TaxTMI 
TaxTMI 
2026 (10) TMI 588
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....scapement of income with consequent initiation of re-assessment proceedings. Accordingly, during the assessment proceedings AO has sought for appellant substantiations of joint development agreement (JDA) dated 11.2.2011 as entered by appellant along with other party Shri. Vireshwar Prasad with the developer M/s. Om Sai builders and developers with all its supporting proofs duly reconciling the applicable provisions 2(47)(v), 45 and 48 of IT Act. Apparently appellant is non-responsive to explain such attraction of transfer of property as applicable u/s. 2(47) of IT Act as pertains to the JDA for its consequent computation of applicable LTCG and in the absence of the same AO arrived at such applicable LTCG as computed in the assessment order and thereby concluded assessment order dated 21 12.2018. Aggrieved by the said order, assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed by holding that assessee has failed to adduce any supporting provisions/evidences as needed to advance the grounds of appeal to hold appellant as a mere agent to the JDA as claimed. 3. Being aggrieved by and dissatisfied assessee preferred appeal before us by tak....
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.... hands of the appellant on the date of entering upon the Development Agreement. 12. For that the Ld. CIT(A), NFAC has failed to consider that the liability of capital gain in case of Development Agreement will arise in the year of exchange of the constructed portion falling to the share of the landlord and not as on the date of entering into the Development Agreement. 4. For that the Ld. CIT(A), NFAC has erred in relying on the order of the Honble Bangalore Bench of ITAT in the case of N S Nagraj reported in (2014) 52 Taxmann.com 511 while confirming the addition. 14. For that the Ld. CIT(A) NFAC has erred in affirming charging of interest u/s 234A, and 234B amounting to Rs. 12,64,771/- and Rs. 13, 21,615/- which is bad in fact and law of the case. 15. For that the appellant may not be treated as assessee in default in respect of the disputed demand including interest amounting to Rs. 40,07,477/-. 16. For that the whole order is bad in fact and law of the case and is fit to be annulled/modified. 17. For that other grounds, if any, shall be urged at the time of hearing of the appeal. 3.1. The Assessee by filing copy of date of absolute sale executed in favour of Shri Chandr....
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....uested to refer to Page 3 of the Summary of Endorsement/POA. The same is reproduced for ready reference: यह कि लेख्यकारी पटना से बाहर रहा करते हैं और अपने अन्य कार्य में व्यस्त रहा करते है और उपरोक्त खाना नं० 5 की सम्पति का ठीक ढंग से देखभाल नहीं कर पाते है। इसलिए मैंने उक्त सम्पति को देखभाल वो &....
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....2325;ारी को देगें। 4. As indicated in Para 3 of this submission, Para 1 of Page 3 of the Summary of Endorsement/ Power of Attorney states that the agent (Lekhyadhari/ लेख्याधारी), Shri Sajindra Singh shall pay the money to the principal (Lekhyakari/ लेख्याकारी), Shri Chandra Prakash, as the principal did not live in Patna. 5. Subsequently, Shri Sajindra Singh, constituted attorney/an, agent on the behalf of the principal, Shri Chandra Prakash and another party entered into a "Development Agreement with the developer M/s. Om Sai builders and developers on 11.02.2011 The assessing officer (OA) referred to this agreement as "Joint Development Agreement" (JDA). The preface of the Development Agreement mentions as under: DEVELOPMENT AGREEMENT This development agreement executed and entered into this 11th day of February, 2011. BETWEEN (1) Sri Sajindra Singh son of Late Banke Bihari Singh, resident of East of N.S.C. Sheikhpura, PO-B. V.College, P.S.- ....
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....one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject tomthe limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience 52. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers of Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the done. An attorney-holder may....
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.... construct multi-storied building.xxxxxxxxxxxxx." 12. That the statutory provision under the Transfer of Property Act and the Income Tax Act do not pertain to the assessee/ appellant on the ground that the appellant is not the land owner and hence not the owner of the respective shares. The same is specifically written at Para 22 of the Development Agreement and is reproduced as under: "(22) That after the completion of the construction of the building project developer/ promoter/ land owner shall be absolute owners of their respective shares and they will be entitled to sell/ transfer as per Provisions of Bihar Apartment Ownership Act, 2006 u/s 5(1) & 5(2) and others. 13. That the notice to the assessee/ appellant is bad in law so, the notice is void abinitio and therefore needed to be cancelled. This was submitted vide letter dated 06.12.2018. Vide this letter, a copy of the Development Agreement and Deed of Absolute sale was also attached. A copy of letter dated 06.12.2018 is attached at Annexure-IV. 14. That vide submission dated 22.01.2021 before the Commissioner of Income Tax Appeal, the assessee/ appellant submitted that the land owner was....
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....onstituted Attorney of the land owner and therefore, the issue of capital gain does not arise. Therefore, the notice issued u/s 148 of the Income Tax Act is void abinitio. Reply to Para 2 (Page 3 of 27): It is humbly submitted that the content of the para is denied as the appellant is not the land owner as per the "Summary of Endorsement" but a constituted attorney of the land owner. It is also submitted that Section 53 of the Transfer of Property Act is not applicable to the appellant being an agent as explained above. Therefore, it is humbly submitted that the provisions of sections 2(47)(v),45 and 48 of the Income Tax Act on capital gain are not applicable to the appellant as the appellant is not the owner of the land but the agent through the "Summary of Endorsement. The same has been clearly written at Page 4 of the Development Agreement signed by the appellant and other party with M/s Om Sai Builders & Developers on 11.02.2011. The same is reproduced for ready reference: "Whereas as the property of Schedule No. 1 fully described at the foot of this deed. Land owner Chandra Prakash purchased the land measuring 4 katha 1 dhurs 2 dhurki from R....
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....come Tax Act, 1961 for the AY 2011-12, as the assessee/ appellant cannot transfer the land to the land developer as the appellant is not the land owner but executed the Development Agreement with the land developer as constituted attorney of the land owner. It is humbly submitted that the appellant cannot transfer property therefore, no transfer of property took place under this Development Agreement between the appellant and the land developer. Therefore, the notice u/s 148 issued to the assessee on 29.03.2018 is void abinitio. Reply to Para 10 (Page 8 of 27): It is humbly submitted that the content of this para does not pertain to the assessee/appellant as the appellant cannot transfer the land to the land developer as he is not the land owner but executed the Development Agreement as constituted attorney of the land owner. It is further humbly submitted that the developer, M/s. Om Sai Builders & Developers after developing the property shall transfer the constructed share to the land owner and cannot transfer to the assessee/ appellant, hence the question of capital gain does not arise out of the signing of the Development Agreement. The same has been clearly w....
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.... building project developer/ promoter/ land owner shall be absolute owners of their respective shares and the appellant shall not receive any constructed area by the developer, as per Para 22 of the Development Agreement, as appellant being the constituted attorney of the land owner. Reply to Para 14 (Page 10 of 27): It is humbly submitted that the content of this para is denied on the ground that the provisions under section 53A of the Transfer of Property Act is not applicable to the assessee/ appellant not being owner of the land. Reply to Para 15 (Page 10 of 27): It is humbly submitted that the content of this para is the details of the computation of the total cost of consideration for the transfer 50% land to the land developer. The same is not applicable to the assessee/ applicant as the appellant is mere constituent attorney of the land owner. In is humbly submitted that the content of this para pertains to the Order in the matter of ITO, Bangalore v. Sri. N.S. Nagaraj, Bangalore. It is humbly submitted that in this example, the power of attorney was executed between the landowners (two brothers) with the land developer. Therefor....
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....he land owner but an agent of the land owner. It humbly submitted that the appellant was not non-responsive to explain applicability of transfer of property u/s 2(47) of the Income Tax Act. It is also humbly submitted that the AO failed to appreciate the submissions made by the appellant. Therefore, the concluded assessment order dated 21.12.2018 is not as per law. Replies to the true extract of the relevant assessment order u/s 144 r.w.s. 147 of Income Tax Act is as follows: That the content of this para is denied on the ground that there is no capital gain to the assessee/ appellant after executing the Development Agreement (DA) as an agent of the land owner with the land developer The assessee duly replied to the notice dated 29.03.2018 issued u/s 148 vide his letter dated 06.12.2018 gating the he was not the land owner along with the documents, namely, the Development Agreement and Sale Deed. That there was no ownership of 50% of the developed area to the assessee. Further, there was no transfer of property between the assessee and the land developer as the appellant was an agent of the land owner. It has been wrongly assessed by the AO that the asses....
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....ed 11.02.2012 is reproduced as under "(22) That after the completion of the construction of the building project developer/ promoter/ land owner shall be absolute owners of their respective shares and they will be entitled to sell transfer as per Provisions of Bihar Apartment Ownership Act, 2006 w/s 5 (1) & 5 (2) and others. In view of the submissions, it is humbly submitted to set aside the Order u/s 250 of Income Tax Act, 1961 dated 27.01.2026. it also humbly submitted to refund Rs Eight Lakh One Thousand Five Hundred (8,01500/-) deposited on 28.02.2019 along with interest and pass the relief as admissible under the law to the appellant. It is, therefore, respectfully prayed that the Hon'ble Appellate Tribunal may please to provide the relief which has been derived arbitrarily on account of misleading computation of capital gain tax which is not applicable to the appellant being the constituted attorney of the land owner and be graciously pleased to delete the demand along with interest in full as submitted above and refund the tax amount already deposited along with the interest. That any other relief as your honour may deem fit may proper....
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....tructed area is actually handed over, the landowner does not receive any ascertainable consideration in his hands, and the "transfer" for the purposes of section 45 read with section 48 of the Act fructifies only when the reciprocal obligation of the developer, namely construction and handing over of possession, stands discharged. 2.2 In this regard, reliance is respectfully placed on the order of the Income Tax Appellate Tribunal, Bangalore Bench, in N.A. Haris v. Additional CIT, ITA No. 988/Bang/2018, order dated 15.02.2021, wherein the Co-ordinate Bench, while examining an identical Joint Development Agreement structure, held that mere permission to enter upon the property for development, without delivery of possession within the meaning of section 53A of the Transfer of Property Act, does not result in transfer, and that the transferee must have "performed or be willing to perform" its obligations under the agreement for section 2(47)(v) to be attracted, the year of taxability was accordingly held to be the year in which the developer's obligations were substantially performed and the constructed area was actually received by the assessee, and not the earlier year....
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....not be in consonance with the settled position of law to fasten the liability to capital gains tas upon a Power of Attorney holder/constinated attorney, where the real owner of the asset is identifiable and is a person other than the attorney holder. 3.2 Reliance in this regard is respectfully placed on the judgment of the Hon'ble Supreme Court in Suraj Lamp & Industries (P) Lad. Tr. Director v. State of Haryana & Anr., (2012) 340 ITR 1 (SC), judgment dated 11.10.2011, wherein it has been authoritatively held that a power of attorney is not an instrument of transfer in regard to any right, title, or interest in an immovable property, and is merely the creation of an agency whereby the grantor authorises the grantee/donee to act on his behalf, such acts, when done, binding the grantor as if done by him; it was further held that the donee acts in a fiduciary capacity and "cannot use the power of attorney for his own benefit," and that even an irrevocable power of attorney does not have the effect of transferring title to the grantee. 3.3 The Hon'ble Supreme Court further clarified, at paragraph 19 of the said judgment, that bona fide development agreements c....