TaxTMI 
TaxTMI 
2025 (5) TMI 2324
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....had arrived at a conclusion favorable to the assessee. 3. The conclusion drawn by the Pr. CIT regarding the JDA's provisions and its alleged implication of a transfer of capital asset under section 2(47) of the IT Act, read with section 53A of the Transfer of Property Act, is unfounded and erroneous. 4. This license granted to the developer does not qualify as part performance u/s 53A of the TP Act r.w.s 2(47) of the IT Act. 5. The ld. Pr. CIT overlooked the SA dt. 12.09.2017, which was executed subsequent to obtaining approvals from Govt Authorities. 6. The Pr. CIT failed to give a specific finding and instead remanded the matter to the A0 for further examination of JDA and SA despite the fact that A0 has already scrutinized and accepted the assessee's contentions with due understanding of the contents of JDA and SA. 7. In the light of the aforementioned grounds, it is respectfully prayed that the Hon'ble ITAT set aside the order passed by the Pr. CIT and allow the appeal in favour of the assessee." 2. In ITA No. 209/Viz/2024, the assessee has also raised an additional ground vide application dated 30/03/2024 which is sup....
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....he issue of estimation of Long-Term Capital Gain arising from a joint development agreement cum irrevocable power of attorney executed and registered by the assessee along with 11 co-owners of the land, in question. During the assessment proceedings, the Assessing Officer has examined the issue and verified all the necessary documents and records. Only on the satisfaction of the Assessing Officer that, no transfer took place by virtue of joint development agreement, the Assessing Officer did not assess the alleged Long-Term Capital Gain in pursuant to the joint development agreement entered into between the co-owner and the developer. He has referred to the draft assessment order as well as the final assessment order and submitted that the Assessing Officer has discussed this issue on facts as well as on law and finally taken a view that there is no transfer of the land by virtue of JDA entered into by the owner on one hand and developer on the other hand. The Assessing Officer has taken this view by considering and following the decisions of Hon'ble High Courts as well as the decision of the Hon'ble Supreme Court in case of CIT vs. Balbir Singh Maini, dated 4/10/2017. Thus....
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....JDA within 15 days from the date of obtaining sanctioned plan. Therefore, contrary to the sanction of plan, the entering into JDA does not constitute any transfer of the immovable property when the agreement itself was dependent upon sanction of the plan as well as signing of a supplementary agreement between the parties. He has then referred to clause (5) of the agreement and submitted that it contains the obligation of the developer whereby the developer was to prepare and finalize the plan and submit the same for approval before the competent authority until and unless this obligation is discharged and sanction is obtained, there would not be any meaning of acting of any furtherance of the JDA. He has then referred to clause (8) of the agreement and submitted that the owner has granted license to the developer to enter into property for the purpose of construction of residential complex. It is further agreed upon between the parties that they have understood that license to enter the property is given with an intend of construction of the project and it does not amount to any transfer of the land as per section 53A of the Transfer of the Property Act r.w.s. 2(47)(v) of the I.T. ....
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....ombay High Court in the case of CIT vs. Gabriel India Ltd (1993) 203 ITR 108 (Bom.). The learned AR has also referred to the order of the learned CIT (A) dated 13/12/2023 in case of Smt. Nalini Kotagiri, the co-owner of the land, in question, wherein the Assessing Officer made an addition of Long-Term Capital Gain which was deleted by the learned CIT (A). Thus, the learned AR has submitted that the impugned order passed by the Pr. CIT is not sustainable in law and liable to be quashed/set aside. 8. On the other hand, the learned DR has submitted that the Pr. CIT has dealt with factual as well as legal aspects of the issue of Long-Term Capital Gain arising from the transaction of JDA as well as irrevocable GPA. The learned DR has referred to para 7(x) of the impugned order and submitted that in the case in hand, the JDA as well as the GPA are duly registered and therefore, the judgment of the Hon'ble Supreme Court in case of CIT vs. Balbir Singh Maini (Supra) is not applicable. The learned Pr. CIT relied upon the judgment of the Hon'ble jurisdictional High Court in the case of Potla Nageshwara Rao vs. Dy.CIT reported in 365 ITR 249 dated 09/04/2014. The learned DR has als....
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....assess the income assessable to tax on account of capital gain accrued to the assessee in pursuant to the JDA cum GPA dated 18/03/2016. The Faceless Assessing Officer vide assessment order dated 29/03/2022 completed the re-assessment order by accepting the returned income without making any addition on account of alleged capital gain accrued to the assessee in pursuant to the JDA. Thereafter, the Pr. CIT on examination of the record found that the Assessing Officer has not examined/verified certain issues properly and hence, the assessment order passed by the Assessing Officer was considered as erroneous in so far it is prejudicial to the interest of the Revenue. The learned Pr.CIT accordingly issued show cause notice u/s 263 of the I.T. Act, 1961 dated 18/12/2023. In response to the show cause notice, the assessee filed written submission on 12/01/2024. The learned Pr.CIT finally arrived to the conclusion that there is a transfer of land by the land owners in favour of the developer under the JDA cum irrevocable GPA, dated 18/03/2016 and consequently held that the assessment order passed by the Assessing Officer without making inquiries or verification is erroneous in so far as it....
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....ons and permissions from the concerned local authorities. The parties have reiterated their intention and purpose for permitting the developer to enter into these pooled lands in clause 2.1 of the JDA as under: "2.1 The Owners hereby permit the Developer to enter upon the Schedule Property for development of the Residential Complex thereon as per the scheme formulated by the Parties and as per the sanctioned pln. The Developer agreed to build a built-up area of 1.20,000 Sft / Acre including EWS/LIG nits, as per building by-laws, rules and regulations elaborated in clause no.1(b). The Parties agree to share the Residential Complex in the following manner: (a) The Owners share The Owner is entitled to 35.833% (43000 S) of the total saleable constructed super built- up area including EWS/LIG Units, along with proportionate car parking space and proportionate undivided share in the Schedule Property corresponding to the super built-up area falling to the share of the Owners (hereafter referred to as "Owner's Share). (b) The Developer's share - The Developer is entitled to the balance o4.166°4% (77000 sq.lt) of the total saleable constructed surer ....
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....n Lakhs and Seventy Seven Thousand Five Hundred only) in favour of the LAND OWNERS herein in proportionate to land contributed by them towards refundable security deposits for entrusting the Schedule land to the DEVELOPER for the purpose of development and the receipt of the same is hereby admitted and acknowledged by the LAND OWNERS here as under" 10.4 Therefore, the refundable security paid by the Developer to the land owners would not constitute a consideration for transfer of land. The parties have specifically agreed that the owners shall refund the security deposit on completion of project or within 60 days from the date of intimation from the developer in the event of cancellation of the project or impossible performance. In case of delay in refund of the security, the owners would be liable to be paid interest @ 18% per annum. The parties also express their intention that owners have allowed the developer to enter into the scheduled property only for the purpose of construction of residential complex which is nothing more than a license to the developer as expressed in clause No. 8.1 as under: "8.1 The owners have this day granted license to the Developer to ent....
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....er of Property Act or section 2(47) of the Act. The security deposit by the developer as performance security was to be refunded on completion of the project and not later than 21/2 years from the signing of the supplementary sharing agreement without any interest by the owners and only in case of delay in refunding the security, the owners would be liable to pay interest. Therefore, the security deposit by the developer cannot be construed as part consideration under the agreement to sell or in part performance agreement to sell. Apart from the judgments relied upon by the learned AR of the assessee including the judgment of the Hon'ble Supreme Court in the case of CIT vs. Balbir Singh 398 ITR 531 (SC), there is a recent judgment of the Hon'ble Telangana High Court in the case of Smt. Shanta Vidya Sagar Annam vs. Income Tax Officer reported in 303 Taxmann 348 whereby the Hon'ble High Court has considered an identical issue of transfer in relation to capital asset and consequent capital gain based on JDA. The relevant decision of the Hon'ble High Court in para 10 to 19 is as under: "10. We have considered the rival submissions on both sides and have perused....
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....uces in limited form the doctrine of equity of part performance in India where requirements mentioned in the provisions are satisfied (see Ramachandrayya v. Satyanarayana AIR 1964 SC 877). Section 53A of the Transfer of Property Act, 1882 reads as under: "53A. Part Performance :- Where any person contracts to transfer for consideration any immovable 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 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 ....
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....ave deposited an amount of Rs. 2,00,000/- (Rupees two lakhs only) with First Party vide Pay Order No. 002314 dated 04.05.1996 for Rs. 2,00,000/- (Rupees two lakhs only) drawn on Bank of Bahrain and Kuwait B.S.C., Somajiguda, Hyderabad. The receipt of which the First Party hereby admits and acknowledged, which is returnable to the Second Party without any interest after the execution of the work entrusted to the Second Party under this agreement and after completion of all further floors. It is hereby clarified that 40% of the builtup portion includes usable area i.e., floor 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 e....
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....ivision Bench has no application to the fact situation of the case. Similarly, in the case of Arvind S Phake (supra), the possession was handed over to the developer and the entire consideration was paid. In the instant case, consideration has not been paid. Therefore, the Division Bench decision of the Bombay High Court also does not apply to the fact situation of the case. In. Harbour View (supra), the Division Bench of Kerala High Court on the facts of the case found that the possession of the 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." 10.7 The Hon'ble High Court has decided this issue by considering an identical JDA as well as supplementary agreement between....
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....s and the assessee has replied to it, it follows that the query raised was the subject of consideration of the AO while computing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Paragraph 14 of Aroni Commercial Ltd.'s case (supra) reads as under: "14. We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing Officer, the petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No. 4/2007 dated 15 June 2007. (The reasons for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the n....
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....ourse of assessment proceeding leading to the order dated 12 October 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment" 10. This would also indicate that there was no failure to disclose any material fact. On that ground alone the notice dated 22nd March 2021 issued under section 148 of the Act has to be quashed and set side. So also, the impugned order dated 14th February 2022 disposing Petitioner's objections. Moreover, the other co-owner's case was also proposed to be reopened. The other co-owner Late Bharat Jayantilal Patel (since deceased) through legal heir Smt. Minal Bharat Patel had filed Bharat Jayantilal Patel v. Dy. CIT [2023] 149 taxmann.com 290/292 Taxman 276 (Bom.) Writ Petition No. 1612 of 2022 which came to be disposed on 10th February 2023. In that case, we could say identical reasons for reopening of the assessment was recorded. The Court after considering the submissions made and relying upon the judgment of the Apex Court in the case of Seshasayee Steels (P.) Ltd. v. Asstt. CIT [2020] 115 taxmann.com 5/275 Taxman 187/421 ITR 46 held that the asse....