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2024 (6) TMI 94 - AT - Income TaxLTCG - JDA - assessee transfers his rights in 62% of the land in lieu of 38% of the developed area to be constructed over a period of time covering the entire land envisaged to yield 75, 818 sq.ft. of built up area Annexure C to the JDA - transfer u/s. 2(47) - HELD THAT - As regards s. 2(47)(vi) also pleaded though found inapplicable in that case the same as a reading of the judgement would show was in view of the peculiar facts of the case wherein the agreement was subject to obtaining necessary permissions and clearances since denied. It is this that led the Hon ble Court to state of the possession as having been allowed for the limited purpose of construction. In fact for the first two tranches where agreement succeeded the capital gain was not disputed. The instant on the contrary is not a case of project failure but of a delay in its completion with we having found time to be not of essence of the agreement. Rather the assessee even though there is no material on record to substantiate the same admits capital gain on execution of assignment deeds in favour of the buyers of the apartments constructed on 62% of the subject land i.e. that falling to the share of the developer. This is apparently so done to save on stamp duty which would otherwise stand to be levied twice i.e. firstly on registration of the agreement on the basis of which rights to the parties arise being the JDA and GPA and then again on transfer of title to the buyers of the flats since constructed. Qua delay how one may ask the assessee know at the time of filing his return for the year that there would be a delay? The law in the matter is patently clear so that any agreement or arrangement or a transaction in any other manner which has effect of transferring or enabling the enjoyment of an immovable property would stand fall within the ambit of transfer u/s. 2(47) - it is well-settled that income is to be taxed in the hands of the right person and for the right year and it is being offered to tax in the hands of another person or year would be of no moment in law for which apart from sections 3-5 of the Act we may refer to some decisions viz. CIT v. British Paints (I) Ltd 1990 (12) TMI 2 - SUPREME COURT and CIT v. Chunilal V. Mehta Sons P. Ltd. 1971 (8) TMI 4 - SUPREME COURT . In our clear view the transaction between the assessee and Plasma Developers Ltd. vide the documents afore-referred constitutes a transfer u/s. 2(47)(vi) of the Act liable to capital gain for the current year. Quantification of the capital gain liable to be taxed for the current year - No dispute in this regard stands raised before us and accordingly not responded to by the other side. So however the assessee having raised a specific ground in this respect which was not specifically stated as not pressed we consider it incumbent on us to opine there-upon to the extent the same admits of no two views i.e. is in complete consistence and harmony with the facts of the case and the law in the matter. We do this taking guidance from the decision Walchand Co. P. Ltd. 1967 (3) TMI 2 - SUPREME COURT wherein it stands held that the Tribunal is to deal with and determine the questions which arise out of subject matter of the appeal in light of the evidence and consistently with the justice of the case. The subject land is stated to have been acquired prior to 01.04.2001. Where so without doubt the fair market value as on that date shall be deemed as the cost of acquisition and toward which the sale deed of lands in proximity of the subject land preferably matching in size on or close to that date is to be adopted. The said cost would further stand to be indexed in terms of section 48. Similarly for the sale consideration which has been adopted at the agreed rate between the parties which would though need to be compared with the stamp value as on the transfer date i.e. 27.06.2001 in view of section 50C r/ws. 48 of the Act and the higher of the two taken as the sale consideration. The onus to prove his claims as preferred would though be on the assessee. AO shall decide in accordance with law per a speaking order upon allowing the assessee a reasonable opportunity to present his case.
Issues Involved:
1. Assessment of Long Term Capital Gain (LTCG) on the execution of a Joint Development Agreement (JDA). 2. Determination of whether the transaction amounts to a transfer under Section 2(47) of the Income Tax Act, 1961. 3. Validity of the JDA and General Power of Attorney (GPA) due to non-registration. 4. Quantification of the capital gain. Issue 1: Assessment of Long Term Capital Gain (LTCG) on the Execution of a Joint Development Agreement (JDA) The appeal concerns the assessment of LTCG arising from a JDA executed by the assessee with M/s. Plasma Developers Ltd. on 27.06.2011. The agreement involved the transfer of 62% of the land in exchange for 38% of the developed area. The primary contention is whether this transaction constitutes a transfer under Section 2(47) of the Income Tax Act, 1961. Issue 2: Determination of Whether the Transaction Amounts to a Transfer Under Section 2(47) of the Income Tax Act, 1961 The assessee argued that the possession given under the JDA was not absolute and constituted only a "License" for development purposes. It was stipulated that nothing in the agreement should be construed as delivery of possession under Section 53A of the Transfer of Property Act. The assessee maintained that no capital gain arose during the year of the JDA's execution as no consideration was paid, and the developer's rights would vest only after construction completion. The Revenue countered by referencing clauses of the JDA and GPA and relied on judicial precedents, including Prameeela Krishna v. ITO, CIT v. Dr. T.K. Dayalu, and Chaturbhuj Dwarkadas Kapadia v. CIT. The Tribunal noted that Section 2(47) inclusively defines 'transfer' to include transactions that allow possession of immovable property in part performance of a contract (Section 53A of the TP Act) and transactions enabling the enjoyment of immovable property. Issue 3: Validity of the JDA and General Power of Attorney (GPA) Due to Non-Registration The assessee emphasized that the JDA and GPA were unregistered, invoking amendments to Sections 17 and 49 of the Registration Act, 1908, and Section 53A of the Transfer of Property Act, 1882. The Tribunal acknowledged that post-2001 amendments, unregistered agreements could not be recognized under Section 53A, affecting the applicability of Section 2(47)(v). However, the Tribunal held that Section 2(47)(vi) would still apply, as it does not require registration. The Tribunal referenced the Coordinate Bench's decision in P. George Jacob v. ITO, which supported this view. The Tribunal concluded that the transaction constituted a transfer under Section 2(47)(vi), liable to capital gain for the current year. Issue 4: Quantification of the Capital Gain The Tribunal noted that the assessee raised a specific ground regarding the quantum of capital gain, which was not disputed before the Tribunal. The Tribunal emphasized the need to determine the fair market value as of 01.04.2001, indexed per Section 48, and compared with the stamp value as of the transfer date (27.06.2011) under Section 50C. The onus to prove claims rested on the assessee, and the AO was directed to decide per a speaking order after allowing the assessee a reasonable opportunity to present his case. Conclusion: The Tribunal concluded that the transaction between the assessee and Plasma Developers Ltd. constituted a transfer under Section 2(47)(vi) of the Income Tax Act, 1961, and was liable to capital gain for the current year. The appeal was partly allowed for statistical purposes, with directions for the AO to quantify the capital gain in accordance with the law.
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