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TMI Blog2012 (6) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... rties Act – assessee contention that the assessee has received the right to receive consideration on a later date – Held that:- Mere accrual of the consideration received in the subsequent years does not defer the taxability of the capital gains – as property was handed over in part performance under S.53A of the Transfer of Property Act, and it could not be said that the transaction was without consideration - date on which possession was handed over to the developer is relevant for determination of the year in which the capital gains are assessable to tax - the possession of the land having been handed over to the developer in the assessment year under consideration, the transfer takes place in the assessment year under consideration only, and consequently the assessee is liable to be assessed to tax in relation to the capital gains in the year under consideration itself – against assessee. - I T Appeal No. 534 (Hyd.) of 2004 - - - Dated:- 13-4-2012 - Chandra Poojari, Smt. Asha Vijayaraghavan, JJ. B.V. Prasad Reddy for the Appellant. V. Sivakumar for the Respondent. ORDER Smt. Asha Vijayaraghavan, Judicial Member This appeal preferred by the Revenue is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inental Hotels Ltd. v CIT [1978] 114 ITR 554 (Cal.) 13. CIT v. Dalmia Cement (Bharat) Ltd. [2000] 242 ITR 129/109 Taxman 363 (Delhi) 14. CIT v. Associated Fibre Rubber Industries (P.) Ltd. [1999] 236 ITR 471/102 Taxman 700 (SC) 15. Tata Chemicals Ltd. v. Dy. CIT [2000] 72 ITD 1 (Mum.) 16. Grasim Industries Ltd . v. Dy. CIT [1999] 64 TTJ 357 (Mum.) 17. Hindustan Zinc Ltd v. Dy. CIT [2000] 74 ITD 25 (JP) 18. CIT v. South India Viscose Ltd. (No. 2) [1998] 229 ITR 203 (Mad.) 19. Core Health care Ltd. v. Dy. CIT [2001] 78 ITD 1 (Ahd.) (TM) 20. Dy. CIT v. Core Healthcare Ltd. [2001] 251 ITR 61 (Guj.) 21. Nagarjuna Fertilizers Chemicals Ltd v. Dy. CIT [ITA No. 534/Hyd/2000 dated 20-10-2001], Hyderabad Bench. 4. The appellant also filed gist of each of the above cases from which it could be soon that interest is allowable as deduction u/s 36(1)(iii) when the monies were utilized for the purpose of carrying on business irrespective of the fact as to whether the monies were utilized in the capital filed or revenue field. 5. The CIT(A) held as follows: "I have given my careful consideration to the above. At the ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a business expenditure the action of the AO in disallowing the impugned interest of Rs 686,749/- is to be held as incorrect. Therefore the AO is directed to delete the addition of Rs. 6,86,749/- made to the income returned.. This ground of appeal is allowed." 6. Aggrieved the revenue is on appeal and raised the first grounds: The learned CIT(A) erred in holding that the interest payable of Rs.6,86,749/- on the picture under production YUVAKUDU is an allowable business expenditure u/s 36(1)(iii) and that the interest on borrowings does not form a part of cost of production under Rule 9A. 7. The learned Departmental Representative Shri B.V. Prasad Reddy gave a written submission wherein he had contended that it is well established principle that specific provisions would normally overwrite the general provisions. The DR relied on the following decisions: 1. South India Corpn. (P.) Ltd. v. Secretary , Board of Revenue AIR 1964 SC 207 2. American Hotel and Lodging Association Educational Institute v. CBDT [2007] 289 ITR 46/158 Taxman 146 (Delhi) 3. Mukta Arts (P.) Ltd. . v. Asstt. CIT [2007] 105 ITD 533 (Mum.) 4. CIT v. Joseph Valakuzhy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar u/s 36(1)(iii). With these directions, the revenue's appeal on this issue is allowed for statistical purposes. 10. With respect to the second issue the brief facts of the case are that the assessee owns a plot of land admeasuring 3100 sq. yds. on Road No.2, Banjara Hills, which he gave for development for construction of a building complex. The understanding between the assessee and the developer was that the assessee should get 35% of the built-up area and car park area towards his share. The agreement with the developer was entered into on 21.6.1999. The construction was continuing during this assessment year and was completed during previous year relevant for AY 2004-05. The assessee placed these facts before the AO who held that the said transaction amounts to transfer within the meaning of S.2(47) r.w.s 53A of the Transfer of Property Act. Accordingly the AO computed the capital gains at Rs. 95,74,710/-. The AO estimated the sale consideration of the land to be the fair market value as per the SRO's records and computed the capital gains as at Rs. 95,74,710/-. 11. Before the CIT(A) it was contended that the agreement entered into is a mere development agreement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of property and the property held by the assessee is not transferred to the transferee. Further, he pointed out that the agreement only entitles the developer to develop the property and thereafter retain his share of built up area and allow the owner of the land his share as per the agreement. The CIT(A) concluded that it will be too very far fetched to hold that a development agreement amounts to a transfer of property for the purpose of section 2(47) of the Act. The CIT(A) pointed out that the Assessing Officer could not arrive at the consideration from the reading of the development agreement and resorted to treating the SRO's record value as consideration, which action of the Assessing Officer shows that one of the vital ingredients of section 53A of the TP Act is absent. Hence, the CIT(A) held that action of the Assessing Officer is subjecting the development agreement to capital gains tax for the assessment year under consideration, is not correct. However, the CIT(A) held that the Assessing Officer is at liberty to consider the question of capital gains in the year in which the transfer takes place. 14. Aggrieved the Revenue is on appeal and has raised the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement: By virtue of the development agreement, the owner hereby assign his rights, title or interest over 2015 sq. yards of land in the schedule property in favour of the promoter ." 19. In the instant case, on 21.6.1999 an agreement was entered into by the assessee with M/s. Trendset Builders Pvt. Ltd. In this case during the previous year relevant to the assessment year 2000-01 on the 21st Day of June, 1991 the assessee entered into development agreement with M/s Trendset Builders P Ltd. for construction and it is enough if the assessee has received the right to receive consideration on a later date, so as to attract exigibility to tax on capital gains during the year under appeal. Mere accrual of the consideration, as it is to be received in the subsequent years does not defer the taxability of the capital gains. The assessee being owner of the capital asst, having parted with the possession of the land under a joint development agreement, for construction and having handed over the possession of the vacant land to the developer on promise to be handed over 35% of built up area and 35% of car parking area of the property to be constructed, it was a clear case of transfer by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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