9911796707
TMI Blog2015 (1) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find it necessary to address other issues relating to computation of capital gains. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ith M/s Murali Realtors on 26.12.1995 & 17.5.1996 and a Deed of Confirmation was also executed on 13.11.1997. Thereafter the assessee also applied to the Income tax department seeking clearance u/s 269UL and the Income tax department also issued a certificate on 15.9.1998. There after, the assessee executed supplementary MOU on 29.3.2000 and the development agreement was executed on 25.9.2000 with M/s Murali Realtors. Thereafter, on 10.2.2001 the assessee cancelled the MOU entered with M/s Radiant Builder earlier in 1994. Between 2000 to 2005, the assessee purchased the tenancy rights of various tenants. In 2005, the assessee received substantial payments from M/s Murli Realtors and the possession was handed over. Finally the assessee executed sale deed on 19.5.2007 in favour of M/s Murali Realtors. According to the assessee, since the substantial amount was received and the possession was also handed over by March 2005, the Capital gain was offered in the assessment year 2005-06. The legal heirs of Mr. Anand Vazirani were the assessee herein, his mother and his sister. The assessee's mother died in between and his sister executed release deed in favour of the assessee. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned on this date, consideration is quantified and possession has been given to the buyer. (2) Part of the consideration amount has been received or deemed to have been received. (3) There is part performance of the contract and as per provisions of section 2(47) r.w.s. 53A the transfer of property is regarded as complete once the possession is given and transferee is ready and willing to perform his part of the contract." Apparently, the tax authorities have applied the ratio laid down by Hon'ble jurisdictional Bombay High Court in the case of Chaturbhuj Dwarakadas Kapadia of Bombay Vs. CIT (2003)(260 ITR 491). Aggrieved, the assessee has filed this appeal before us. 7. The Ld Counsel appearing for the assessee Mr. Vimal Punmiya submitted that the view taken by the tax authorities to assess the capital gain in assessment year 2001-02 is against the peculiar facts prevailing in the instant case and they have reached such a conclusion without properly appreciating the facts. He submitted that the tax authorities are under the impression that the possession of the property was given to the developer on the date of execution of development agreement and further the develope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld D.R, Shri Jeetendra Kumar submitted that the assessee had received substantial amount by virtue of the development agreement, where as in the case laws relied upon by the assessee, the consideration paid to the owners of the property was not substantial. Further, by giving licence to enter the property, the assessee has given possession to the developer. Accordingly, the Ld D.R submitted that the provisions of sec. 2(47)(v) and 2(47)(vi) shall square apply to the impugned transaction and hence the Ld CIT(A) was justified in confirming the assessment of Capital gain in AY 2001-02. 9. We have heard the rival contentions and carefully perused the record. We feel it pertinent to highlight certain facts, which were reiterated by Ld A.R during the course of his arguments. There is no dispute with regard to the fact that the impugned property was occupied by many tenants and they held tenancy rights. The payments made by the assessee to the tenants to purchase the said tenancy right were allowed as deduction by the assessing officer himself while computing the Short term Capital gain. The assessee has placed copies of agreements entered with various tenants for vacating the property a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -06. 10. Further, our attention was invited to the following clauses of the development agreement dated 25.9.2000, which is placed at pages 102 to 117 of the paper book:- (a) As per clause 5, the owners (assessee herein) has agreed to execute a Power of Attorney in favour of the developer. (b) As per clause 6, the owner has to get the Deed of Transfer executed by the Government of Maharashtra in his favour. The expenses to be incurred in connection there with shall be borne by the owner. (c) As per clause 15, the owners have executed licence in favour of the Developer to carry out construction activities. However, the possession of the property shall be delivered by the owners upon execution of Conveyance Deed in favour of the Developer or their nominees. Accordingly, it was contended that the legal possession (complete control over the property) was not given to the developer and he was given only the licence to carry out the work. 11. The Ld A.R also placed reliance on few case laws to support his contention that the capital gain need not be assessed in the year in which the development agreement was entered, i.e., the year of assessment should be decided on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed the capital gains in AY 2006-07 observing that the transfer had taken place in AY 2006-07. The Tribunal noticed that the assessee has given only 'permissive possession' to the developer, vide the development agreement. Further, the developer did not carry on any development activity on the property as per the development agreement. Accordingly, the Tribunal held that there was no transfer of property by virtue of development agreement giving rise to Capital gain in AY 2006-07. It is pertinent to note that the Tribunal had placed reliance on the Third member decision rendered in the case of Vijaya Productions (P) Ltd Vs. Addl. CIT (2012)(134 ITD 19). (d) S. Ranjitha Redddy Vs. DCIT (2013)(35 taxmann.com 415)(Hyd) - In this case, the assessee had given licence to the developer to carry on development activities. However, the developer did not commence construction activities. The Tribunal held that the 'willingness to perform' contemplated in sec. 53A of the Act is something more than a statement of intent; it is the unqualified and unconditional willingness on the part of the vendee to perform its obligations. Unless the party has performed or is willing to perform its oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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