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TMI Blog2021 (12) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... license to enter the scheduled property for the purpose of construction of residential apartments as per the plan to be obtained. It is specifically been mentioned that the license so granted shall not be considered as possession delivered in part performance of the contract u/s 53(sic. 53A) of Transfer of property Act nor any property right shall be deemed in favour of developer. The transferee should have taken possession in part performance of the contract and has done same act in furtherance of the contract. In the instant case, development agreement clearly specified on the possession of the property was not given and what was given is only license to enter the property. The question whether granting of such kind of license would amount to Possession within the meaning of sec.53A of Transfer of Property Act r.w.s sec. 2(47)(v) of Income tax Act was examined by the Bangalore SMC bench of Tribunal in the case of Smt. Lakshmi Swarupa [ 2018 (10) TMI 1345 - ITAT BANGALORE] In the instant case also, we have noticed that the assessee has given permissive possession and not legal possession as contemplated within the meaning of sec.53A of the Transfer of Property Act. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared capital gain, the AO reopened the assessment u/s 147 of the Act by issuing notice u/s 148 of the Act on 30.3.2013. 4. Before the A.O., the assessee contested the reopening of assessment. The assessee also submitted that the above said land has been held as stock in trade by the assessee and not as capital asset . The A.O. took the view that the assessee has purchased the land for investment purposes. Accordingly, he held the same as capital asset. By invoking provisions of section 2(47)(v) of the Act, the A.O. held that there was transfer of asset within the meaning of section 53A of the Transfer of Property Act. In this regard, the A.O. placed reliance on the decision rendered by Hon ble Karnataka High Court in the case of CIT Vs. Dr. T.K. Dayalu 202 Taxman 531. Accordingly, he computed short term capital gain of ₹ 1,00,74,435/- and assessed the same in the hands of the assessee. 5. Before Ld. CIT(A), the assessee challenged both validity of reopening of assessment and assessment of short term capital gain in the hands of the assessee. The Ld. CIT(A) upheld the validity of reopening of assessment and also assessment of short term capital gain. Aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record. We notice that the original return of income has been processed u/s 143(1) of the Act. Even though the AO has reopened the assessment after expiry of four years from the end of the assessment year, yet the proviso to sec.147 is not applicable, since the original assessment was done u/s 143(3) of the Act. The Ld A.R submitted that the assessee has disclosed the assets as current assets only in the Balance Sheet. Accordingly, the Ld A.R submitted that the AO has not brought on record any fresh material and hence the AO could not have entertained belief that there was escapement of income. However, it is an admitted fact that the Joint Development Agreement was not furnished by the assessee along with return of income and the details of JDA came to the notice of the AO only subsequently. Thus JDA would constitute fresh material. It is a settled proposition of law that the entries made in the books of account will not be deciding factor in so far as Income tax Act is concerned. Hence we are of the view that there was sufficient reason for the AO to entertain the belief that there was escapement of income. Accordingly, we uphold the validity of reopening of assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so granted shall not be considered as possession delivered in part performance of the contract u/s 53(sic. 53A) of Transfer of property Act nor any property right shall be deemed in favour of developer. 11. We notice that the AO has invoked the provisions of sec.2(47)(v) of the Act, which reads as under:- 2(47) transfer in relation to a capital asset includes .. (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). The provisions of section 53A of the Transfer of property Act reads as under:- 53A. Part performance.-Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Owner shall always be entitled to inspect the progress of the work and type of work which is being done on the Schedule Property. .. 9. I have carefully considered the rival submissions. Sec.45 of the Act lays down that profits and gains arising out of transfer of capital asset effected in the previous year shall be chargeable to income tax under the head capital gains and shall be deemed to be the income of the previous year in which the transfer took place. It is thus clear that there should be transfer during the previous year 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 tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 stand incorporated into the provisions of the Income Tax Act, 1961. If that be so then the Tax authorities for coming to a conclusion that provisions of Sec.53A of the Transfer of Property Act, 1882 are attracted to a particular transaction have to come to a conclusion the transaction/agreement in question is such that the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee, has, in part performance of the contract, 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, 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 mea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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