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TMI Blog2022 (8) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after 15.04.2013. AO/Ld. CIT(A) erred in assuming that assessee by virtue of the sale-cum-development agreement dated 20.10.2010 has handed over/allowed the transferee to take possession of the immovable property and thus erroneously held that section 53A of TOPA read with section 2(47)(v) of the Act stood attracted. AO/Ld. CIT(A) mis-interpreted the agreement dated 20.10.2010 and applied the law erroneously, so their impugned action cannot be sustained. Having held so, we further note that there was no evidence/material before AO/LD CIT(A) to suggest that the assessee has given possession of the property to the developer before the IOD was issued by the MCGM and any way that is not the case of AO/Ld. CIT(A). Assessee has produced evidence to substantiate that he had not vacated the house in the immovable property till IOD was issued by MCGM. For that he has has filed the Electricity Bill in the name of assessee (Mahesh Saini) for the month of April 2011- June 2011, April-2012 June 2012 found placed at page no. 1 to 4 of the P.B-III and Property Tax Bill issued by BMC in the name of Mother of assessee Smt. Parvati Devi of Property No. 1481 1482 upto 28.12.2012 (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constructed by the developer at the Plot No. 135, mentioned above. Accordingly, consideration received by the assessee for transfer of his 1/3rd right, title and interest in the said property was Rs. 36 Lac and a right in the house property of Rs. 2,500/sq. feet built up area wall to wall flat. Taking note of the aforesaid facts, the AO noticed that the assessee has not offered any capital gains in his return of income for A.Y. 2011-12 [in respect of transfer of his 1/3rd share in the ancestral property as mentioned above]. 4. Therefore, the AO issued show cause notice to the assessee as to why the LTCG in respect of property may not be taxed in the hands of the assessee in this relevant AY 2011-12. The assessee in response brought to the notice of AO that there was an agreement dated 20.10.2010 which was executed by the assessee (Vendor no. 3) along with his two brothers (Vendor no. 1 and Vendor no. 2) each having 1/3rd share in the property (ancestral property being Residential Bungalow) with the Developer cum Purchasers (Bhupatbhai Lukhi Rameshbhai Lukhi). According to the assessee, the transfer of the property/their 1/3rd share in the property did not take place in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above discussion, tong term capital gains arising out of transfer of right title of the share of the assessee in the property mentioned in the Sale - Cum - Development Agreement dated 21.10.2010, is computed at 1,05,37,002/-. In the return of income, the assessee has not reported any capital gains in respect of the transfer of right title in the immovable property as mentioned above. Therefore, an addition of Rs.1,05,37,002/which represents long term capital gains earned by the assessee during the year, is made to the total income under the head Capital Gains. 5. Aggrieved by the aforesaid action of the AO computing the long term capital gain (LTCG) of Rs.1,05,37,002/-. The assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the same by holding as under: - 5.2 The submissions and contentions of the appellant have been duly considered. Though the appellant has contended that as per clause 37 of the Sale Cum Development Agreement dated 20.10.2010, if the purchaser cum Developer makes default in completing the development within the stipulated period of 24 months, the vendor shall be entitled to make time essence of the contract and to cancel the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A), the assessee is before us. 7. We have heard both the parties and perused the records. The short point to be decided is whether in the facts and circumstances of the case whether the incident of tax [i.e, transfer of immovable property] for charging capital gain has arisen in this year (AY. 2011-12) against the assessee or not. The AO s case is that since the assessee has executed an agreement dated 20.10.2010 with the developer cum purchaser and having received Rs.35 Lakhs, the assessee has transferred the land in question. And therefore he is bound to have offered the capital gain for the transfer of his share of land. However, the assessee s contention is that based on the agreement executed by the assessee with the developer cum purchasers, the incident of tax (transfer of his share of property) has not taken place in this relevant assessment year. And therefore no capital gain could have been charged in this assessment year from him. For adjudicating this issue, we need to look into the certain relevant provisions. First of all let us look at Section 2(47) of the Act which is reproduced as under: - Section 2(47) of the Income Tax Act, 1961 (47) transfer , in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. 9. Now let us have a look at important clauses of the agreement in question dated 20.10.2010 which is reproduced as under: - 7. The Purchasers-cum-Developer have already paid a sum Rs.70,00,000 (Rupees Seventy Lakhs only) a3 the consideration money inter alia for obtaining the sale-cum-development rights to the Vendors Nos.1 and 3, as orally agreed he Vendors shall hand over free vacant and peaceful possession-of-the property to the purchasers-cum-developer on or before the Purchasers-cum-Developers obtaining the IOD from the competent authority for the purpose of development. Further, on these presents being executed i.e. Sale-cum-Development, the Vendors shall give their No Objection/Consent to convey the said property in the. name of the Purchasers-cum-Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the TOPA, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee (developer) must have performed or be willing to perform his part of the agreement. It is only when these two important conditions, among others, are satisfied that the provisions of Section 53A of the TOPA can be said to be attracted on the facts of a given case and referred to the decision of the Hon ble Supreme Court in the case of Seshasayee Steels Pvt. Ltd. Civil Appeal No. 9209 of 2019 (2020) 421 ITR 46 (SC). 11. Having perused the sale-cum-developments agreement dated 20.10.2010 it is noted that as per the terms of the ibid agreement, the assessee shall hand over physical possession of the property to the purchaser cum developer after the purchaser cum developer obtain IOD (i.e. Intimation of Disapproval) from the competent authority for the purpose of development. IOD has to be issued by the local authority Municipal Corporation of Greater Mumbai (MCGM). As per the agreement, the assessee only has to hand over possession of the immovable property in the event the transferee obtains the IOD from the M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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