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TMI Blog2015 (5) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... operty under the Development Agreement and the irrevocable Power of Attorney and the part possession of the property having been given to the assessee, we hold that there was effective transfer on the date of execution of Agreement dated 18.01.1996. Consequently, the assessee acquired certain rights in the said property from 18.01.1996 and the compensation received by the assessee in view thereof, is to be taxed in the hands of the assessee as income from long term capital gains. We uphold the order of CIT(A) - Decided against revenue. - ITA No.179/PN/2014 - - - Dated:- 10-4-2015 - Shri G.S. Pannu And MS Sushma Chowla JJ. For the Appellant : Shri B.C. Malakar For the Respondent : Shri S.N. Doshi ORDER Per Sushma Chowla, JM: This appeal filed by the Revenue is against the order of CIT(A)-III, Pune, dated 20.11.2013 relating to assessment year 2003-04 against order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961. 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in treating the capital gain arising out of the acquisition of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that out of total consideration of ₹ 45,00,000/-, sum of ₹ 31,00,000/- was paid up to 26.07.1999. The assessee ultimately purchased the land vide Sale Deed dated 31.08.2000 for consideration of ₹ 23,92,000/- and stamp duty of ₹ 2,23,000/- was paid. Subsequently, out of this land, MHADA acquired land admeasuring 80307 sq. mtrs. and paid compensation of ₹ 3,21,10,358/- on 14.12.2002. As per the assessee, income on account of compensation received was to be assessed as income from long term capital gain, whereas the Assessing Officer was of the view that the transaction between the parties was completed by handing over the possession vide Sale Deed dated 31.08.2000, as initially no possession was given to the assessee and only permission was given to carry out the development works and other transactions, and hence it was Short Term Capital Gains. On the other hand, claim of the assessee was that it was in possession of the land since 18.01.1996. The Assessing Officer held that the income was assessable as income from short term capital gain. 5. The CIT(A) examined the terms of Development Agreement, Power of Attorney and supplementary Development Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty vested with the assessee as per Irrevocable Power of Attorney and Development Agreement dated 18.01.1996, therefore, there was effective transfer of impugned property on that date and the compensation receipts were to be taxed as income from long term capital gain in the hands of the assessee. 6. The Revenue is in appeal against the order of CIT(A). 7. The learned Departmental Representative for the Revenue pointed out that the issue arising in the present appeal is whether the gains are to be assessed as short term or long term capital gains. The case of the Assessing Officer was that the possession was given on 31.08.2000 i.e. on the date on sale deed was executed, whereas the case of the assessee was that the possession was given in 1996 on the execution of Development Agreement. It was pointed out by the learned Departmental Representative for the Revenue that both the Development Agreements do not mention giving of possession and only Power of Attorney was only registered. The learned Departmental Representative for the Revenue further pointed out that the ratio laid down by Hon ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia Vs. CIT (supra) was distinguisha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish that the assessee had acquired rights in the said property as the property was also mutated in the name of assessee. The CIT(A) had examined the documents executed by the assessee vis- -vis the said property and observed as under:- 3.2. I have considered the submissions made on behalf of the appellant, the objections of the Assessing Officer and the legal position with regard to transfer of a capital asset. The crux of the issue is the determination of the correct date of transfer of the land in question. Since this issue involves examination of the development agreement, POA and supplementary development agreement and the final sale deed, I have examined the impugned documents which have been got translated into English by the appellant through Shri Mukund Madhavrao Kulkarni, Advocate Solapur and filed during the course of appellate proceedings. Pages 17 to 21 of the paper book, relate to the development agreement dated 18.1.1996 wherein admittedly, against the consideration of ₹ 5 lakhs received till that date (Rs.40 lakhs received vide post-dated cheques dated 1.7.1996. 1.1.1997 and 11.71997) the appellant was given the rights to develop the land under the Talegaon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gives undertaking that while executing sale deed or Development agreement, wherever his signatures are required he will do so. As per this agreement, the 2nd party Shri Sureshkumar Shreekishan Bhaiyya acknowledges the receipt of ₹ 31 lakhs by cash and through cheque as a consideration for the agreement. 10. The finding of the CIT(A) vide paras 4.3.3 and 4.3.4 was as under:- 3.3 A reading of these three documents as mentioned in the preceding paragraphs shows that the appellant has acquired certain rights viz. the development rights by which he is authorised to get the land converted for non agricultural use, take sanctions and permissions for construction of row houses (subsequently plots) as per the Talegaon Dabhade scheme. As already mentioned, the POA which is a registered document, mentions the rights acquired by the appellant for taking the various permissions, implementation of the row house scheme, division of the lands into plots, selling the plots and accepting the sale consideration of the plots. Therefore, reading of the three documents together [irrespective of clause O of the development agreement dated 18.1.1996] clearly shows that the appellant has part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and possession of the land to the appellant as 'absolute owner. However, the arrangement confirming the privileges of ownership without transfer of title has been held by the Bombay High Court to fall within the purview of sec.2(47)(v). Accordingly, respectfully following the decision of the Hon'ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia's case and other cases referred supra, it is held that the rights over the property vested with the appellant as per the irrevocable POA and development agreement dated 18.1.1996 and therefore, there was effective transfer on impugned property on that date. The Assessing Officer is directed to treat the compensation receipts as long term capital gains in the hands of the appellant. Grounds 1, 3 and 4 stand allowed. 11. The assessee before us has furnished an Explanation of the notings made in the Record of Right in Form No.6D. As per the entries made in Nature of Rights in Record of Right in Form 6D in pursuance of Development Agreement and Irrevocable Power of Attorney registered with Sub-Registrar of Solapur on 19.01.1996 the name of Shri Prakash R Bolgamwar is recorded in other rights . As per the commentary on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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