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TMI Blog2023 (5) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of a sum of Rs. 37,05,858/- as Income from Long term Capital Gains upholding the view that the date of entering into the joint development agreement i.e., 16/09/2010 would be the date of transfer of the said capital asset under the facts and in the circumstances of the appellant's case. 4. The learned CIT[A] ought to have appreciated that the provision of section 2[47][v] of the Act were not applicable to the appellant's case for the year under appeal since the appellant had given possession over the agricultural lands to the Developer on 20/12/2012 that too after conversion of the said lands for non-agricultural purposes on 03/12/2012 and accordingly, the appellant had recognized transfer of the capital assets in the return of income filed for the assessment year 2013-14 and thus. the additions made in respect of long-term & short-term capital gains ought to have been deleted. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 6. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acres 12 guntas of Agricultural land bearing Survey Nos. 331, 367 and 373 at Belawadi Village, Kasaba Hobli, Srirangapatna Taluk, Mandya District. 2.4 The assessee had entered into a Development Agreement with M/s. Dhatri Properties, Sidhartha Nagar, Mysore (Developer) vide registered agreement dated 16.09.2010 in respect of the said lands for formation of sites. A sum of Rs. 10,00,000/- had been received as refundable interest free deposit. 2.5 During the assessment proceedings, the assessee submitted that he did not give possession of the lands for commencement of any work on entering into Joint Development Agreement, as the lands continued to be Agricultural lands, and under Karnataka Land Reforms Act, unless lands were converted into non-agricultural purposes, the lands could not have been put to any non-agricultural use. It was submitted that the assessee received orders for conversion issued by Deputy Commissioner, Mandya District on 03.12.2012 in respect of the subject lands and on receipt of the orders, possession of the lands were given to the developer. The assessee also produced affidavit from the developer M/s. Dhatri Properties confirming that the possession was take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.09.2010 had given specific rights to the developer in Para 5.1 that, the owner gives permission to the developer to enter upon the schedule property with full right and authority to commence, carry on and complete development thereof in accordance with the permissions herein mentioned. This shall not be construed as delivery of possession under Section 53A of the Transfer of Property Act, 1882. The owner shall continue to be in possession of the schedule property till such time as the contract is discharged by performance and the developer will have only the right of entry to the schedule property for the purpose of this contract The developer was also allowed to bring in machineries, equipments, tools, Tachies, labour force on the schedule property for carrying out the development work. The developer was also permitted to store the materials required for the development work. Since the decisions in the case of Charanjit Singh Atwal v ITO Ward - VI (1) Ludhiyana, Dr T Achyutha v Asstt.CIT (2007) 108 TTJ (Hyd), CIT v. Dr. T.K. Dayalu [2011] 202 (Kar), Mysore Minerals Limited v. CIT [1999] 239/TR775/106, Dwarka Das Kapadia v. CIT [2003]/180 CTR (Bom.)107/260 ITR 491(Bom)/[2003] a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreement, then the date of agreement ceases to be relevant. In such situation, it is only the actual performance of transferee's obligations which can give rise to the situation envisaged in section 53A of the Transfer of Property Act. 4.4 It was submitted that, the condition laid down under s.53A of the Transfer of Property Act was not satisfied during the year under consideration and, therefore it is the submission of the Ld.AR that, no transfer effectuated for the year under consideration. 4.5 Referring to para 5.1, the Ld.AR submitted that the possession of the property was permissible in nature, to the extent to fulfill the necessary obligations of the transferee for conversion of the land from agricultural to non-agricultural nature. The said clause 5.1 is reproduced as under: "5.1 That, the OWNER gives permission to the DEVELOPER to enter upon the schedule property with full right and authority to commence, carry on and complete development thereof in accordance with the permissions herein mentioned. This shall not be construed as delivery of possession under Section 53A of the Transfer of Property Act, 1882. The OWNER shall continue to be in possession of the schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee with the developer would reveal that, there was no transfer of a capital assets in view of the provisions of section 2(47)(v) of the Act r.w. section 53A of the Transfer Of Property Act. 15. In our view, in order to attract provisions of section 53A of the Transfer Of Property Act, 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 Transfer of Property Act can be said to be attracted on the facts of a given case. We refer to the decision of Hon'ble Supreme Court in case of Seshasayee Steels (P.) Ltd. v. AIT reported in (2020) 115 taxmann.com 5. 16. We also note that under the general law, transfer of immovable property of the value of rupees one hundred and upwards can take place only by a registered deed. If no registered deed is executed in respect of such property, legal title or ownership is not effectively conveyed to the transferee although tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Sec.2(47)(v) in the facts and circumstances of the present case on the basis of clause 1.1 of the JDA, in our view was not proper. Further the obligation cast on the Transferee(developer) to 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. 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. 19. Similar view has been taken by Coordinate Bench of this Tribunal in case of Kola Venkat Rama Naidu vs. CIT in ITA No. 206/Bang/2020 for A.Y. 2010-11 by order dated 05.08.2022. 20. For the above reasons, we hold that there was no transfer during the previous year relevant to AY 2011-12. Therefore, capital gain on transfer of the property cannot be assessed in AY 2011-12. The assessment of capital gain in AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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