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TMI Blog2025 (1) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of transfer under Section 2 (47) of the Act. Reliance placed by the Revenue in Potla Nageswara Rao [ 2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT] the same is an authority for the proposition that element of factual possession and agreement are contemplated as transfer within the meaning of Section 2 (47) of the Act. It has further been held that when the transfer is complete, the consideration mentioned in the agreement for sale has to be taken into consideration for the purpose of assessment of income. In the instant case, under the development agreement there is no transfer and the consideration has also not been paid. Therefore, the aforesaid decision of the Division Bench has no application to the fact situation of the case. Similarly, in the case of Arvind S Phake [ 2017 (12) TMI 1235 - BOMBAY HIGH COURT] , the possession was handed over to the developer and the entire consideration was paid. In the instant case, consideration has not been paid. Therefore, the Division Bench decision of the Bombay High Court also does not apply to the fact situation of the case. The finding has been recorded by the Tribunal that the appellant has handed over the possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, the same was not a transfer within the meaning of Section 2 (47)(v) of the Act read with Section 53 of the Transfer of Property Act, 1882. In reply, it was stated that consideration was to be received, after completion of construction and only on receipt of possession of built up area, the property could be said to have been transferred. Thus, according to the assessee, she did not have any liability for capital gain for the year ending 31.03.1997. 4. The assessing officer disagreed with the assessee and a show cause notice dated 23.03.2001 was issued to her proposing to complete the assessment under Section 144 of the Act after determination of the long term capital gain arising out of the transaction at Rs.13,78,900/-. The assessee submitted a reply on 03.04.2001, wherein it was stated that the built-up area was received from the builder from the year 1999 onwards and therefore, the relevant financial year through which capital gain arose was 1998-99, relevant for the assessment year 1999-2000. It was also stated that the assessee received 6560 square feet of residential built-up area on surrender of her land measuring 570 square yards. According to the assessee, she is el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 53A of the Transfer of Property Act, 1882. It is pointed out that there is no transfer of capital asset in the assessment year 1997-98 and consequently no profit or gain accrued to the assessee in order to attract Sections 45 and Section 48 of the Act. In support of the aforesaid submissions, reliance has been placed on decision of the Supreme Court in Seshasayee Steels Private Limited vs. Assistant Commissioner of Income Tax, Chennai (2020) 14 SCC 774 : [2020] 421 ITR 46 (SC) and decisions on Principal Commissioner of Income Tax, Kolkata-1 vs. Infinity Infotech Parks Limited [2018] 407 ITR 137 (Cal) and Chaganlal Mulji Dholu vs. Joint Commissioner of Income Tax, JCIT (OSD) Circle [2023] 291 Taxmann.com 304 (Guj) rendered by the Calcutta and Gujarat High Courts respectively. 8. Learned Senior Standing Counsel for the Revenue has invited the attention of this Court to various clauses of the development agreement and has submitted that the same amounts to transfer within the meaning of Section 2 (47) (v) of the Act. It is further submitted that in pursuance of the development agreement, the possession was handed over to the developer. In support of his submissions, reliance ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to capital assets. The aforesaid definition is inclusive in nature and reads as under: 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 53-A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a cooperative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation-1. For the purposes of sub-clauses (v) and (vi) immovable property s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part performance thereof. 13. Thus, it is evident that in order to attract the applicability of Section 53A of the Transfer of Property Act, 1882, as held by the Supreme Court in Shrimant Shamrao Suryavanshi vs. Prahlad Bhairoba Suryavanshi (2002) 3 SCC 676 , the following conditions are required to be fulfilled: (1) there must be a contract to transfer for consideration of any immovable property; (2) the contract must be in writing, signed by the transferor, or by someone on his behalf; (3) the writing must be in such words from which the terms necessary to construe the transfer can be ascertained; (4) the transferee must in part-performance of the contract take possession of the property, or of any part thereof; (5) the transferee must have done some act in furtherance of the contract; and (6) the transferee must have performed or be willing to perform his part of the contract. 14. Now we may advert to the facts of the case in hand. Clauses 4, 6 and 8 of the development agreement dated 04.05.1996 read as under: 4. That 60% of the constructed portion along with 60% undivided share in land would be retained by the Second Party in lieu of their developing the total area of the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and mentioned below to the Developers for the purpose of carrying out the development works. 16. Thereafter, a supplementary agreement dated 26.12.1996 was executed between the parties, which contains a recital that developer had obtained municipal sanction for construction of residential complex under permit No.6 of 1959, dated 26.07.16 and has commenced construction work. 17. Thus, from the aforementioned facts, it is evident that even though there is a contract to transfer the immovable property, which is signed by the parties, yet the contract has not been executed for consideration. A sum of Rs. 2,00,000/- mentioned in paragraph 6 of the development agreement is only the performance guarantee which is refundable. The aforesaid amount of Rs. 2,00,000/- has not been paid by way of consideration of the transaction. The developer has been handed over the possession for the limited purpose of carrying out the development work. Therefore, in pursuance of the development agreement, the possession of the immovable property has not been handed over to the developer as contemplated under Section 53A of the Transfer of the Property Act, 1882. Therefore, the same does not fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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