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TMI Blog2024 (11) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property. In the present case, as per the development agreement cum GPA dt.27.06.2015 and the possession has already been handed over by the land owners to the developer and therefore, for all the requirements of law of transfer as per the pronouncement of Potla Nageswara Rao [supra] took place in the assessment year before us. In view of the above, the AO as well as the Ld.CIT(A) were correct in making the additions in the hands of the assessee in the year under consideration. AO has not examined the affidavit filed by the developer and also has not taken into account the permission granted by the local authorities on 05.01.2021 - The development agreement cum GPA dt.27.06.2015 is a registered document and there is a clear mention of handing over the possession by land owners to the developer. The above said facts mentioned in the said document cannot be merely disbelieve on the account of the affidavit filed by the developer at the request of the assessee. The law is fairly settled that the contents of the registered document shall prevail over the affidavit or the oral statement. In view of the above, we have no hesitation to say that the Assessing Officer was right in not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of land development agreement cum GPA where physical possession could not be delivered during the assessment year. He ought to have considered the fact that the transfer could not be completed due to problems in handing over of the physical possession of the land to the developer. 3. On the facts and circumstances of the cases and in law, the Learned CIT(A) has erred in sustaining the addition made under short term capital gains for the land intended to transfer under (development cum GPA ignoring the fact that physical 8,87,9 possession has not been delivered to the developer and the contents of the affidavit given by the developer were completely ignored. He ought to have considered the fact that the contents of affidavit were not enquired into by the A.0 and it has not been proved by him as in correct. 4 On the facts and circumstances of the cases and in law, the Learned CIT(A) has erred in sustaining the disallowance of claim of appellant for the development expenditure of Rs. 6,90,400/- alleging that such as expenditure is not supported by any evidence ignoring the fact that the development expenditure is paid to a contractor and such agreement entered into with the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of search proceedings conducted in the case of Sri Allam Raja Reddy (Giridhari Construction Group) on 26.04.2018, a document pertaining to the assessee was found and seized. The details of the document are as follows: Development Agreement-Cum-General Power of Attorney document no. 8396 of 2015 dated 27.06.2015 executed between Sri Bandi Sudheer Reddy 4 others [Land Owners] and M/s Giridhari's Vue represented by its Partners Sri K. Indra Sena Reddy and Sri O. Raghupathi Reddy [Developer] in respect of the property in Survey No.46 land admeasuring Ac.0.32 Guntas (Eastern Side Portion) situated at Kismathpur Village O.P, Rajendranagar Mandal, Ranga Reddy District, Telangana State. Further, as seen from the Annexure-1A of the said Development Agreement, the proposed total built-up area is mentioned as 80,000 sq. ft. and the estimated market value of the building is mentioned as Rs.6,48,08,000/-. 4.1) As could be seen from the development agreement, the land owners/developer agreed to divide the respective share of units according to the sanction plan of the schedule property in the ratio of 33:67. As the said document did not specify about sharing ratio among the lando ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torney, in the year of agreement i.e., for the assessment year 2016-17. Ld.AR further submitted that the Assessing Officer was bound to apply his mind to the facts of the case and that the Assessing Officer has wrongly relied upon the judgment of jurisdictional High Court in the case of Potla Nageswara Rao Vs. DCIT reported in (2014) 8 TMI 636 (Andhra Pradesh High Court) and has wrongly decided the issue against the assessee. It was submitted by the ld.AR that the issue was decided by the hon'ble Supreme Court in the case of CIT Vs. Balbir Singh Maini reported in (2018) 12 SCC 354, wherein it was held that the year of taxation would be the year in which the physical possession of the property has been handed over in pursuance to the agreement u/s 53A of the Act. The relevant portion of the said judgment is reproduced hereinbelow : 20. The effect of the aforesaid amendment is that, on and after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other factual question. 21. However, the High Court has held that Section 2(47)(vi) will not apply for the reason that there was no change in membership of the society, as contemplated. We are afraid that we cannot agree with the High Court on this score. Under Section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property would come within its purview. The High Court has not adverted to the expression or in any other manner whatsoever in sub-clause (vi), which would show that it is not necessary that the transaction refers to the membership of a cooperative society. We have, therefore, to see whether the impugned transaction can fall within this provision. 22. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression enabling the enjoyment of takes color from the earlier expression transferring , so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof. 1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in bookkeeping, an entry is made about a hypothetical income , which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. 15. The above passage was cited with approval in Morvi Industries Ltd. v. CIT [Morvi Industries Ltd. v. CIT, (1972) 4 SCC 451 : 1974 SCC (Tax) 140 : (1971) 82 ITR 835] in which this Court also considered the dictionary m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to attract Sections 45 and 48 of the Income Tax Act. 29. We are, therefore, of the view that the High Court was correct in its conclusion, but for the reasons stated by us hereinabove. The appeals are dismissed with no order as to costs. 6.2. The ld.AR Shri Mohd. Afzal, Advocate, appearing for the assessee Shri Pramod Reddy Tekula has submitted that besides the decision in the case of CIT Vs. Balbir Singh Maini (supra), the hon'ble Supreme Court in the case of Seshasayee Steels (P) Ltd. Vs. ACIT reported in 421 ITR 0046 (2020) has also decided the issue in favour of the assessee. The relevant portion of the said judgment is hereinbelow for the ready reference. In order that the provisions of Section 53A of the T.P. Act be attracted, 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 must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case. On a reading of the agreement to sell dated 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the enjoyment of must take colour from the earlier expression transferring , so that it can be stated on the facts of a case, that a de facto transfer of immovable property has, in fact, taken place making it clear that the de facto owner s rights stand extinguished. It is clear that as on the date of the agreement to sell, the owner s rights were completely intact both as to ownership and to possession even de facto, so that this Section equally, cannot be said to be attracted. Coming to the third argument of the learned senior counsel on behalf of the appellant, what has to be seen is the compromise deed and as to which pigeonhole such deed can possibly be said to fall under Section 2(47) of the Income Tax Act. A perusal of the compromise deed shows that the agreement to sell and the Power of Attorney are confirmed, and a sum of Rs.50 lakhs is reduced from the total consideration of Rs.6.10 crores. Clause 3 of the said compromise deed confirms that the party of the first part, this is the appellant, has received a sum of Rs.4,68,25,644/- out of the agreed sale consideration. Clause 4 records that the balance Rs.1.05 crores towards full and final settlement in respect of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the period of completion, mutually agreed by both parties, the developer was to pay a compensation of Rs.6,000/- per flat per month for the land owners share for such delayed period. This implies that the appellant and the other land owners had clearly considered the risk of delay in the project and are ready to take the risk. 8. We have heard the rival contentions of both the parties and perused the material available on record and also the orders passed by the lower authorities. Undisputedly, as per the development agreement cum General Power of Attorney dt.27.06.2015 which was entered into between the land owners and the developer, the parties have agreed to venture into the development of flats, as per the subject matter of the property. As per clause 8 of the said development agreement cum General Power of Attorney, the possession has already been handed over to the developer at the time of entering into development agreement cum GPA. In our understanding, the law has been fairly settled by the jurisdictional High Court in the case of Potla Nageswara Rao Vs. DCIT (supra), wherein it was held that the year of taxation would be the year, in which the registered developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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