TaxTMI 
TaxTMI 
2021 (12) TMI 1549
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....Road, V.V. Puram, Bangalore. The A.O. noticed that the assessee did not declare any capital gains as a result of entering into above said joint development agreement (JDA). Accordingly, he issued a show cause notice to the assessee seeking reason as to why the assessee did not offer capital gain upon entering into joint development agreement as per decision of the Hon'ble High Court of Karnataka in the case of T.K. Dayalu (ITA No.3209/2005 dated 20.6.2011). In reply thereto, the assessee submitted that the capital gain cannot be taxed in assessment year 2014-15. The A.O. did not accept the contentions of the assessee and accordingly assessed a sum of Rs.1,95,18,480/- as short term capital gain in the hands of the assessee. 3. The Ld. A.R. submitted that the A.O. as well as the Ld. CIT(A) has taken the view that the transfer of land has taken place upon entering into joint development agreement. In this regard, they have taken support of the provisions of section 2(47)(v) of the Income tax Act r.w.s. 53A of the Transfer of Property Act. The Ld. A.R. submitted that one of the main conditions for invoking provisions of section 53A of the Transfer of Property Act is that the possess....
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.... 18. The OWNER has now on execution of this agreement delivered permissive possession of the Schedule Property to the DEVELOPERS and now irrevocably permits and authorizes the DEVELOPERS to enter upon the Schedule Property to develop the same for construction. ............. 34. That the OWNERS are in the actual physical possession of Schedule Property and that they undertake not to part with its possession in any manner." 7. Now the question that arises is whether the provisions of sec.53A of the Transfer of property Act shall apply to the impugned JDA entered by the assessee with R.S Builders, when one considers the clauses of the JDA referred above. We notice that an identical issue was examined by the co-ordinate bench in the case of Anugraha Shelters (P) Ltd (ITA No. 2314/Bang/2016 dated 22.11.2021) and it was decided as under:- "10. We notice that the assessee has entered into a joint development agreement on 29.12.2005 and on the very same day a supplementary joint development agreement was also entered. Both the agreements have been registered with the registration authorities. The last paragraph in page 4 of the supplementary joint development....
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....nder:- "2(47) "transfer" in relation to a capital asset includes .................... (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882)." The provisions of section 53A of the Transfer of property Act reads as under:- "53A. Part performance.-Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance 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 2[***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribe....
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....s 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 the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act....
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.... 1882 are attracted to a particular transaction have to come to a conclusion the transaction/agreement in question is such that the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee, has, in part performance 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. 11. In the present case, the clause in the JDA regarding possession clearly states that what is given is not possession contemplated u/s.53A of the Transfer of Property Act and that it is merely a license to enter the property for the purpose of carrying out development. Further, the subsequent MOU dated 16.8.2006 and delivery of legal possession on 22.4.2006 clearly shows that there was no transfer within the meaning of Sec.2(47)(v) of the Act during the previous year relevant to AY 2006-07. Therefore, invocation of the provisions of Sec.2(47)(v) in the facts and circumstances of the present case on ....