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TMI Blog2017 (8) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... ssignment of lease with another developer M/s Jiva Builders and developers dated 27-12-2007 & deed of confirmation was registered with the sub-registrar Mumbai city-3 vide dated 07-01-2010. It is also a fact that the assessee has not parted with the possession of the property till date or has not handed over the possession of the property to the new developer and even the new agreement. In view of the decision of Hon’ble Bombay High Court in the case of Geetadevi Pasari (2008 (7) TMI 990 - BOMBAY HIGH COURT), and the fact of the case that no transfer of property took place during the FY relevant to the AY 2008-09 and no possession was handed over to the developer and ultimately the agreement between the assessee and the developer, the assessee cannot be held to be liable for capital gain tax liability. Accordingly, all these five appeals of the assessee are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... g with affidavit. 7. That I am Senior Citizen aged about 64 years and not keeping well and not having educational background and not aware of the provision for filing appeal and limitation period thereof. 8. That in this way there is a delay of 140 days for which an application under Section 5 of the Limitation Act has been filed alongwith memorandum of appeal. 9. That delay in filing the appeal is because of a genuine belief of the applicability of a particular provision of the Income Tax Act 1962 which was neither accepted neither rejected the CIT (A) and further for pending application for rectification of appeal order with Commissioner of Income Tax Appeal-38, Mumbai. 10) That I had no intention to jeopardize the interest of the revenue by delaying the filing of the appeal." 3. Exactly identical worded petitions are filed in the case of other assessee's of the group. When these facts were pointed to the Learned Sr. DR, he fairy conceded that the appeal can be admitted and delay can be condoned. Accordingly, I condoned the delay and admit the appeals. 4. The only common issue in these five appeals of assessee of the same group is as regards to the assessment of lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1) of the Maharashtra Slum area (IC & R) Act 1971. Earlier co-owners entered into agreement with one M/s Raj Realtors vide agreement date 11-11-1994 i.e. development agreement to re-develop the property under Slum re-development scheme. This development agreement became unsuccessful after about 14 years and M/s Raj realtors vide release deed dated 03-08-2008 and letter of surrender dated 04-07-2008 withdrawn from the development agreement. Subsequently, the assessee along with other seven co-owners entered into agreement for development dated 27-12-2007 as M/s Jiva Builders and Developers for re-development of property whereby, the co-owners, the holders of re-development of the property will be provided on completion of development of property an independent residential building admeasuring 1500 sq. ft. of carpet area and three shops in rehabilitation component of Ground floor each of 150 sq. ft. carpet area and 5500 sq. ft. incentive FSI in sale component building free of cost in term of ready flats on ownership basis as per clause 2 and 4 of development agreement. 6. In view of the above, the AO estimated the market value of this property as per value of circle rate / stamp d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain is chargeable to tax it is necessary that consideration should be either received or accrued. Consideration should also be properly determinable for the purpose of computation of capital gain. In terms of section 48 of the Act Capital Gain can be determined w.r.t. "full value of consideration received or accruing" it has been held by the Supreme Court in the cases of CIT v. George Henderson and Co. Ltd., 66 ITR 622 and CIT v. Gillanders Arbuthnot and Co. 87 hR 407 that full value of consideration has been used in the law for the reasons that law does not deal only with the case of sale in which case consideration in money would be available. In the case of development agreement the land owner would transfer the land rights in exchange of built-up- area and, therefore, value of built-up-area which will be received by the land owner from the developer after completion of construction would be 'lull value of consideration'. (b) Since in most of the cases the consideration is not passed on in money terms and consideration is paid either partly or wholly in the form of built-up-area subsequently, both the issues i.e. the stage of accrual of consideration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances it must be further shown that a transferee had in part performance of the contract either taken possession of the property or any part thereof or the transferee being already in possession continues in possession in part performance of the contract and has done some act in furtherance of the contract. The acts claimed to be in part performance must be unequivocally referable to the preexisting contract and the acts of part performance must unequivocally point in the direction of the existence of contract and evidencing implementation or performance of contract. There must be a real nexus between the contract and the acts done in pursuance of the contract or in furtherance of the contract and must be unequivocally referable to the contract." In view of above legal position, wherever the department claims it to be transfer under section 2(47)(v) of the Act, it has to satisfy the conditions of section 53A of TPA. Accordingly, it has been a point for discussion and decision by the Tribunal or the Courts in the light of facts of each case, whether conditions of section 53A of the TP Act have been fulfilled and consequentially. Thus there is a transfer under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was allowed to srll the area comprised in the builder's allocation. On the basis of clauses of the agreement the Hon'ble High Court had held that clause of agreement has all the elements of transfer at the stage of entering into the agreement and, therefore, there was Inescapable conclusion that there was transfer of property by the owner to the developer. iv. Reliance is also placed on the following judicial pronouncements wherein such development agreements have been considered to be transfer as per section 2(47) r.w.s 53A upon which Capital Gain was applicable. 1. K. Radhika (Mrs.) & Ors. Vs. Dy.CIT (2012) 65 DTR 250 (I lyd)(Trib.) 2. By. Khodre (HUF) vs. ITO ITA No. 834/PN/2008 dt. 4/10/2011 Bench B'. V. It is further to be noted that the appellant and others had agreed to allow the developer to start construction on the aforesaid property / land subject to obtaining all the requisite permissions and sanction of the plans from the local authorities and subject to approval of land owners which show that he has transferred the development rights to the developer. vi. Further, on perusal of the Development Agreement, it is observed that as per clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was made on 27.12.2007 and the deed of confirmation has been registered on 7.1.2010 upon which the stamp duty authorities adopted the fair market value at Rs.5,78,30,500/-. In view of the above discussions and decision of Bombay High Court mentioned supra, the date of agreement i.e. 27.12.07 will be treated as date of transfer relevant to A.Y. 2010-11. xiii. As far as the question of applicability of Capital Gain and SOC is concerned, it is stated that, FSI /TDR are benefits arising from the land consequently and must be held as immovable property as held by Hon'ble Bombay High court in the case of Chheda Housing Development Corporation, a partnership firm vs. Bibijan Shaikh Farid and Ors. (2007) (3) MHLJ 402 (BOM). xiv. Further, the right to obtain conveyance of immovable property is a capital asset as held by Bombay High Court in the case of CIT Vs. Tata Services Ltd. (1980) 122 ITR 594 (Born), CIT Vs. Sterling Investment Co. Ltd. (1980) 123 ITR 441 (Born) and CIT vs. Vijay Flexible Containers (1990) 186 ITR 693 (Born). Thus, the development rights are capital asset as far as the question of applicability of Capital Gain Is concerned. xv. In view of Mumbai Tribunal&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is registered. xviii. Since, the AO considered the date of agreement i.e. 27.12.2007 as date of transfer relevant to A.Y. 2008-09, therefore, substantive addition was made by the AO in the case of the appellant in AY 2008-09 which seems to be justified in view of the above discussion and judicial pronouncements and therefore the addition so made by the AO is sustained in A.Y. 2008-09 as the correct year for taxing the Capital Gain, being 2008-09. xix. As per the assessment order dt. 24.03.14 for A.Y. 2008-09, the appellant's share of Fair Market Value as on 27.12.2007 in the aforesaid property was worked out by the AO at Rs.52,76,785/- on the basis of the Development Agreement dtd.27.12.2007, considered being the date of transfer. Thereafter the AO has worked out the Capital Gain in the case of the appellant at Rs.48,27,410/- after giving the benefit of indexed cost of acquisition. Accordingly, Rs.48,27,410/- was added back to the total income of the appellant as Long Term Capital Gain. xx. During the course of appellate proceedings, the Valuation Report of DVO-1, Mumbai dtd. 29.10.14 was received, a certified copy of which was obtained from the concerned AO, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hand of one of the co-owner i.e. the assessee Ms. Rukiyabanu Gullam Mohiuddin Ahmedji, whereas she is the only 1/8th of the one of the co-owner of the property. The assessee before AO as well as before CIT(A) filed detailed submissions re-treating that when there is no transfer within the meaning of section 2(47) of the Act r.w.s 53A of the Transfer of Property Act and taxable event has not occurred in this year or in AY 2010-11 giving rise to capital gain. It was claimed by assessee that capital gain is assessed only in the year when consideration is received or when the full value of consideration ascertainable on receipt of constructed area and not otherwise. We find that clause No. 2, 4, 5 and 28 of the Development Agreement are the essence of the contract wherein developer has agreed that the possession of the sale unit shall be given only after accommodating old tenants first and in no case developer will be entitled to possession of self components unless old tenants / occupants inducted in the respective permanent accommodation on ownership basis. Admittedly, possession of the property was not handed over during AY 2008-09 and mere execution of agreement for the dev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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