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TMI Blog2018 (9) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset …”. There can be no tax payable unless there is any profit or gain that has arisen. It could never have been the Revenue’s case that there was any monitory profit or gain that accrued to the assessee at the time of the execution of the agreement of February 7, 2007. In the light of the discussion above, the first ground urged by the Revenue does not appeal and the order of the Appellate Tribunal does not call for any interference as it set aside the erroneous view taken by the Commissioner in the order passed under Section 263 of the Act. Claim of depreciation - whether the land had to be regarded as a current asset which could be dealt with by the assessee in its usual course of business or it had to be treated as a fixed asset of the assessee, probably deriving income - Held that:- CIT (Appeals) passed an order on such aspect of the matter on August 20, 2010 and on September 8, 2011 the Tribunal passed its order, holding that the immovable property had to be regarded as a fixed asset of the assessee and depreciation calculated accordingly. Since such issue in respect of the same immovable property had been conclusively dealt with in orders passed by authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther with the construction thereon would belong to the assessee. The Revenue refers to Section 2(47)(v) of the Act to suggest that the transfer as between the assessee and the developer took place upon the execution of the agreement and the making over of the possession of the land by the assessee to the developer. Section 2(47)(v) of the Act provides as follows: transfer , in relation to a capital asset, includes, any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 The Revenue also refers to the statement of objects and reasons accompanying the Finance Act, 1987 pertaining to the amendment introduced, inter alia, by clauses (v) and (vi) being inserted in Section 2(47) of the Act. It may be profitable to notice the reason for introducing such amendment: The existing definition of the word transfer in section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member of or acquiring shares in a co-operative society, company, or associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to be some needless discussion on this aspect of the matter in the order impugned passed by the Tribunal. The relevant Commissioner assumed jurisdiction under Section 263 of the Act on his perception that erroneous findings had been rendered by the Assessing Officer in respect of when capital gains tax was payable and in the assessment of the quantum of allowable depreciation which resulted in prejudice to the Revenue. A notice of hearing was issued by the Commissioner on February 19, 2015. Upon hearing the assessee, the Commissioner passed his order on March 20, 2015. The Commissioner reasoned that since possession of the land was made over by the assessee to the developer at or immediately upon the execution of the agreement of February 7, 2007, the transfer is deemed to have taken place at such point of time in view of Section 2(47)(v) of the Act. The Commissioner then read Section 45 of the Act to imply that capital gains tax was payable at the relevant point of time and not at a later date when capital gains tax was offered and paid by the assessee. It is the same argument on this score which is repeated on behalf of the Revenue. Even if the mischief that was soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the agreement. The matter may be viewed from another perspective. Merely because de facto possession of the land is made over to a mason or a civil engineer for the purpose of making a construction thereon, it would not imply that possession is made over to the mason or the civil engineer for their enjoyment of the property. Such persons would be in de facto possession under the de jure possession of the owner and only for the purpose of undertaking the construction at the land in question. In terms of the agreement of February 7, 2007, the developer was to get 61% of the land and the proportionate share in the constructed area whereas the assessee was to get the balance 39% of the land and the proportionate constructed area thereupon. Till such time that the construction came up and 39% of the constructed area was made over to the assessee, it could not be said that possession of the balance land, in the sense that the expression carries in Section 2(47)(v) of the Act, had been made over by the assessee to the developer. It is the undeniable position that under the agreement of February 7, 2007, the land and the construction thereon were to be divided in a certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructed area that was retained by the assessee was in an information technology park and long-term leases were granted in respect of some portions thereof by the assessee and other portions were let out on short-term leases. In respect of assessment years 2004-05 and 2005-06, the matter as to how the depreciation was to be arrived at fell for consideration of the CIT (Appeals) and of the Tribunal. The moot point was whether the land had to be regarded as a current asset which could be dealt with by the assessee in its usual course of business or it had to be treated as a fixed asset of the assessee, probably deriving income. The CIT (Appeals) passed an order on such aspect of the matter on August 20, 2010 and on September 8, 2011 the Tribunal passed its order, holding that the immovable property had to be regarded as a fixed asset of the assessee and depreciation calculated accordingly. Since such issue in respect of the same immovable property had been conclusively dealt with in orders passed by authorities superior to the Commissioner, the Commissioner, in exercise of his powers under Section 263 of the Act, could not have reopened the same issue. It was a closed chapter and the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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