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TMI Blog2015 (5) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... izure operation was conducted in case of assessee on 11/09/07 and assessment incase of assessee was completed u/s 143(3) read with section 153A vide order dated 09/12/09. Ld. CIT while examining the assessment records of assessee for the year under consideration was of the view that assessment order passed is erroneous and prejudicial to the interests of revenue, as AO has failed to bring to tax the capital gain arising from transfer of land to the developer under development agreement. Accordingly, he issued a notice u/s 263 of the Act to assessee to show cause as to why assessment order should not be revised. In response to the said show cause notice, it was submitted by assessee that the development agreement executed with the developer is only a joint venture agreement for the purpose of development of the property in to a commercial complex and thereafter sharing the constructed area in the ratio provided in the development agreement. The possession given to the developer is only for the purpose of construction of the commercial complex as per the terms and conditions agreed upon. Assessee submitted, 'transfer' liable to capital gain will occur only when the constructed area f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exercised his revisionary jurisdiction u/s 263 of the IT Act. 2. It is contended that the facts obtaining in the above appeal, independent of the legal issue also reveal that the issue is debatable and controversial. Hence the CIT could not have exercised his jurisdiction u/s 263 of the IT Act. " 6. Ld. AR submitted before us that assessee along with his two brothers have jointly purchased the land situated in plot No. 8-2- 293/82/A/714 -714/a in road No. 6, Jubilee Hills, Hyderabad vide registered sale deeds executed on 26/02/05 for land admeasuring 1280 sq.yds. with built up area of 600 sq.ft. for a total consideration of Rs. 1,05,60,000. Subsequently, assessee has transferred his share in the property admeasuring 426 sq.yds. along with built up area of 200 sq.ft. to his wife Smt. Chhaya Devi Kankaria. It was submitted, though, as per the general law a sale is yet to be completed, however, as far as the income-tax Act is concerned, transfer of the asset has taken place in favour of Smt. Chhaya Devi Kankaria at the time of execution of the registered agreement of sale-cum-GPA on 04/04/06, hence, no capital gain can be assessed at the hands of assessee as he no longer was the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter nor has applied mind to the materials on record. Therefore, when AO has not taken any view at all, it cannot be said that the view taken by AO is one of the possible view. Ld. DR referring to the development agreement submitted before us, development agreement clearly establishes the fact that assessee has transferred the land to the developer in terms with the development agreement for a consideration. Therefore, once the possession is delivered there is a transfer within the meaning of section 2(47)(v). In this context, she relied upon a decision of the Hon'be AP High court in case of P. Nageswara Rao Vs. CIT, 365 ITR 249 and the following decision: 1. Taher Aumohammed Poonawala Vs. Addll. CIT, 124 TTJ 387 Ld. DR also raised objections with regard to the additional ground raised by assessee and the additional evidence produced before the Tribunal by submitting that there being no valid reasons shown by assessee as to why they were not taken before AO or ld. CIT they cannot be entertained at this stage. 8. In the rejoinder, ld. AR submitted before us, as there is no quantification of sale consideration under the development agreement except the percentage of constructed ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of Smt. Chhaya Devi Kankaria does not appear at all. Further, in the very same supplementary agreement, a refundable advance of Rs. 7.20 crores was paid to the land owners by the developer. It is also interesting to note that in another supplementary agreement executed between parties on first day of October'07, the name of Smt. Chhaya Devi Kankaria does not appear as land owner. Therefore, if at all the land was agreed to be sold to Smt. Chhaya Devi Kankaria on 04/04/06, then, how come the name of Smt. Chhaya Devi Kankaria as land owner is not appearing in the supplementary agreement executed with the developer on first day of October'07 and 16/04/07 requires to be examined. 10. Furthermore, on perusal of the assessment order it is very much evident that AO has not discussed even a single sentence wi th regard to the issue of transfer of land to the developer. No other material has been brought to our notice to indicate that AO in course of the assessment proceeding has either conducted any enquiry with regard to the development agreement or examined the issue by applying his mind to the materials on record related to that issue. Though, ld. AR tried to impress upon us th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital gain has rendered the assessment order erroneous and prejudicial to the interests of revenue. Therefore, invoking of power u/s 263 of the Act in the facts of the present case is justified. 11. As far as the decisions relied upon by ld.AR are concerned, on careful examination of the same we are of the view that they will not apply to the facts of the present case. Ld. AR has relied upon the decision of Hon'ble Supreme Court in case of Suraj Lamp & Industries (P.) Ltd. Vs. State of Haryana (supra) for the proposition that transfer of immovable property can be validly made only through a registered deed of conveyance. However, on a careful reading of the aforesaid judgment of the Hon'ble Apex Court it becomes clear that the ratio laid down is applicable to contract of sale as envisaged u/s 54 and 55 and not section 53A of the T.P. Act. Moreover, in the aforesaid decision the Hon'ble Apex Court was not called upon to examine import of expression 'transfer' as envisaged u/s 2(47) and more particularly sub-clause (v) of section 2(47) of the I.T. Act, 1961, which takes within its ambit contracts of the nature referred to in section 53A of T.P. Act. Further, a reference to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to conclusion that there is a transfer in terms of section 2(47)(v) various factors as indicated hereinbefore, need to be examined. Assessee's claim that there was dispute between the parties and developer was not willing to carry out development work requires examination on the basis of evidence produced by assessee. Further, AO is required to examine assessee's claim that he is no more owner of the property as it was sold to his wife by registered agreement of sale on 04/04/06. AO also is required to determine the year of taxability considering the claim of assessee that capital gain on transfer of land to the builder was offered by the land owners in A.Y. 2011-12 upon cancellation of development agreement and execution of sale deed. In the aforesaid facts and circumstances, though, we uphold the exercise of jurisdiction u/s 263 by ld. CIT, but, we modify his order by directing AO to examine the issue of accrual of capital gain in the impugned AY, independently, without being influenced by any of the observations of ld. CIT. AO must decide the issue considering all facts and materials on record as well as the submissions of assessee and keeping in view the judicial precedents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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