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TMI Blog2021 (12) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... e market value of the land under the said Joint Venture Agreement was of Rs. 1,26,90,000/-. On the basis of the information that the assessee has sold an immovable property worth of Rs. 1,26,90,000/- without quoting PAN during the Financial Year 2011-12 for A.Y. 2012-13 the case was reopened under Section 147 of the Act; notice under Section 148 of the Act was issued to the assessee. The Sub-Registrar, under Section 133(6) of the Act was directed to provide a copy of registry of the property sold by the assessee to the Ld. AO. It appears from the said Joint Venture Agreement that the assessee has given the working rights to M/s. Ample Builders for the purpose of development of entire land and the said builder shall develop the said land and prepare residential apartments at his own cost. The assessee will not bare any expenses in the cost of development and construction. It further appears that the said builder was given the right of submission of application before all the competent authorities for getting the entire permission for such development and construction work including building permission, development permission, lay out plan of the said project etc. After getting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted in this case in the year in which transfer of land to the Joint. Venture took place and therefore assessee must have offered LTCG in. the A.Y. 2012-13. Therefore, assessee was liable to pay capital gains tax on entering into Joint Venture Development Agreement. However, from the records it is observed that the assessee did not offer capital gains to tax in return of income in A.Y. 2012-13. This omission resulted in under assessment of income. Keeping in view of the above, the assessment order passed by the Assessing Officer is considered to be erroneous in so far as it is prejudicial to the interest of revenue, and therefore, I, Propose to invoke powers vested u/s 263 of the Income Tax Act, 1961 in respect of the order referred to above." 6. It is the specific submission made before the Ld. PCIT that the Joint Venture Agreement was registered before the office of the Sub-Registrar on 02.09.2011 in which the estimated market value of the land for the purpose of paying stamp duty was at Rs. 1,26,90,000/- which was considered by the Ld. AO in the re-assessment proceeding under Section 143(3) r.w.s. 147 of the Act and the AO concluded the said proceeding opining that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses on the cost of development and construction. That for the purpose of development of the said land of the assessee, M/s Ample Builders shall have all the right of submission of application before all the competent authorities for getting the entire permission in respect of the said land. That M/s Ample Builders shall obtain all necessary permission from the competent authority viz. the building permission, development permission and the lay out plan of the said project and the amount spent m obtaining the said permission shall be borne in by M/s Ample Builders. That after getting the said land developed and residential apartment constructed, the residue will be divided between both the parties. The assessee will retain 11 flats (Eleven Flats) out of total flat constructed and M/s Ample Builders will retain balance flats. Flats will be earmarked by both the parties in building permission map which is approved from concern department vide building permission No. NC-5211- 515-62011 dated 25.06.2011 and will be part of this agreement. That both the assessee and M/s Ample Builders can sell their share of flats by themselves. During the course of assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while concluding the proceeding under Section 143(3) r.w.s 147 of the Act as it appears from the said order. In fact merely because of registration of the agreement and for the purpose of ascertaining stamp duty the market value was ascertained and shown as Rs. 1,26,90,000/- as such there was no transfer took place on 02.09.2011 in respect of the land by the assessee to the builders. Further we find that the assessee discharged its onus by submitting all the documents in connection with such Joint Venture Agreement. Under these circumstances no liabilities for capital gain could arise as has already been observed by the Ld. AO upon considering and/or verifying the facts as mentioned hereinabove. 8. On this issue we have further considered the judgment passed by the Hon'ble Delhi High Court in the case of CIT vs. Software Consultants in tax appeal No. (2012), 341 ITR 240 wherein it has been held that where the AO did not make any addition on the issue in respect of which reasons were recorded at the time of issuing notice under Section 148 of the Act SEQUITUR is that the AO could not have made an addition on account of the said issue and, thus, the Ld. CIT could not have exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h construction to be made on the land. The possession that was made over by the assessee to the developer was not of the developer's share as envisaged in the agreement, but of the entirety of the land for the construction to be made thereon. It is true that the developer could have retained possession of the land and declined to return possession thereof to the assessee since the developer was in physical control thereof. But such resistance of the developer would not have been protected under Section 53A of the Act of 1882. It was only after the apportionment of the areas upon the construction on the land being completed that the developer could have rightfully retained possession of the developer's 61% share and resisted dispossession by discharging his obligation under the agreement and seeking refuge in terms of Section 53A of the Act of 1882 despite the formal conveyance pertaining to the developer's entitlement not having being executed. In any view of the matter, the right of the developer to retain possession and protect such possession under Section 53A of the Act of 1882 could never have arisen prior to the construction being completed and the apportionment e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case particularly regarding liability of the assessee for paying long term capital gain as per Sec. 45(1) of the Act in entering into a Joint Venture Agreement with M/s. Ample Builders during F.Y. 2011-12. The Ld. PCIT further directed the Ld. AO to make a Denovo proceeding after giving a reasonable opportunity of being heard to the assessee and after bringing all records, the relevant supporting materials and evidences in support of the action of the Ld. AO. We find that it is merely a Joint Venture Agreement executed by and between the assessee and the developers and only the working right has been conveyed by the assessee to the developer. The real ownership does not transfer at the time of execution of the agreement but it could only be transferred at the time of completion of project. Relevant to mention the assessee has only conveyed the working rights and not transfer the land. By way of a registered agreement the said transaction was done and only in order to get the instrument registered by the valuation of the property was determined by the Registrar at Rs. 1,26,90,000/- for the purpose of paying appropriate stamp duty by the party. Considering the entire aspect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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