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TMI Blog2024 (7) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... corded that the assessee offered the capital gain in the year in which share in the constructed area is given to the assessee, which is subjected to tax in A.Y. 2018-19 which is also not disputed by the ld. DR. If we accept the contention of the ld. DR that the capital gain was rightly determined by the AO in A.Y. 2012-13, certainly, it amounts to double taxation, having offered the same in A.Y. 2018-19, as rightly pointed by the AR. Addition in the bank account - AR strenuously argued that the rental income from house property was received during the year - HELD THAT:- Accepting assessee submission we direct the addition as income from house property. Loan receipts - asessee as submitted that Rs. 1,70,000/- has been received by the assessee from his daughter and wife. The bank statement of daughter was enclosed. Thus, the genuineness, identity and correctworthyness is never in doubt. However, as far as his wife is concerned, he could not submit any document. But, in view of the fact that it is a loan from his own wife, we accept the same to be duly explained in view of the fact that the amount is negligible and further normally wives help husband in distress. Balance unexplained a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxes u/s 45(1) is not dependent upon the receipt of the consideration. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee has correctly declared the capital gains on sale of immovable property in the assessment year 2017-18. 6. On the facts and circumstances of the case and in law, the Learned. CIT(A) failed to appreciate that the facts of the case were similar to the facts in the case of CIT V.K. Jeelani Basha, 256 ITR 282 (Mad) wherein Hon'ble High Court after analyzing the provisions of section 2(47)(v) has held that once the possession even for a part of property was handed over to the transferee for purpose of section 2(47) (v) read with section 45, the transfer was complete. 7. On the facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate that the facts of the case were similar to the facts in the case of CIT vs. T.K. Dayalu (KAR,60 DTR 403). In this case the Hon'ble High Court of Karnataka has held that in case of joint development agreement, relevant date for attracting Capital Gain is date on which possession was handed over to the Developer and not the date of completi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi, and M/s Concrete Developers on 05.08.2011 for property at Mouza Somalwada CTS No. 504, Nagpur. The Stamp duty value of the property as per the Joint Development Agreement was Rs. 9,62,20,000/-. 5. During Course of assessment proceedings, on perusal of the seized documents B-47 Page No. 1 to 176 found and seized from the office premises of M/s Concrete Developers Ground Floor, Gauri Heights. Canal Road, Ramdaspeth, Nagpur, it was seen that a Joint Development Agreement was made between Shri Naresh Vasantrai Trivedi, Shri Ashok Vasantrai Trivedi, Shri Ajay Vasantrai Trivedi (Land Owners) and M/s Concrete Developers (Developers) for development of land at Mouza Somalwada CTS No. 504, Nagpur. According to the Joint Development Agreement, the assessee along with his two brothers was to receive 42.5% of constructed land, in the form of 55 flats. Further the developer (M/s Concrete Developers) paid a refundable security deposit of Rs. 1,31,00,000/- to the land owners. The stamp duty value of the land on the date of the joint development agreement was Rs. 9,62,20,000/-. A general power of attorney was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OWNERS equal to 42.5% shall be the full and final consideration to be paid by the DEVELOPER to the OWNERS for giving unfettered and absolute authority for development and sale of the remaining portion of the building equal to 57.5% along with undivided proportionate share of land. The DEVELOPER agrees to pay the OWNERS a refundable security deposit of Rs. 1,31,00,000/- (Rs. One Crore Thirty One Lakh Only) for faithful implementation of the development and the terms and conditions mentioned hereinafter out of which the OWNERS hereby acknowledged the receipt of Rs. 75,00,000/- paid by the DEVELOPER to the previous owner vide various cheques as per the Agreement of Joint Development, Construction and Sale and the remaining amount of Rs. 56,00,000/- shall be paid by the DEVELOPER to the OWNERS at the time of signing of this modified Agreement. 8. Further, on perusal of para 6, 7, 9, 10, 20, 21, 22, 23 26 of the agreement, it is clear that the assessee has transferred vacant possession of the property to the developer. The relevant paras are reproduced below: 6] THAT, the OWNERS hereby confirm the licensee and permission given to the DEVELOPER by the previous owner to enter upon the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the permissible T.D.R/F.S.I. on the said land. It will be responsibility of the DEVELOPER to obtain sanction of the building plans on the land of OWNERS. The Development of the property as per the development rules and bye laws shall be done by the DEVELOPER at the entire cost, risk and Consequences of the DEVELOPER, The OWNERS hereby agrees to render all assistance and co-operation that may be required by the DEVELOPER from time to time to carry out the development work in respect of the said property and construction and completion of buildings and structures thereon in accordance with the terms and conditions as may be stipulated by the concerned authorities and in respect of any other matter relating to or arising there from provided that the OWNERS, shall not be liable to incur any financial obligation in that behalf. 20] THAT, the DEVELOPER shall be entitled to mortgage the 57.5% of land share or apartments to be built on the said 57.5% of land share to financial institution for raising the finance. 22] THAT, the DEVELOPER shall be at liberty to enter into separate contract in his name for carrying out the said development of construction of multistoried building, water line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for AY 2017-18, the amount of Rs. 3.40 Crore is the value of land or the value of new asset in the forms of flats. In the case of Shri Naresh Vasantrai Trivedi it is seen from the CIT(A)'s order at para-No. 4.2.3 that assessee has declared capital gain taxes in the AY 2017-18. Thus, it can be seen that for the transfer of same land on 05.08.2011, out of 3 Co-owners, 2 Co-owners have declared Long Term Capital Gain in the A.Y. 2018-19 and one in A.Y. 2017-18. The inconsistency in declaring of LTCG by the assessees holding the same asset and getting the same consideration in the same year has been disclosed in A.Y. 2017- 18 and 2018-19 which is not as per the law. Therefore, the provisions of section 2(47)(v) have been considered by various judicial authorities time and again and is considered in various judicial decisions relied upon by AO and also by appellant's AR in his written Submissions. As per the provision of section 2(47), any transaction involving the allowing of the possession of any immovable property to the taken or retained in part performance of a contract of the nature referred to in Sec. 53A of the Transfer of Property Act would come within the amb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petent Authority. The said sub section 5A is applicable w.e.f. 01.04.2018 i.e. from the A.Y. 2018-19. This clearly reveals that intention of the legislature that Capital gain on transfer of land or building or both will be taxable up to A.Y. 2017-18 in the assessment year in which development agreement is entered by the assessee. Therefore, AO was correct in making addition in the assessment year 2012-13. 16. The Ld. CIT(A) has not appreciated that the amount to be taxed u/s 45(1) is not dependent upon the receipt of the consideration. As observed by the Apex Court in Morvi Industries Ltd. vs. CIT (1971) 82 ITR 835. The income can be said to9 accrue when it becomes due.... 17. The test of accrual is whether there is a right to receive the amount though later and such right is legally enforceable. In fact, as observed by the Hon'ble Supreme Court in E.D. Sassoon Co. Ltd. Vs. CIT (1954) 26 ITR 27. It is clear therefore, that income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision cited is not applicable to the instant case. 22. As per section 45 of the IT Act, Income-tax is to be charged under the head Capital Gain on transfer of a capital asset and shall be deemed to be the income of the previous year in which the transfer took place. The year of transfer is the crucial year and not the time of the receipt. Section 2(47)(v) read with section 45 indicates that capital gains is taxable in the year in which such transactions were entered into even if the transfer of immovable property is not effective or complete under the general law and therefore, CIT(A) has erred in holding that the capital gains is chargeable in the assessee's case in AY 2018-19. 23. In addition to the above case laws, the revenue also relies on the following case laws in the case of Shri Naresh Vasantrai Trivedi. * K.P. Varghese Vs. ITO, Ernakulum and Anr. 181 ITR page 597 * T.V. Sundaram Iyengaar and sons Ltd. Vs. CIT, 37 ITR 26 (Mad) * CIT Vs. T.K. Dayaluu (KAR, 60 DTR 403) * Rubab M. Kazerani Vs. JCIT (91 ITD 429) * Bertha T. Almeida Vs. ITO (2015) 53 taxman.com 522/229 taxmann 159 (Bom) (Bombay High Court) * CIT Vs. Rohtak Textile Mills Ltd. (Del.) 138 ITR 195 (Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the said property in accordance with the permission herein mentioned. Further, clause 7, wherein, it describes that the owners has given registered general power of attorney to the developer in respect of the said property giving all the general power in respect of obtaining sanction of the layout and building plan and to appear before the various authorities for mutation and sanction on behalf of the owners which clearly shows that no possession whatsoever given by the assessee to the developer and it was only general power of attorney to obtain requisite permissions and sanctions on behalf of the assessee to carry out the development. We note vide para 9 of the modified Joint Development Agreement that the assessee shall have first choice of reserving their 42.5% built-up area which also supports the arguments of ld. AR. 10. The ld. AR placed on record the decision dated 10-02-2023 of Hon'ble High Court of Bombay in the case of Late Bharat Jayantilal Patel in Writ Petition No. 1612 of 2022 and by referring to para 7 of the said decision, the ld. AR submits that the facts in the present case are identical to the facts of the case before Hon'ble High Court of Bombay, arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement executed between the owners including the Petitioner and the developer, namely, Sai Ashray Developers Put Ltd., which had permitted the said developer to develop the property belonging to the owners only as a 'licensee'. Reliance in this regard was placed upon the clause 10(i) of the development agreement, which reads as under: 10. DEVELOPERS' RIGHTS, ENTITLEMENTS, DECLARATIONS AND OBLIGATIONS On and from execution hereof and subject to the fulfillment of all the terms and conditions to be performed and complied with by them under this Agreement, the Developers shall have rights and be entitled to do the following, at its own costs and expenses: i) To enter into the said properties as an exclusive licensee for the purpose of development of the said Properties thereon with their own sources and cost as per the permission/NOC that may be given by the Local Authorities and the Applicable law; 9. Applying the principle as crystallized by the Apex Court reproduced herein above, to the facts of the present case, it can be seen that the development agreement permitted construction on the land in question only as a licensee which did not have the effect of transmitting po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the licensee. Further, the developer has given possession of the assessee's share in June, 2017 which is evident from para 5.3.3 of the impugned order which is also not disputed by the ld. DR. The CIT(A) clearly recorded that the assessee offered the capital gain in the year in which share in the constructed area is given to the assessee, which is subjected to tax in A.Y. 2018-19 which is also not disputed by the ld. DR. If we accept the contention of the ld. DR that the capital gain was rightly determined by the AO in A.Y. 2012-13, certainly, it amounts to double taxation, having offered the same in A.Y. 2018-19, as rightly pointed by the 1d. AR. Therefore, the facts and circumstances of the case before the Hon'ble High Court of Bombay is similar and the ratio laid down by the Hon'ble Court is applicable to the facts on hand. Thus, we find no infirmity in the order of CIT(A) in holding that there is no transfer u/s. 2(47)(v) of the Act and no capital gain is chargeable thereon in the year under consideration. Thus, the grounds raised by the Revenue fails and are dismissed. 5. Since the matter is identical, we absolutely find no compelling reason to differ with the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on record, we dismiss the appeal of the department. CO NO. 2/NAG/2021 6. The Ld.AR submitted the following grounds of cross objection. 1) On the facts and circumstances of the case and in law, the entire assessment framed and the additions to the extent confirmed are bad in law and liable to be quashed in the interest of justice. 2) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not adjudicating on merits the ground pertaining to grant of exemption under section 54F of the Income Tax Act, 1961 ( Act ) considering the addition on account of long-term capital gains was deleted. In case the Respondent is held liable for long term capital gains as originally assessed then the benefit of exemption under section 54F of the Act in respect of residential building to be received as consideration for transfer of property deserves to be allowed in the interest of justice. 3) The Ld. AO grossly erred in making and the Ld. CIT(A) 3, Nagpur grossly erred in confirming the addition to the extent of Rs. 3,65,425 treating the same in the nature of unexplained deposits in bank account ignoring the submissions of the Respondent. The source of the amounts totaling to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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