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TMI Blog2014 (4) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... ts co1n4firmation letter dated 19.11.2010, we deem it fit and proper to hold that the date of transfer has to be understood as 01.03.2008 and accordingly, the period available with the assessee to make the investment qualifying for deduction u/s 54EC has to be calculated accordingly. In this view of the matter, the investments in the bonds of REC Ltd. made by the assessee on 22.08.2008 is within the period of six months from the date of transfer as prescribed in section 54EC of the Act and accordingly the assessee is eligible for deduction u/s 54EC of the Act also - Decided in favour of assessee Addition to taxable income - addition on account of the land development agreement entered by the assessee with Rudra Buildcon Pvt. Ltd. apart from the cash consideration, the developer also offered to the assessee a separate tenement which was to be constructed by the developer on its own cost - Held that:- In the present case, assessee was owner of land at 799/A, Bhandarkar Road, Pune and assigned the development rights in such land to a builder M/s Rudra Buildcon Pvt. Ltd. vide agreement dated 13.09.2007. Apart from receiving the consideration price in cash, assessee was also entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to the assessment year 2008-09. 2. In this appeal, assessee has raised following Grounds of Appeal :- "1.) In view of the facts and circumstances of the case CIT(A) has erred both on facts as well as in law in confirming the date of transfer of Property CTS No.799/A, Bhandarkar Road, Pune, U/s 2(47) as 13.09.2007 that is the date of Execution of Development Agreement as against date of transfer as 1st March 2008 i.e. the date of possession and disallowing investment of Capital Gain U/s 54EC alleging same to be out of time. Appellant prays for determination of date of transfer as 1st March 2008 and allowing the deduction U/s 54EC. 2) CIT(A) has erred in holding that rent paid by Rudra Buildcon Pvt. Ltd. ₹ 2,55,000/- towards alternate accommodation is part of Consideration for transfer. Appellant prays for deletion of the same. 3) CIT(A) has erred in confirming addition/ disallowance undue section 14A of ₹ 36,024/- same may please be cancelled. 4) Appellant prays for Just and Equitable relief." 3. The appellant before us is an in2d ividual who filed a return of income for the assessment year 2008-09 declaring incomes on account of long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six months from the date of transfer of asset in order to claim exemption u/s 54EC of the Act. As per the Assessing Officer, the investment in the bonds of NHAI made on 28.03.2008 of ₹ 50,00,000/- was within the specified period whereas the balance investment of ₹ 50,00,000/- made in the bonds of REC Ltd. on 28.02.2008 was beyond the period prescribed in section 54EC of the Act. Accordingly, he allowed exemption to the extent of ₹ 50,00,000/- relating to the investment in the bonds of NHAI and the balance of ₹ 50,00,000/- invested in the bonds of REC Ltd. on 28.02.2008 was denied. The CIT(A) has also sustained the action of the Assessing Officer on the ground that the investment made in the bond of REC Ltd. of ₹ 50,00,000/- on 22.08.2008 was not within six months from the date of transfer of asset, and accordingly claim of ₹ 50,00,000/- was denied. The assessee is in appeal before us on the aforesaid issue. 6. The aforesaid dispute hinges around the date of transfer of asset i.e. the land sold by the assessee which has resulted in capital gains accruing to the assessee. The assessee entered into an agreement with M/s Rudra Buildcon Pvt. Ltd. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten submissions and other material that was put-forth before the lower authorities. The relevant material and evidence has been perused. The learned Departmental Representative, on the other hand, re5f erred to the discussion made by the lower authorities in their respective orders. 8. As per the appellant, the development agreement dated 13.09.2007 allowed a limited possession to the developer, which was also subject to a fundamental condition that the consideration price of ₹ 5,32,00,000/- would be paid within the installment dates contained in the agreement. The learned counsel pointed out with reference to the agreement that the entire consideration was not received within the period prescribed in the agreement and in-fact dispute with the developer still continues on account of nonrecovery of the full consideration. Therefore, according to the learned counsel, the giving of possession in terms of the agreement was subject to a condition, which was not complied with and therefore according to him, there could not be a 'transfer' within the meaning of clause (v) of section 2(47) of the Act. It was explained that though the agreement was registered on 14.09.2007, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 53A of the Transfer of Property Act, 1882 (4 of 1882)" 11. The aforesaid sub-clause (v) seeks to provide that allowing possession of any immovable property in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act would fall within the meaning of the expression 'transfer' in relation to a capital asset. In the present case, as per the Revenue by way of the development agreement dated 13.09.2007, assessee has allowed the transferee to obtain possession of the land as part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act. As noted earlier, assessee has assigned development rights in respect of his land to the developer in term of agreement dated 13.09.2007. It is also7 made out that an irrecoverable Power of Attorney has also been executed by the assessee in favour of the developer. The said Power of Attorney was given to carry on all such works and perform such acts as listed out in paragraph 3 of the agreement that were needed to complete the development of the property and it was to remain in existence till the completion of the development. The relevant clauses of the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment project." 13. Ostensibly, the aforesaid would reveal that the delivery of peaceful and vacant possession of the property was to be proceeded with only after the developer paid whole of the consideration price to the assessee-owner. Further, the following clause is also relevant :- "The absolute and vacant possession of the said properties is deemed to be handed over to the developer upon realization of the cheques given as full and final payment of the consideration as mentioned in I & II in clause I and thereafter only the developer or their assignee/ nominee will be entitled to commence the development of the said properties." 14. The aforesaid clause reflects that the possession which is said to have been given to the developer was subject to the realization of the cheques and the final payment of consideration mentioned therein. We are only trying to point out that the possession understood by the Assessing Officer by a reading of the development agreement is a conditional possession. 15. At this point, we may also refer to the plea of the Revenue that the assessee had authorized the developer to carry out certain acts in relation to the development of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and other acts which included taking of possession, only after payment of full consideration. Ostensibly, it is not in dispute that as on the date of agreement i.e. 13.09.2007 the full payment of consideration had not taken place and in-fact in the course of hearing the learned counsel made a statement at bar that even when assessee gave physical possession of the property on 01.03.2008, full consideration was still not paid to the assessee. 16. Be that as it may, we are pointing out the aforesaid contours of the development agreement only to say that the allowing of possession on 13.09.2007 for the purposes of carrying out development activity was subject to condition, which was not fulfilled at that stage. Therefore, under these circumstances, the date of development agreement i.e. 13.09.2007, could not be the date on which assessee passed or transferred complete control over the property in favour of the de1v0eloper. Pertinently, when the full consideration was not paid and the handing-over of vacant and absolute possession of the property was subject to full and final payment of consideration, which did not happen on the date of development agreement, thus the same would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances of the case and in law, the Hon'ble Tribunal was justified in concluding that the said property was not transferred by the assessee to the purchaser within the meaning of s. 2(47)(v) of the IT Act in the asst. yr. 1994-95 in spite of there being glaring evidence to rebut the claim of the assessee that the possession was given on 10th April, 1998 ? (c) Whether on the facts and the circumstances of the case and in law, the Hon'ble Tribunal was justified in concluding that the ratio laid down by the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT (2003) 180 CTR (Bom) 107 : (2003) 260 ITR 491 (Bom)are not applicable to the facts and circumstances of the case ?" 3. Mr. Gopal, the learned counsel for the respondent, pointed out that in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT (2003) 180 CTR (Bom) 107 : (2003) 260 ITR 491 (Bom) wherein almost identical issues were involved and the same was also relied upon by the Tribunal in its order. 4. In the aforesaid judgment, this Court had clearly taken a view that the relevant assessment year for the purpose of computation of capital gains will be the assessment year in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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." 19. The aforesaid provision of the Transfer of Property Act has been incorporated in the Act in terms of sub-clause (v) to section 2(47) of the Act. Because of insertion of sub-clause (v) of section 2(47) of the Act by the Finance Act, 1987 w.e.f. 01.04.1988 a transaction falling within the situation contemplated by section 53A of the Transfer of Property Act is liable to be treated as a 'transfer' in relation to capital asset for the purposes of the Act even in the absence of a conveyance deed. Section 53A of the Transfer of Property Act deals with the doctrine of the part performance of a contract and as per the Hon'ble Delhi High Court in the case of CIT vs. Reliance International Corporation Pvt. Ltd., 211 ITR 666 (Del), the aforesaid provision of the Transfer of Property Act does not confer title on the transferee on possession but merely imposes a statutory bar on the transferor. In other words, the doctrine of part performance is a defense and it is a right to protect the transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2008 and accordingly, the period available with the assessee to make the investment qualifying for deduction u/s 54EC has to be calculated accordingly. In this view of the matter, the investments in the bonds of REC Ltd. of ₹ 50,00,000/- made by the assessee on 22.08.2008 is within the period of six months from the date of transfer as prescribed in section 54EC of the Act and accordingly the assessee is eligible for deduction of ₹ 50,00,000/- u/s 54EC of the Act also. Thus, on Ground of Appeal No.1, assessee succeeds. 21. The second Ground of Appeal is with regard to an addition the taxable income of ₹ 2,55,000/- made by the Assessing Officer. The said addition is on account of the land development agreement entered by the assessee with Rudra Buildcon Pvt. Ltd.. In terms of the said development agreement apart from the cash consideration, the developer also offered to the assessee a separate tenement which was to be constructed by the developer on its own cost. Till developer was to construct and put the assessee in possession of such tenement, the developer was to provide an alternative and suitable accommodation to the assessee and the expense on providing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the constructed tenement from the developer. Ostensibly, there is no justification for the Revenue to say that it is a revenue receipt because it is nobody's case that the arrangement with the developer undertaken by the assessee is in the course of any business activity. Therefore, in1 6our considered opinion, the Assessing Officer shall re-work the total income of the assessee on the impugned aspect in the aforesaid light. Accordingly, assessee succeeds on this ground for statistical purposes. 25. The last Ground in this appeal is with regard to a disallowance of ₹ 36,024/- sustained by the CIT(A) out of a total disallowance of ₹ 41,389/- made by the Assessing Officer by invoking section 14A of the Act. 26. In brief, the facts are that assessee was found to have earned certain incomes which did not form part of the total income under the Act and accordingly the Assessing Officer invoked section 14A of the Act and sought to disallow such expenditure which was incurred in relation to earning such incomes. The Assessing Officer noted that assessee had made substantial investments in shares and out of the expenditure incurred on account of bank charges, Telepho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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