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TMI Blog2018 (10) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... issive possession and not possession in part performance of agreement for sale. There is no document by which the revenue can come to the conclusion that there was delivery of possession. The mere fact that development of the property cannot be done without possession cannot be the basis to come to a conclusion that possession was delivered in part performance of the agreement for sale in the manner laid down in Sec.53A of the Transfer of Property Act. Thus we hold that there was no transfer during the previous year relevant to AY 2006-07. Therefore, capital gain on transfer of the property cannot be assessed in AY 2006-07. - Decided in favour of assessee. - ITA No.2278/Bang/2018 - - - Dated:- 12-10-2018 - Shri N.V. Vasudevan, Judicial Member For the Appellant : Shri Lokesh Jain, CA For the Respondent : Shri Vikas K. Suryavamshi, Addl.CIT(DR)((ITAT), Bengaluru. ORDER This is an appeal by the assessee against the order dated 28.12.2015 of the CIT(Appeals)-7, Bengaluru relating to assessment year 2006-07. 2. The only issue that arises for consideration in this appeal is as to whether there was transfer of capital asset by the assessee during the previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of Property Act and therefore there was no transfer during the relevant previous year. The Assessee also pointed out that legal possession of the property was given to the developer only on 22.4.2006 and filed a confirmation from the developer in this regard. The Assessee pointed out that what was given to the developer under the JDA was only a license to enter the property for the purpose of carrying out development, which was not legal possession as contemplated u/s.53A of the Transfer of Property Act. The Assessee also brought to the notice of the CIT(A) that subsequently, the Assessee entered into an MOU dated 16.8.2006 whereby the Assessee instead of receiving built up area as contemplated under the JDA received a sum of ₹ 15 lacs in lieu of his right to obtain built up area. The Assessee also pointed out that she had filed a return of income declaring capital gain in AY 2007-08 because the date of transfer was only on 16.8.2006 whereby the Assessee agreed to sell the property outright and received considered in a sum of money in lieu of built up area of construction as was originally envisaged under the JDA. The Assessee submitted that there was no transfer during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT OF KARNATAKA in the case of COMMISSIONER OF INCOME TAX ANR. vs. DR. T.K. DAYALU( Supra) while deciding the following questions that Whether the Tribunal was correct in holding that there was no transfer during the current assessment year despite the assessee handing over the possession of the immovable property to the builder who had in turn handed over the part of the consideration amount which would amount to transfer attracting capital gains tax ? and Whether the Tribunal was correct in holding that the capital gains tax should be levied only on completion of the entire transaction when the super built-up area is handed over to the assessee as per the agreement ? also held that : The question to be decided is the year in which ₹ 45 lakhs received by the assessee under the agreement dt. 26th Jan., 2006 (sic-1996) as modified by the subsequent agreements is to be taxed. It is not disputed that the assessee had received capital gain in the year 1997-98 and having regard to the finding of fact that the possession of the property has been handed over on 30th May, 1996, we hold that appropriate assessment year in which the capital gain is to be taxed is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to attract charge to tax on capital gain. Sec.2(47) of the Act defines Transfer for the purpose of the Act. It reads thus: Sec.2 (47) transfer , in relation to a capital asset, includes,- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in trade of a business carried on by him, such conversion or treatment ; or (iva) the maturity or redemption of a zero coupon bond; or (v) 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 (4 of 1882) ; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract. 11. In the present case, the clause in the JDA regarding possession clearly states that what is given is not possession contemplated u/s.53A of the Transfer of Property Act and that it is merely a license to enter the property for the purpose of carrying out development. Further, the subsequent MOU dated 16.8.2006 and delivery of legal possession on 22.4.2006 clearly shows that there was no transfer within the meaning of Sec.2(47)(v) of the Act during the previous year relevant to AY 2006-07. Therefore, invocation of the provisions of Sec.2(47)(v) in the facts and circumstances of the present case on the basis of clause-1 of the JDA, in my view was not proper. The possession in the present is traced to the joint development agreement which is in the nature of permissive possession and not possession in part performance of agreement for sale. In the present case, there is no document by which the revenue can come to the conclusion that there was delivery of possession. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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