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TMI Blog2014 (3) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... t the intention of the parties is to sell the property as such to the buyer, or their nominees and a power of attorney is given to enable the buyer to sell the undivided share of land in favour of purchasers of apartments to be constructed by the buyer of the land - the assessee themselves executes the sale deed after several years on the request of the builder - the actual transfer takes place between the assessee and the builder and it is thereafter the builder transfers possession to the purchaser of the apartments - Capital gains is to be computed at the time when the transfer takes place which has to be during the assessment year when a substantial portion of the amount was received by the assessee, that is when Rs.3.81 crores was rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. The consideration was paid in a deferred manner starting from April 2003. M/s.Abad builders had constructed an apartment complex in the said property and on the basis of a power of attorney issued by the assessee the undivided share of land and the apartments were sold. The assessee declared a consideration of Rs.3.81 crores during the assessment year for the purpose of computation of long term capital gain. The Assessing Officer held that the total consideration of the transaction was Rs.8,83,50,400/- and the entire consideration should be taken into account for the purpose of long term capital gains and not the installment alone. The assessment was completed under Section 143(3) on 29/10/2007 determining long term capital gain at Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property is transferred after receiving substantial portion of consideration, the builder is entitled to invoke Section 53A of the Transfer of Property Act. Hence it amounts to a transfer as defined under Section 2(47) of the Income Tax Act and therefore the entire amount is liable to be taxed during the said assessment year itself. The Tribunal came to a finding that in order to attract Section 53A of the Transfer of Property Act, two conditions are to be fulfilled namely transfer of possession and secondly payment of substantial provision of consideration. Since only a part of the consideration was paid, the conditions have not been fulfilled and therefore it does not amount to a transfer. 5. Transfer is specifically defined under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. 7. It is therefore clear that if a transaction involves allowing of possession of any immovable property to be retained in part performance of a contract of a nature referred to in Section 53A of Transfer of Property Act it amounts to transfer. The only question is whether such a transfer is evident from the agreement executed between the assessee and Abad Builders. A copy of the agreement has been placed bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes the following: (i) that CSE will hand over possession of the said property to ABAD, free of all encumbrance, charges, liens etc, immediately on receipt of the first instalment of payment from ABAD for the purpose of construction and sale of the multi storied building as per this Agreement. 8. On a reading of the above provision itself, it is clear that possession of the property has been handed over to the builder immediately on receipt of the first installment of the payment from the builder. As per clause (3), the total consideration is mentioned as Rs.8,83,50,400/- and Rs.3,00,00,000/- was to be paid as advance on the date of the agreement. The balance amounts were to be paid in instalments. These provisions categorically ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmance. Perusal of the agreement in the case clearly indicates such a contract of part performance. The assessee cannot take a contention that the builder is not the buyer. In fact, the terms and conditions of the agreement clearly indicates that the intention of the parties is to sell the property as such to the buyer, or their nominees and a power of attorney is given to enable the buyer to sell the undivided share of land in favour of purchasers of apartments to be constructed by the buyer of the land. The execution of the sale deed is deferred as at the time when the possession of the property is transferred to the builder, there is no purchaser for the property. In other words, the builder himself has crept into the shoes of the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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