Ashwin M. Patel, Huf,, Ahmedabad vs Assessee

Ashwin M. Patel, HUF ITO, Ward-10(1) 'Pitruashish', B-Block Vs Ahmedabad. Umang Parivar B/h. LIC Office, Vasna Ahmedabad 380 007.

PAN : AADHP 8812 N

अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)

Assessee(s) by : Shri S.N. Divatia, AR Revenue by : Shri Roopchand, SR-DR

सन ु वाई क तार ख/ Dateof Hearing : 30/01/2015 घोषणा क तार ख / Date of Pronouncement: 19/02/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This appeal by the

assessee against order of the CIT(A)-XVI, Ahmedabad dated 30.5.2013 for Asstt.Year 2010-11.

2. The assessee has raised the following grounds:

"1.1 The order passed u/s.250 on 30-5-2013 for A.Y.2010-11 by CIT(A)-XVI, Abad upholding the addition of Rs.1,07,03,362 as capital gains arising in this year instead of A.Y. 2011-12 is wholly illegal, unlawful and against the principles of natural justice.

1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned additions.

ITA No.1876/Ahd/2013 2 2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming that the "transfer" u/s 2(47)(v) of IT Act r.w.s 53A of Transfer of Property Act had taken place in A.Y. 2010-11 on execution of development agreement with M/S Chanchal Construction Co. and not in'A.Y. 2011-12 so that the capital gains of Rs. 1,07,03,362 was chargeable in A.Y. 2010-11.

2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld that the "transfer"

u/s 2(47)(v) of IT Act r.w.s 53A of Transfer of Property Act had taken place in A.Y. 2010-11 on execution of development agreement with M/S Chanchal Construction Co. so that the capital gains of Rs. 1,07,03,362 was chargeable in A.Y. 2010-11 instead of A.Y. 2011-12.

2.3 The Ld CIT(A) has grievously erred in holding that(a) the appellant had divested with ownership on handing over the possession, though it was given as a licensee (b) the payments received from M/S Chanchal Const Co were in nature of/ part of the sale consideration though the same was yet to be determined. The Ld CIT(A) has erred in construing the terms of the development agreement and relying upon the inapplicable case laws so that the observations made and conclusions reached in para-5.6 and 5.8 are not accepted."

3. The AO observed as under:

"3. The assessee derives income from rent income, interest income and agriculture income shown in return of income. In Balance sheet, the assessee has shows capital of Rs.92,44,450/- and Un secured loan of Rs.2,58,00,000/- included unsecured loan of Rs.2,12,00,000/- from Chanchal Construction. Copy of balance sheet is part of the assessment order.

4. AIR transaction of ITS;, shows the interest income of Rs.6,62,987/-, OLTAS details of Rs.90,000/- and investment on 31/07/2009 in Rural Electrification Corporation Limited of Rs.50,00,000/-. Interest income and OLTAS details is verified from the records.

5. In respect of source of .investment in Rural Electrification Corporation Limited of Rs.50,00,000/-, the A.R. of the assessee has stated that the same is invested from the unsecured loan of Rs.2,12,00,000/- taken from Chanchal Construction, shown in the balance sheet under the head of unsecured loan. Letter dtd.28/9/2012 was issued for the details i.e. Name, complete postal address, PAN, copy of contra-confirmation a/c and Bank ITA No.1876/Ahd/2013 3

details in case of any transaction in respect of unsecured loans and deposits. The assessee has submitted the details/documents vide submission dtd.13/10/2012 containing contra-confirmation account of Chanchal Construction and Xerox copy of investment made in REC Bond. The copy of a/c. of chanchal construction shows the amount given to the assessee as under:

Date: Amount Opening balance 97,00,000/- 12/06/2009 40,00,000/- 06/10/2010 75,00,000/-

6. During the discussion held on 16/10/2012, the assessee was asked to clarify as you have earned only interest income and rental income, please clarify the purpose of taking unsecured loan in huge amount. The A.R. of the assessee stated that this is the advance taken on account of sale consideration for development agreement entered with the Chanchal Construction. From this discussion, the crystal clear fact has came to notice that this is the advance taken for land development agreement but not loan taken in the nature of unsecured loan. Therefore, the assessee has shown the transaction under the wrong head in the balance sheet & thereby the assessee has diverted the advance of his income from land development to unsecured loan and thereby it can be said that the assessee has diverted his income, the assessee has hidden his income and the assessee has concealed his income particularly for the year under consideration. Hence, only by AIR transaction, the issue is came into light, which is hidden by assessee by showing the transaction as unsecured loan.

7. For verification of the transaction, information u/s. 133(6) of the Act was called for vide letter dtd. 18/10/2012 from Chanchal Construction who submitted the reply dtd. 06/1 1/2012 and stated that the amounts paid to Ashwin M Patel (HUF) are as advances for the development of land.

8. The assessee has submitted the right of development agreement on 18/10/2012 as required during the hearing held on 16/10/2012. The AR of the assessee was asked, why should not the amount received from the Chanchal construction for the land given for development be treated the income for this year, as the right of agreement is made on 01/04/2009 and the land for which right of development is given is not shown in balance sheet as asset in the year under consideration? On being asked the A.R. of the assessee has stated during the hearing on 21/10/2012 that the same was received in F.Y. 2009-10 as final payment was ITA No.1876/Ahd/2013 4

received in F.Y 10-11 therefore the same was offered for taxation in A.Y.2011-12. The copy of the return of income for A.Y.2011-12 was also submitted by the assessee, which shows the final amount of Rs.2,26,96,000/-, Indexed cost of acquisition of Rs.78,66,717/-, investment in REC Bond of Rs.l,00,00,000/- and offered capital gain of Rs.48,29,283/- .

9. The terms & conditions between First part i.e. Chanchal Construction and Second part i.e. Ashwin M Patel (HUF) of right of development agreement are as under:

i) The Second Part grant exclusive right of the said land to the first part which is absolutely seized and possessed of or otherwise well and sufficiently entitled by the second part.

In pursuant, the first part has paid to the second part Rs.65,00,000/- being the consideration granting the exclusive rights of development.

ii) If the "First part" desires to make changes or additions in theplans prepared for construction then the first part shall obtain sanction of such revised plans at their own costs and expenses and "second part" shall make applications, replies, declarations and affidavits in all such proceedings to obtain sanction for such plans at the costs borne by the "first Part". Even non-agricultural permission for land shall be obtained at the costs and

10. As regards, notice was issued to the assessee on 07/12/2012 and requested to show cause on or before 11/12/2012 as to why capital gain should not be charged on the' consideration, as the particular amount has accrued as a result of transfer of capital asset, and received in this year. The A.R. of the assessee was requested vide letter dtd. 10/12/2012 to grant period of 15 days to file the detailed reply. As required by A.R. of the assessee sufficient tune was allowed and case adjourned to 26/12/2012. The A.R. of the assessee attended on 28/12/2012 along with written submission dated 24/12/2012 and stated as under:

A. 1 Para 4 of agreement- This is land development agreement A.2. Para-5 of agreement- Assessee has taken services for Development A.3 Para 73&8 of agreement- Chanchal construction Co. & assessee would sign necessary papers/documents to be filled ITA No.1876/Ahd/2013 5

before A'bad Municipal corporation.

A.4 Para 18 of agreement - Assessee has given possession only for development & there is no transfer under Transfer of Property Act.

A.5 Para. 25 of agreement- The land is handed over as licensee to Chanchal Construction Co.

Explanation

B.1 No sale price or consideration was agreed upon between parties while executing development agreement. It was mutually agreed by parties that as & when the 1st sale deed of constructed property will be executed the rate/value determined by local stamp authority shall be the sale consideration of land. It was so agreed to protect- safeguard' any delay or non execution of agreement by developer after having agreed for development.

B.2 Since delay in execution of development of project would increase the price in view of the buoyancy in real estate market. This, condition was agreed upon to protect the interest of land owner. Accordingly when 1st sale deed was executed on 28/09/2010, the Jantri price of Rs 8000/- per sq meter was taken and aggregate sale consideration comes to be Rs.22696000/- which assessable in A.Y. 2011-

12. The copy of sale deed & Jantri rate are enclosed.

As per 1

B.3 In view of the aforesaid consent/terms & conditions of development agreement, you will appreciate that no transfer u/s 2(47) has taken place in A.Y. 2010-11. Further, we have neither determined the actual sale price or delivered .possession as owner to the developer under this development agreement so that there is no transfer of land so as to be chargeable in A.Y. 2010-11. In other words, in absence of any transfer of land in this year, no capital gain has accrued or arisen in A.Y. 10-11.

Therefore sum of money received by assessee for 08-09 of Rs.97,00,000/- &F.Y. 09-10 of Rs.11150000/- were shown. And the same was not received towards sale consideration since sale price was not determined.

ITA No.1876/Ahd/2013 6 B.5 Normally Jantri price increases & chances of reduction in Jantri price would be less than 1%. Hence deciding Jantri price as base would have following advantage to owner of land:

a) Chances receiving higher sum of consideration.

b) To pay tax on actual amount receivable (and not to receive less amount) & not to pay tax on (higher) Jantri value.

c) The developer would try to expedite the work without wasting time.

C. Broadly speaking the long term capital gains on sale of land is subject to tax @20% flat rate and, therefore, no question of avoiding tax. In fact for A.Y. 11-12 total tax payable has been paid by assessee. Thus impact of this is tax neutral taxing income in one year & giving relief in other year would be paper exercise. This view should also be considered.

Not being satisfied by the contention of the assessee, the undersigned is bound to assess the issue as per section 2(47)(v) of the Act which narrates:

"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, 18.82 (4 of 18:82)"

Section 53A of the Transfer of Property Act narrates as following:

"where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,

And the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession, in part performance of the contract and has done some act in furtherance of the contract.

And the transferee has performed or is willing to perform his part of the contract.

ITA No.1876/Ahd/2013 7 Then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has, not been completed in the manner prescribed therefore, by the law, or the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the ,transferee and person 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 who has no notice of the contract or of the part performance thereof."

10. Reliance is placed on the decision of ITAT Hydrabad Bench B, Assistant Commissioner of Income-tax, Central Circle-6, Hydrabad V A.Ram Reddy reported in IT appeals No.407 to 409, 483 & 484(HYD.)of 2011 that Where owner entered into an agreement for development of property and developer made substantial payment, entered into property and taken steps to construct flats, then there was transfer under section 2(47) of the Act, Completion of "Transfer" of an immovable property as per 'general lap is not a requirement for applicability of provision of sub-clause(v) of section 2(47) and Capital Gain would be taxable in year in which such transaction are entered into even if transfer of immovable property is not effective or complete under general law. In such a situation, fact that legal ownership continues with owner which is to be transferred to developer at a future distant date really does, not affect applicability of section 2(47)(v) of the Act. Hence, section 45 of the Act for capital gain is chargeable in Assessment year - whether total profits may actually be received in any other year, but for the purpose of section 45, gain shall be deemed income of year of transfer of capital asset.

11. Similar view has been taken by the ITAT Mumbai Bench"

B" Mrs. Bertha T. Almedia. V. Income-tax Officer, Ward 24(1)(3) in IT Appeal N.6546 (Mum.) of 2008 that whether even if legal title, has not passed to transferee, transaction shall still be regarded as transfer where property is handed over in part performance of agreement and also whether if a particular amount has accrued to assessee as a result of transfer of capital asset, that shall be included in full value ITA No.1876/Ahd/2013 8

of consideration, even if it is not realized within year of transfer.

12. There is another decision by the ITAT, Ahmedabad, Bench "D", Assistant Commissioner of Income-Tax, Baroda Circle, Baroda V Jaivijay Singh K Chauhan, held that during relevant assessment year, assessee entered into an agreement with a developer for development of land belonging to him, assessee disclosed a part of amount received from builder, almost entire payment was also received by assessee - whether all requirements of section 2(47)(v) of the Act fulfilled, hence it was to be concluded that property in. question had been transferred by, the assessee in relevant assessment year itself and so entire capital gain tax was payable by the assessee in assessment year in question.

13. The legendary decision also delivered by Hon'ble High court of Karnataka in the favour of revenue in (2012) 20 taxmann.com 430(Kar.) commissioner of Income-tax V H. Anilkumar* N. Kumar and Ravi Maljmath, JJ, IT Appeal No. 772 of 2006 , held that Amount received by assessee for giving up right of specific performance constitutes Capital Gain.

14. The assessee i.e. "second part" has given the land for development and given the rights to take all the decision as well as the "first Part" has taken all the responsibilities and paid all expenses and costs for the transaction. As well as the assessee has not shown the land as his own asset, in the asset side of the balance sheet & thereby the assessee has himself left his ownership over the land in the year under consideration, which itself proves that the assessee has left his ownership, rights & responsibilities over the land and transferred to the hands of the Chanchal Construction. Therefore, transaction absolutely regarded as the transfer of capital asset within the meaning of the Act in the year under consideration, as almost 95% amount i.e. Rs.2,12,00,000/- out of final amount of Rs. 2,26,96,000/- was received by the assessee in F.Y.2009-10 & only Rs.14,00,000/- was received in F.Y.2010-11 for giving up the rights of specific performance constituted capital gain. Amount accrued whether it is not realized within the year of transfer, the entire amount would clearly amount to charge of Capital Gain & thus, assessee is liable to pay capital gain tax on entire amount in the assessment year, in question. Penalty ITA No.1876/Ahd/2013 9

proceedings u/s.271(1)(c) of the Act was initiated for furnishing inaccurate particulars of income."

4. On appeal, the CIT(A) confirmed the action of the AO by observing as under:

"5.8 A perusal of the above decision of the Hon'ble Tribunal which has been passed on identical facts clearly indicate that transfer of property u/s 2(47) in this case shall be deemed to have taken place on 1-4-2009 when the development agreement was signed between the appellant and the CCC. It is further seen that Hon'ble jurisdictional Tribunal in the case of ACIT vs J S Chauhan have held that requirements of sec 2(47) were fulfilled if the amounts were received by an assessee by way of development agreement and that the Transfer of Property was complete. Hon'ble Mumbai Tribunal in the case of Mrs Bartha T Almedia vs ITO IT Appeal No 6546/Mum of 2008 have held that even if a legal title have not passed to transferee transaction shall be regarded as transfer, the moment a property is handed over in part performance of an agreement. Hon'ble Karnataka High Court in the case of CIT vs H Anilkumar 20 Taxman.Com 430 have held that, amounts received by an assessee for giving a right of specific performance constitutes capital gains. As facts of the present appeal have been found to be identical to those adjudicated by Hon'ble Tribunals and High Courts discussed supra, it is held that the action of the A O in treating the transactions entered upon by the appellant by virtue of development agreement dated 1-4-2009, as transfer u/s. 2(47) and thus liable for taxation under the head capital gains during A Y 2010-11 is based upon correct understanding of law and the judicial pronouncement on the matter. Consequently, the addition of Rs. 1.07.03.362/- is therefore confirmed and the ground of appeal No. 2.1. 2.2 & 3.1 are dismissed."

5. The AR of the assessee filed written submissions, which reads as under:

The above appeal is directed against the order passed u/s.250 on 30.05.2013 by CIT(A)-XVI, Abad confirming the addition made towards capital gains of Rs.1,07,03,362/- brought to tax in this year instead of the succeeding year by AO.

2.1 The brief facts of the case are that the appellant is an HUF and derives income from rent, interest agriculture. It had filed its return of income for A.Y.2010-11 on 16-07-2010 declaring total income of Rs.7,61,380 and agrl. Income of Rs.49,000.

ITA No.1876/Ahd/2013 10 2.2 During the course of asstt. proceedings, the AO noticed that the appellant had shown investment in RAC Bond which was claimed to be from advance received from Chanchal Constn.

towards development agreement of land. It was further pointed out that the capital gain arising from the said development agreement was offered to tax in A.Y.2011-12. After going through the various terms and conditions of the development agreement, the AO concluded that the development agreement was the transfer of capital asset and the appellant having received almost 95% of the consideration, it was assessable in A.Y.2010-11.

2.3 Being aggrieved, the appellant challenged the impugned addition before CIT(A) who has confirmed the same in para 5.2 to 5.8 of the impugned order.

2.4 Being aggrieved by the said order, the appellant has challenged it before Hon'ble Tribunal. The appellant submits that the impugned addition is wholly unjustified both on facts and in law. As regards the contention of the appellant that the transfer of the immovable property had not taken place during the year under appeal but in the succeeding year, the appellant submits as under:

As per AO/CIT(A) As per Assessee

1. In view of the possession of the 1. The appellant had not handed land handed over to CCC and as over legal possession of the land to per terms of development the developers but it was for a agreement reproduced at para 5.4 limited purpose of carrying out the of the impugned order of CIT(A), scheme of construction of flats as CCC had become real owner of clearly stated in clause 18 of the land. Development agreement and even confirmed by CIT(A) at Page 19 of

2. Section 2(47) postulates the impugned order. transfer of a capital asset if the same is done with reference to 2. The provisions of section 53A of section 53A of T.P. Act. T.P. Act were not attracted to the facts of the present case because

(i) The section 53A requires that there should be an agreement in the nature of transfer but in the present case, it is a development agreement.

(ii) The developer was handed over a license to develop the land and no legal possession was given to it.

It was merely a grant of permissive right to built on the plot ITA No.1876/Ahd/2013 11

of land as held in case of CIT vs. Atam Prakash & Sons (175 Taxman 499) (Delhi)

The word "possession" has a variety of uses and a variety of meanings, so that it depends upon the context and use. It does not include the occupier of the property since it does not create legal ownership.

(ii) There should be willingness on part of both the parties to perform his part. But, in this case, there was no willingness on part of the purchaser to pay the price on 01.04.2009. It had paid only Rs.97 lacs during A.Y.2009-10 i.e. before execution of development agreement.

(iii) The consideration of the property to be transferred should have been, determined at the time of handing over the possession because the purchaser could not otherwise perform his part to pay the price. The existence of consideration is the essence of the contract. But, in this case, the sale price was not fixed on 01.04.2009 and it was to be determined when first sale deed was made (see clause ____).

(iv) Reliance is placed on the decisions given in separate compilation.

ITA No.1876/Ahd/2013 12 CIT(A) heavily relied upon the 1. The subsequent decisions given decision in case of Ravindrasing in the compilation has considered Arora of ITAT, Haydrabad Bench the latest legal position on this (ITA No. 355/Hyd/2011 dated issue. The decision relied upon by 20.07.2012). CIT(A) are distinguishable on facts.

2. The facts of this decision show that the conditions provided u/s.53A were fulfilled, but in the present appeal, many of them are not satisfied as stated above.

3. This decision lays down that To sum up the owners have entered into an agreement for development of the property and certain rights were assigned to the developer who in turn had made the substantial payment and consequently entered into the property and thereafter if the transferee has taken steps in relation to construction of the flats, then it is to be considered as transfer u/s. 2(47)(v) of the I.T. Act. But in the present case, the appellant had not received substantial consideration as on 01.04.2009. It was only about 43 % of the total amount received.

6. He further relied on the decision of this Bench of the Tribunal in the case of ITO Vs. Yogendra Ambalal Sarkar & Ors., in ITA No.977/Ahd/2011 & Ors. Dated 17.10.2014, wherein, it was held as under:

"9. We have heard the rival submissions and perused the orders of lower authorities and material available on record. In the instant case, the assessee Shri Yogendrabhai Ambalal Sarkar with six co-owners entered into a development agreement with M/s. Deluxe Purohit Infrastructure Pvt. Ltd. on 25.05.2006 for development of land in Survey No. 683/2, 683/1, 664 (part), 660/1 (part), at Village Chandkheda, District Ahmedabad, having gross land area of 5939.50 sq. mtrs. Similarly, the assessee with his brother Shri Dilip Ambalal Sarkar also entered into a development agreement on 02.02.2005 with M/s. Shukan ITA No.1876/Ahd/2013 13

Developers for the development of land in Survey No. 625/5, Village Chandkheda, District Ahmedabad. The assessee offered capital gains in respect of above lands in the Assessment Year 2007-08 to Assessment Year 2009-10 in proportion of the amount received and sale deeds executed in the respective years. It is not in dispute that the assessee has not received any amount from the developer in the years in which development agreements were entered into. However, according to the Assessing Officer, the transfer of the amounts in question took place in the year in which development agreements were executed in view of the provisions of section 2(47)(v) of the Income Tax Act, 1961 and accordingly the Assessing Officer brought the entire capital gains to tax in the Assessment Years 2005-06 and 2007-08 in place of the assessee's offer in the Assessment Year 2007-08 to Assessment Year 2009-10. Therefore, the Assessing Officer made addition of Rs 26,56,733/- in the Assessment Year 2005-06 in the case of Yogendrabhai Ambalal Sarkar and Rs Rs 26,56,733/- in Assessment Year 2005-06 in the case of Dilipbhai Ambalal Sarkar.

10. On appeal, the Commissioner of Income Tax (Appeals) agreed with the claim of the assessee for the reasons quoted above in his order.

11. Before us, the Departmental Representative supported the order of the Assessing Officer and contended that the amounts in question were transferred in the year in which development agreements were entered into within the meaning of section 2(47)(v) of the Act. On the other hand, the Authorized Representative of the Assessee supported the order of the Commissioner of Income Tax (Appeals).

12. The crux of the argument of the assessee is that there is no transfer u/s. 2(47)(v) of the Act during the year under consideration. That being so, there cannot be any capital gain in the assessment year under consideration and nothing has happened with regard to the land property in the assessment year under consideration.

13. We thus find that the dispute which requires adjudication is that whether on the facts of the instant case, a transfer within the meaning of section 2(47)(v) took place in the years in which development agreements were entered into or not. We find that section 2(47)(v) reads as under:

"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 ITA No.1876/Ahd/2013 14 Section 53A of the Transfer of Property Act, 1882 (4 of 1882);"

14. Further, section 53A of the Transfer of Property Act reads as under:

"Section 53A : Part performance-Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or. any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed thereof by the law for the time being in force, the transferor or any person claiming under him shall 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 the right specifically 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."

15. A reading of the above provisions of section 53A of the Transfer of Property Act shows that the following are the essential elements of transaction to be covered by the aforesaid provisions:

(a) There should be contract for consideration;

(b) It should be in writing;

(c) It should be signed by the transferor;

(d) It should pertain to the transfer of immovable property;

(e) The transferee should have taken possession of property;

(f) Lastly, transferee should be ready and willing to perform the contract".

16. In the instant case, the claim of the assessee is that nothing happened in the year in which development agreement were ITA No.1876/Ahd/2013 15

entered into and no material was brought on record by the Revenue to show that the alleged transferee either performed their part of obligations under the agreement or they were willing to perform their part of obligation during the year in which joint development agreement were entered into.

17. We find that the Hyderbad Bench of the Tribunal in the case of Fibers Infratech Private Ltd. vs. ITO (2014) TaxCorp(LJ) 2498 (ITAT-Hyderabad) has held as under:

"Handing over of the possession of property is only one of the conditions of the Transfer of Property Act, but it is not the sole and isolated condition. 'Willingness to perform' has been specifically recognized as one of the essential ingredients to cover a transaction by the scope of Section 53A of the Transfer of Property Act."

Further, the Hyderabad Bench of the Tribunal in the case of Shri ABVS Prakash vs. ACIT (2014) TaxCorp (LJ) 2700 (ITAT- Hyderabad) has held as under:

"JDA-No possession handed over to the developer and also kept the possession with the assessee himself and only for the limited purpose of carrying on construction in the scheduled property by the developer, permission was given to the developer to enter the property. It cannot be said that absolute possession of the property was given to the developer, in other words, only symbolic possession has been given to the developer. Further, the assessee has not received any consideration whatsoever vide the Joint Development Agreement. Being so, it cannot be said that there is a transfer in terms of Section 2(47)(v) of the Act."

18. In the instant case, it is not in dispute that no consideration whether in part or full was paid by the developer to the assessee in the year in which the joint development agreements were entered into. Further, no material has been brought on record by the Assessing Officer to show that the transferee were willing to perform their part of obligation under the agreement during the year under consideration. In absence of any such material, we do not find any good reason to interfere with the order of the Commissioner of Income Tax (Appeals) which is confirmed and the grounds of appeal of the Revenue are dismissed."

7. The DR supported the orders of the lower authorities.

ITA No.1876/Ahd/2013 16 8. We have heard rival submissions and also perused the orders of the lower authorities and material available on record. In the instant case, according to the AO, the assessee entered into an agreement with Shri Kulin Pankajbhai Patel, partner of firm, Chanchal Construction, Ahmedabad on 1.4.2009 and handed over the possession of land measuring 2837 sq.mtrs. situated at Dist. Sub. Ahmedabad Ta. City Moje Vasna to the said developer. Further, as per the AO, the land was sold for Rs.2,26,96,000/- and maximum amount of consideration of Rs.2,12,00,000/- was received during the year under consideration i.e. Asstt.Year 2010-11. Thus, even though no sale deed was executed during the year under consideration, but in view of provision of section 2(47)(v) of the IT Act r.w.s. 53A of the Transfer of Property Act (TP Act), there was a transfer of land on 1.4.2009 giving rise to capital gains liable to tax in the year under consideration. Accordingly, the AO computed long term capital of the assessee at Rs.1,07,03,362/- and added to the income of the assessee.

9. On appeal, the CIT(A) confirmed the action of the AO.

10. Before us, the AR of the assessee contended that there was no consideration as per the agreement dated 1.4.2009 entered into with the developer and the assessee, and therefore, it cannot be held that there was an agreement as referred to section 53A of the TP Act, and there was no transfer of land under section 2(47)(v) of the IT Act during the year under consideration.

11. The AR further submitted that the sale consideration was agreed in the subsequent year, and accordingly, the assessee has shown capital gain in the Asstt.Year 2010-11 as per law.

12. We find that the relevant clauses of the development agreement dated 1.4.2009 reads as under:

ITA No.1876/Ahd/2013 17 4) ... A meeting was held in A'bad between first party with second party and in the said meeting an oral agreement and understanding of the condition of developing the said land has been discussed between the parties of the first part and the second part but no written agreement was made for the same and in future no dispute or controversy arisen between first party and second party, the development agreement made on dtd.1/4/09, fixing the terms and conditions of the development agreement between the parties.

5) The first party demand from the second party to develop the said land by entering into the development agreement and the second party having no experience for the development of the said land decided to take service of the first party and first party has got years of experience for the development; of lands, first party and second party decided to develop the said land under the following terms and conditions handed over the said land to the first party by the second party, by this development agreement between the first party and second party.

.....

7) .... The second party by this development agreement to develop the said land the first party put the development scheme and plan of the said scheme prepared by the first party, give it to the second party, those plan to be signed by the second party and give it to first party. Those signatures are to be approved in the A'bad Muni.Corp. as per its presents byelaws by the first party and as per the plan of the scheme approved by the A'bad Muni.Corp. the first party has to finish construction of the building as per the approved plan and the second party agree and approved it.

......

......

8) ..... The second party under the transaction of development agreement prepared the plan for the development of the said land by preparing construction plan made by the first party and the first party can change or add in those plan as it thinks fit and first party prepare residential plan in this scheme the first party by his own cost approved the said revised plan in A'bad Muni Corp. and the second party has to sign on the said plan and to make all proceedings for approving the said plan i.e. application, replies, declaration and affidavit etc made by the second party at the expenses of the first party and as per the said approved plan all the proceedings for getting the permission under the non ITA No.1876/Ahd/2013 18

agriculture land second party has to sign, applications, replies, declaration, affidavit required for the same but the said plan and permission of non agriculture will be taken by the first party at the cost of first party and as per the construction plan approved by the A'bad Muni. Corp., the first party made construction accordingly on the said land. The first party has to construct residential flat as per the said scheme and give it to the members of the scheme by the first party.

.....

.....

18) .... It is to be considered that the direct possession of the said land bearing F. P NO : 195 admeasuring 3297 sqr mtr paikee 2837 sqr mtr of land of the second party has handed over the direct possession to the first party by this agreement for the development of the scheme but it is to be consider that the first party has not given possesion to M/s. Chanchal construction as per the provision under the transfer of properties act.

.....

.....

25) ..... By this agreement the second party has handed over the said land to the first party for construction, orgainasing the scheme and developing it and today handed over the direct possession of the said land as a licensee to the first party for development and the possesion of the said land directly given to the first party as a licensee. It may happen that the said land came in direct possesion with the first party as a licensee and until whole the development of the scheme has not been completed over the said land and under the scheme the residential type of property and or unit has not been constructed on said land and the same has not been given to the different person and total amount has not been receive by first party from all the members till then it may be considered that the direct possesion of the said land with first party as licensee.

13. We find that DR could not point out any clause in the agreement dated 1.4.2009 wherein the assessee agreed to transfer its land to developer for consideration.

14. Section 2(47)(v) of the IT Act reads as under:

"any transaction involving the allowing of the possession of any ''immovable property to be taken or ITA No.1876/Ahd/2013 19

retained in part performance of a contract of the nature referred, to in section 53A of the Transfer of Property Act, 18.82 (4 of 18:82)"

15. Section 53A of the Transfer Property Act, reds a under:

"where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,

And the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession, in part performance of the contract and has done some act in furtherance of the contract.

And the transferee has performed or is willing to perform his part of the contract.

Then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has, not been completed in the manner prescribed therefore, by the law, or the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the ,transferee and person 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 who has no notice of the contract or of the part performance thereof."

16. On reading of the above provisions, this Tribunal vide its order dated 17.10.2014 in ITA No.977/Ahd/2011, A.Y.2005-06, ITA No.978/Ahd/2011, A.Y.2007-08, CO No.110/Ahd/2011, A.Y.2005-06, ITA No.979/Ahd/2011, A.Y.2005-06, ITA No.980/Ahd/2011, A.Y.2007- 08, CO NO.109/Ahd/2011 for A.Y.2005-06 in the case of Shri Yogendra Ambalal Sarkar and Shri Dilip Ambalal Sarkar has held that the ITA No.1876/Ahd/2013 20

following are the essential ingredients for attracting the provision of Section 53A of the TP Act.

(a) There should be contract for consideration;

(b) It should be in writing; (c) It should be signed by the transferor; (d) It should pertain to the transfer of immovable property; (e) The transferee should have taken possession of property; (f) Lastly, transferee should be ready and willing to perform the contract".

17. We find that the agreement dated 1.4.2009 does not show that any particular consideration was fixed for transfer of land by the assessee in favour of the developer. Both the lower authorities could not controvert the contention of the assessee that development agreement does not contain any provision for consideration in respect of transfer of land by the assessee to Chanchal Construction.

18. Thus, we find that the agreement dated 1.4.2009 does not satisfy the requirement of section 53A of the TP Act. Section 53A of the TP Act categorically provides as "when any person contracts to transfer for consideration any immovable property". Thus, an agreement to come within the mischief of section 53A of the TP Act, the condition precedent is that the transfer of immovable property should be for consideration. Keeping in view the above clear provision of law, as we find in the instant case that the agreement was not for consideration of Rs.2,26,96,000/- as held by the lower authorities, and therefore, the development agreement dated 1.4.2009 does not fall under section 53A of the TP Act. Consequently, handing over of the possession of the land by the assessee to the developer was not in pursuance to a contract to transfer an immovable property for consideration, and thus, there was no "transfer" within the meaning of section 2(47)(v) of the IT Act. No material could be brought before us by the Revenue to show that the any other agreement was entered into by the assessee with the ITA No.1876/Ahd/2013 21

developer during the year relevant to the assessment year under consideration. In view of the above, we find no transfer of land took place on 1.4.2009, or for that matter, during the Asstt.Year 2010-11. Therefore, the addition of capital gain during the Asstt.Year 2010-11 is not sustainable, and therefore, we delete the capital gain of Rs.1,07,03,362/- added to the total income of the assessee of the year under consideration, and accordingly, this ground of appeal of the assessee is allowed.

19. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on Thursday the 19th February, 2015 at Ahmedabad.

Sd/- Sd/- (SHAILENDRA KUMAR YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 19/02/2015

आदे श क& " त(ल)प अ*े)षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. संबं धत आयकर आयु!त / Concerned CIT

4. आयकर आयु!त(अपील) / The CIT(A), Ahmedabad

5. $वभागीय 'त'न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड- फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad