained the fact that part of the jewellery belongs to his brother-in-law Dr. K. Srinivas Reddy, who is a non-resident Indian and kept the jewellery with the assessee for safe custody. He has further submitted that once the assessee has filed the affidavit and confirmation of Dr. K. Srinivas Reddy, a non-resident Indian, then in the absence of any contrary record or fact, the affidavit filed by the assessee cannot be rejected. The Ld. AR has further contended that the explanation of the assessee cannot be rejected when it was supported by the affidavit of Dr. K. Srinivas Reddy which was filed before the DDIT (Investigation) with....
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....stay in our residence and use the jewellery for various functions. There is no other close relative to keep the said jewellery. I furnished a self attest affidavit dt. 04-09-2016 signed by brother-in-law Dr. K Srinivasa Reddy declaring that certain jewellery listed in the affidavit belonging to him and his family members and kept in in India at his sister's house for safe custody and for use during their stay in India. Therefore, it is requested that the self attested affidavit furnished before DDIT may kindly be considered. The balance of 1100 gms. of jewellery belongs to me and my family members. The sources for the jewellery owned by our family is mostly they are gifted to my wife during wedding ceremony and received by way of gifts from my closed relatives like my mother, during different occations. Further, as per CBDT instructions 1916 (1994) the allowable limit of gold in case of me 100 gms, in case of my wife 500 gms and in case of my two daughters is 250 gms each which totals to 1100 gms which is below the prescribed limit by the CBDT Instructions. Further, in view of the above submissions, it is requested that the entire jewellery weighing 2481.500 g....
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....nt of the assessee has been corroborated by the affidavit of Dr. K. Srinivas Reddy. In the absence of any contrary facts or further enquiry conducted by the Assessing Officer, to disprove the statement of the assessee as well as the affidavit of Dr. K. Srinivas Reddy, it constitute a tangible evidence so far as the jewellery belongs to Dr. K. Srinivas Reddy. Accordingly, in the facts and circumstances of the case when the assessee has discharged his onus by explaining the facts related to the jewellery found during the search and seizure action at the first occasion of statement recorded u/s.132(4) of the Act which is further corroborated by the affidavit of Dr. K. Srinivas Reddy, the addition made by the Assessing Officer on this account is not sustainable and the same is deleted. In the result, the appeal is allowed. 20. To sum up, the appeals of the assessee are allowed. Order pronounced in the open Court on 13th Feb., 2025. ============= Document 1 11.1 The Land owners hereby grant license to the Developers, to enter upon the scheduled property free of all encumbrances and obstructions, solely for the purpose of development of the property as contemplated under this ....