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TMI Blog2014 (3) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... see. - ITA No. 462/Hyd/2013 - - - Dated:- 27-2-2014 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Sri V. Shiv Kumar For the Respondent : Sri Solgy Jose T. Kottaram ORDER Per Chandra Poojari, AM: This appeal by the assessee is directed against the order of the CIT(A)-I, Hyderabad dated 19.12.2012 for assessment year 2008-09. 2. The assessee raised the following grounds: 1. The order of the learned CIT(A) is against law, weight of evidence and probabilities of the case. 2. The learned CIT(A) erred in sustaining the assessment of the Assessing Officer who held that as per the development agreement dated 13-11-2007 entered into by the assessee, transfer of capital asset being land owned by the assessee occurred in the previous year relevant to Asst. Year 2008- 09. 3. The learned CIT(A) failed to appreciate that the stipulations and covenants in various clauses of the development agreement clearly show that parties to the agreement did not contemplate handing over possession of the immovable property sought to be developed nor was possession handed over in fact during the previous year relevant to A.Y. 2008-09 and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands, had granted rights to the developer for making a residential complex thereon. In consideration of such rights, the developer had agreed to give as consideration 25% of the fully developed built up space in the form of residential units. Accordingly, flat Nos. 101, 203 and 402 were allocated to the assessee's share, along with the terrace rights. The Assessing Officer opined that the capital gain arising out of such transfer was liable to be taxed as Short Term Capital Gain. Though the assessee did not file any reply to the notice dated 9-8-2011 in this regard, he observed that during the course of search, the assessee had submitted a computation of capital gains at Rs. 22,04,444/- for the Assessment Year, claiming deduction of Rs. 11,58,500/- u/s. 54F of Income-tax Act, 1961. 8. The Assessing Officer observed that it is a well established law that capital gain arises in the year in which possession of the property was handed over. He opined that since the development agreement had been entered into the Assessment Year 2008-09, the deemed transfer took place on that date. He also noted that as per the said agreement, the assessee had handed over the vacant and peaceful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given to the developer. Further, the assessee has not received any consideration whatsoever vide the Joint Development Agreement. Being so, it cannot be said that there is a transfer in terms of section 2(47)(v) of the Act and the judgement of Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT (260 ITR 491) (Bom) wherein held that in case of development agreement, if the contract, read as a whole indicates passing of or transferring of complete control over the property in favour of the developer, then date of the contract would be relevant to decide the year of chargeability of capital gain and substantial performance of the contract would be irrelevant, cannot be applied to this case. 10. More so, the co-ordinate Bench in the case of Mrs. K. Radhika vs. DCIT (47 SOT 180) (Hyd) (UR) held as follows: 46. A plain reading of the Section 53A of the Transfer of Property Act shows that in order that a contract can be termed to be of the nature referred to in Section 53A of the Transfer of Property Act it is one of the necessary preconditions that transferee should have or is willing to perform his part of the contract. This aspect has been duly taken note of by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of Property Act will come into play on the facts of that case. It is only elementary that, unless provisions of Section 53A of the Transfer of Property Act are satisfied on the facts of a case, the transaction in question cannot fall within the scope of deemed transfer under Section 2(47)(v) of the IT Act. Let us therefore consider whether the transferee, on the facts of the present case, can be said to have 'performed or is willing to perform' its obligations under the agreement. 49. Even a cursory look at the admitted facts of the case would show that the transferee had neither performed nor was it willing to perform its obligation under the agreement in the assessment year under consideration. The agreement based on which capital gains are sought to be taxed in the present case is agreement dated 11.05.2005 but this agreement was not adhered to by the transferee. The transferee originally made a payment of Rs.10 lakhs on 11.5.2005 and another payment of Rs.90 lakhs on the same day as refundable security deposit. However, out of this a sum of Rs.50 lakhs was said to be refunded by the landlord to the developer on 5.3.2009. As such, the assessee has received only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under the joint development agreement. As per clause no. 12.11 and 19.1 of Development Agreement-cum Power of Attorney, time is the essence of the contract and as per clause No.12.11 the said property is to be developed and hand over the possession of the owners allocation to the owners and or their nominees within 24 months from the date of receiving the sanction of the plan from HUDA and Municipality/Gram Panchayat with a further grace period of 3 months. But the fact remains that the transferee was not only failed to perform its obligations under the agreement, but also unwilling to perform its obligations in the assessment year under consideration. Even otherwise, the assessing authorities has not brought on record the actual position of the project even as on the date of assessment or he has not recorded the findings whether the developer started the construction work at any time during the assessment year under consideration or any development has taken place in the project in the relevant period. He went on to proceed on the sole issue with regard to handing over the possession of the property to the developer in part performance of the Development Agreement- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 2(47)(v) could not have been invoked on the facts of the present case and for the assessment year in dispute before us. In the present case, the situation is that the assessee has received only a meager amount' out of total consideration, the transferee is avoiding adhering to the agreement and there is no evidence brought on record by the revenue authorities to show that there was actual construction has been taken place at the impugned property in the assessment year under consideration and also there is no evidence to show that the right to receive the sale consideration was actually accrued to the assessee. Without accrual of the consideration to the assessee, the assessee is not expected to pay capital gains on the entire agreed sales consideration. When time is essence of the contract, and the time schedule is not adhered to, it cannot be said that such a contract confers any rights on the vendor/landlord to seek redressal under Section 53A of the Transfer of Property Act. This agreement cannot, therefore, be said to be in the nature of a contract referred to in Section 53A of the Transfer of Property Act. It cannot, therefore, be said that the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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