Itta/527/2006 Of Smt. Shantha Vidyasagar Annam v. Income Tax Officer, Ward-4(2) Hyderabad

IN THE HIGH AT HYDERABAD TUESDAY, TWO THOUSAND PRESENT THE HONOURABLE ANDTHE HONOURABLE INCOME TAX TRIBUNAL [NO:][ 527 ][0F ][2006] Appeal filed [under ][Section ][260-4 of the ][lncome ][Tax ][Act' ][196'1 ][against ][the]orderdated09-06-2006passedinl.T.A.No.885/Hyd/2003forAssessmentyear1997-98 on the [file ][of the ][lncome ][Tax ][Appellate Tribunal, ][Hyderabad ]['A'Bench']Hyderabad [preferred ][against ][the ][Assessment ][Order ][dated 21-02-2002 ][passed ][in]PAN/GIRNo' /S-.1759^/t/d.4(2)onthefileofthelncomeTaxofficer,Ward 4(2), HYderabad. Between:Smt. Shantha [Vidyasagar ][Annam' ][3-4-612' Narayarraguda' Hyderabad] ...Appellant AND lncome Tax [Officer, ][Ward4(2), ][Hyderabad] ...Respondent Mr S Ravi, Senior [Counsel]Rep.M/sRSAssociatesMr J V PrasadSr. SG for lncome [Tax DePartment] Counsel for [the ][APPellant]Counsel for [the ][ResPondent] The Court delivered [the ][following Judgment ][:] THE HON'BLE THE CHIET JUSTICE ALOK ARI\DHEANDTHE HON'BLE SRI JUSTICE J.SREENIVAS RAOI.T.T.A. No.527 0F 20,06 JUDGMENTT (per the Hon'bLe the Chief Justice Alok Aradhe) Mr. S.Ravi, learned Senior Counsel re presenting M/ s. R. S.Associate s for the appellant. Mr. J.V.Prasad, learned Senior Standing Counsel lor IncomeTax Department fbr the respondent. 2. This Appea-l under Section 260A of the Income Tax Act, 1961(hereinafter referred to as 'the Act) has been fired by thr: assesseeagainst the order. dated 09.O6.2006 passed by the Income TaxAppellate Tribunal, Hyderabad Bench A,, Hyderabad (hereinafterreferred to as 'the Appellate Tribunar). The subject matter of theappeal pertains to assessment year l_gg7 _gg. The appeal wasadmitted on the follou,ing substantial questions of law: "i) Whether on the facts and circumstances of r.hecase, the findings of the Income Tax Appellate Triburralthat the appellant has handed over possession of theentire property enabling the developer to enjoy 600/o of tneconstructed area of the building is not perverse? ii) Whether on the facts and circumstances of the case, the appellate authorit5r was correct in law in holdi tg .\ that the appellant is liable to capital gains tax during theassessment year 1997 -98?" 3. Facts leading to hling of this appeal in nutshell are that theassessee is a Non Resident Indian (NRI). A notice under Section148 of the Act was issued to her. In response to the said notice,assessee filed return of income on 27 .1 1.2OOO, wherein theassessee declared her income as Nil. However, in the noteaccompanying the return, the assessee stated that she [had]entered into a development agreement on 04.05.1996 with [a]builder for construction of residential flats on sharing [basis]A copy of the agreement along with the return was [enclosed.]According to the assessee, the possession of the land owned [by]her was handed over to the builder only for the purposes ofconstruction and the builder did not get arly right to tralsfer [the]property or to execute sale deeds. Therefore, according to theassessee, the same was not a transfer within the meaning ofSection 2$71{vl of the Act read with Section 53 of the Transfer ofProperty 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 havebeen transferred. Thus, according to the assessee, she did nothave any liability for capital for the year ending 3I.03.1997.Ein 4 4 4The assessing ofrrcer disagreed with the assessee and a showcause notice dated 23.03.2001 was issued to herp roposing tocomplete the assessment under Section 144 of the Act aftercomplete the assessment under Section 144 of the Act afterdetermination of the long term capital gain arising out of thetransaction at Rs. l3,7g,gOO/_. The assessee submittecL a reply on03.04.200 l, wherein it was stated that the built_u1r area wasbuilt_u1r area wasreceived from the builder from the year 1999 on.vards andtherefore, the relevant financial year through which capital gaintherefore, the relevant financial year through which capital gainarose was l99g_99, relevarrt for the assessment year J ggg_2OOO.It was also stated that the assessee received 6560 squ are feet ofresidential built_up area on surrender of her land It was also stated that the assessee received 6560 squ are feet ofresidential built_up area on surrender of her land meas;uring 570squa_re yards. According to the assessee, she is eligrbl: to claimexemption under Section 54F of the Act as considerati,)n can besaid to have been re-invested in residential house propery. 5. The assessing offrcer assessing offrcer by arr order d,ated 21.O2.2OO2 arr order d,ated 21.O2.2OO2 order d,ated 21.O2.2OO2 21.O2.2OO2 inter atiaheld that the clevelopment agreement dated 04.05.1,196 is atransfer within the meaning of Section 2$7) of the Act. Theassessing officer firrther held that the assessee is not eetitled tobenefit of Section 54F of the Act. The assessing officer, therefore,determined the taxable capital gain at Rs.13,7g,9OO/_ rrnd heldthat the assessee is iiable to pay a total tax of Rs.7,5 O,6Zit/ - alongwith interest under Sections 2344. and.234Bof the Act. The assessing offrcer assessing offrcer by arr order d,ated 21.O2.2OO2 arr order d,ated 21.O2.2OO2 order d,ated 21.O2.2OO2 21.O2.2OO2 inter atia 6. The assessee challenged the aforesaid order in an [appeal.]The Commissioner of Income Tax (Appeals) by order [dated]21.O3.2OO3 inter alia held that [the ][development agreement ][dated]04.05.1996 amounts to transfer as all other conditions [mentioned]in Section 53A of the Transfer of Property [Act, ][1882 ][except ][the]condition of receipt of consideration [were ][satisfied. ][It ][was ][further]held that the receipt of consideration [is ][not ][mandatory ][condition]to be specihed under Section [2$71(vl ][of the ][Act. ][The]Commissioner of Income Tax [(Appeals), ][therefore, ][affrrmed ][the]order passed by the assessing [officer. The ][assessee ][challenged the]a-foresaid order of Commissioner [of ][Income ][Tax ][(Appeals) ][before]the Appellate Tribunal. The [Appellate ][Tribunal, ][by ][order ][dated]09.06.2006 hetd that the development [agreement ][amounts ][to]transfer as the same is covered [under ][Section ][2$71(vil ][of ][the ][Act']In the result, the appeal [preferred ][by ][thg ][assessee ][was ][dismissed']In the aforesaid factual [background, ][this ][appeal ][has ][been frled'] 7. Learned Senior Counsel for [the ][assessee ][submitted ][that ][the]Appellate Tribunal ought to [have ][appreciated ][that ][under ][the]the [assessee ][has ][handed ][over ][the ][vacant]development agreement, of the land for the [purposes ][of ][carrying ][out]possession development only and there was [no ][transfer ][of ][ownership ][in ][the]year 1996 and the same, therefore, would [not be ][covered ][in ][terms] 7. Learned Senior Counsel for [the ][assessee ][submitted ][that ][the]Appellate Tribunal ought to [have ][appreciated ][that ][under ][the]the [assessee ][has ][handed ][over ][the ][vacant]development agreement, of the land for the [purposes ][of ][carrying ][out]possession development only and there was [no ][transfer ][of ][ownership ][in ][the]year 1996 and the same, therefore, would [not be ][covered ][in ][terms] of Section 2@Z) of the Act. It is contended that from pe rusal of thedevelopment agreement dated 04.05 .1996, it is evident that thetransfer of title has been contemplated only a_fter conr;truction ofthe building' It is also contended that the transfer of pcssession inpart performa,ce of any agreement to sell cannot be treated astransfer of ownership under section 53A of the riansfer ofPropertlz Act, 1882. It is pointed out that there is no transfer ofcapital asset in the assessment year lgg7 _gg and consequently noprofit or gain accrued to the assessee in order to attra(:t Sections45 and Section 4g of the Act. In support of the aforesaidsubmissions, reliance has been placed on decision of thr: SupremeCourt in Seshasayee Steels private Limited vs. AssistantCommissioner of Income Tax, Chennai r and decisions onPrincipal Commissioner of Income Tax, Kolkata_l vs. InfinityInfotech Parks Limited2 and Chaganrat Mulji Dholu rs. JoiatCommissioner of Income Tax, JCIT (OSDI Circle3 rerrdered bythe Calcutta ald Gujarat High Courts respectively.8. Learned Senior Standing Counsel for the Revenue hasinvited the attention of this Court to various clause s of thedevelopment agreement and has submitted that tlLe sarnei',l2ozol tt scc tt+ : lzo2ol 42r trR 46 (sc)'[20181407 trR 137 (cat)-[2023j 291 Taxmann.com 304 (Gui) announts to transfer within the meaning of Section 2$7)(vl of t}reAct. It is further submitted that in pursuance of the developmentagreement, the possession was handed over to the developer. Insupport of his submissions, reliance has been placed on theDivision Bench decisions of the erstwhile High Court of AndhraPradesh in Potla Nageswara Rao vs. Deputy Commissioner ofIncome Tax [a ], High Court of Bombay in Commissioner ofIncorne Tax, Pune vs. Arvind S Phakes, Kerala High Court inCommissioner of Income Tax vs. Harbour [Viewo ]and the [order]of the Supreme Court in Harbour View vs. Commissioner [of]Income Tax7. 9. By way of rejoinder, learned Senior Counsel for the [assessee]has invited the attention of this Court to substaltial [questions ][of]law framed in P.T.Narasimhachar vs. the Assistant [Settlement]Oflicer, Chittoor [e ]and has submitted that the [aforesaid]substantial questions of law do not [pertain to the ][issue involved ][in]this appeal and therefore, the aforesaid [decision ][has ][no]application to the fact situation of the [case. ][It ][is ][contended ][that]even if the decision in Potla [Nageswara ][Rao ][vs. ][Deputy] 4 2014 Lawsuit (AP) 377 s 2017 Lawsuit (som) 2871 6 [2018] 409 trR s99 (Ker)' [zozl] [+eo ][trn ][+g: ][(sc)]t 1970 SCC OnLine eP 117 : 1971 (2) ALT 17' [zozl] [+eo ][trn ][+g: ][(sc)]t 1970 SCC OnLine eP 117 : 1971 (2) ALT 17 9. By way of rejoinder, learned Senior Counsel for the [assessee]has invited the attention of this Court to substaltial [questions ][of]law framed in P.T.Narasimhachar vs. the Assistant [Settlement]Oflicer, Chittoor [e ]and has submitted that the [aforesaid]substantial questions of law do not [pertain to the ][issue involved ][in]this appeal and therefore, the aforesaid [decision ][has ][no]application to the fact situation of the [case. ][It ][is ][contended ][that]even if the decision in Potla [Nageswara ][Rao ][vs. ][Deputy] 4 2014 Lawsuit (AP) 377 s 2017 Lawsuit (som) 2871 6 [2018] 409 trR s99 (Ker)' [zozl] [+eo ][trn ][+g: ][(sc)]t 1970 SCC OnLine eP 117 : 1971 (2) ALT 17' [zozl] [+eo ][trn ][+g: ][(sc)]t 1970 SCC OnLine eP 117 : 1971 (2) ALT 17 Commissioner of Income Tax (supra), is held appli:able to thefact situation ol- the case, the same has been implied ly overruledin view of the decision of the Supreme Court in fact situation ol- the case, the same has been implied ly overruledin view of the decision of the Supreme Court in Seshas;ryee SteelsPrivate Limited vs. Assistant Commissioner of Income Tax,Chennai (supra). In support of the aforesaid submission, reliancehas been praced on the Division Bench decision of the erstwhileAndhra Pradesh High Court in p.T.Narasimhachar. vs. TheAssistant set'ement oflicer, chittoors. It is also urgr:d that thePrivate Limited vs. Assistant Commissioner of Income Tax,Chennai (supra). In support of the aforesaid submission, reliancehas been praced on the Division Bench decision of the erstwhileAndhra Pradesh High Court in p.T.Narasimhachar. vs. TheAssistant set'ement oflicer, chittoors. It is also urgr:d that thedecision in Commissioner of Income Tax vs. Harhour View(supra) and the Commissioner of Income Tax vs. T.Bi.DayaluroT.Bi.Dayalurorendered by the Kerala and Karnataka High Courts rt:spectivelyhave no application to the fact situation of the cirse. It iscontended that in the instant High Courts rt:spectivelyhave no application to the fact situation of the cirse. It iscontended that in the instant case, agreement was executedwithout any consideration. It is therefore argued that in view ofthe decision of the Supreme Court in Seshasayee Steels privatetherefore argued that in view ofthe decision of the Supreme Court in Seshasayee Steels privateLimited vs. Assistant Commissioner of Income Tax, ChennaiTax, Chennai(supra), the substantiar questions of law deserve to be arxiwered infavour of the assessee.questions of law deserve to be arxiwered infavour of the assessee. 10.We have considered the rival submissions on both sides andhave perused the record.have perused the record. t02077 (2O2) taxman 531 1 1 . Before proceeding further, it is apposite to take note ofrelevant statutory provisions of the Income Tax Act, 1961. Sectionrelevant statutory provisions of the Income Tax Act, 1961. Section2(47) defines the expression 'transfer' in reration to capital assets.The aforesaid definition is inclusive in nature and reads as under: "2(471 "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(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 ownerthereof into, or is treated by him as, stock_in_trade ofa business carried onby him, such conversion ortreatment; orthereof into, or is treated by him as, stock_in_trade ofa business carried onby him, such conversion ortreatment; or (iva) the maturit5z or redemption of a zero coupon bond;oror (v) any transaction involving the allowing of thepossession of any immovable property to be taken orretained in part performance of a contract of thenature referred to in Section 53_A of the Transfer ofProperty Act, 1882 (4 of 1882); orpossession of any immovable property to be taken orretained in part performance of a contract of thenature referred to in Section 53_A of the Transfer ofProperty Act, 1882 (4 of 1882); or (iv) in a case where the asset is converted by the ownerthereof into, or is treated by him as, stock_in_trade ofa business carried onby him, such conversion ortreatment; orthereof into, or is treated by him as, stock_in_trade ofa business carried onby him, such conversion ortreatment; or (iva) the maturit5z or redemption of a zero coupon bond;oror (v) any transaction involving the allowing of thepossession of any immovable property to be taken orretained in part performance of a contract of thenature referred to in Section 53_A of the Transfer ofProperty Act, 1882 (4 of 1882); orpossession of any immovable property to be taken orretained in part performance of a contract of thenature referred to in Section 53_A of the Transfer ofProperty Act, 1882 (4 of 1882); or (vi) any fansaction (whether by way of becoming amember of, or acquiring shares in, a cooperativesocietSz, company or other association of persons or byway of any agreement or any arrangem€nt or in anyother manner whatsoever) which has the effect oftransferring, or enabling the enjoyment of, anyimmovable property.member of, or acquiring shares in, a cooperativesocietSz, company or other association of persons or byway of any agreement or any arrangem€nt or in anyother manner whatsoever) which has the effect oftransferring, or enabling the enjoyment of, anyimmovable property. Explaaation- 1.-For the purposes of sub_clauses (v) and(vi) 'immovable prgpeq/ shall have the same meaningas in clause (d) of Section 26g_t. \.(vi) 'immovable prgpeq/ shall have the same meaningas in clause (d) of Section 26g_t. \. Explanation-2.-For the removal of doubts, it is herebyclarified that [..transfer" ]includes and shall be dr:emedto have always included disposing of or partingl withclarified that [..transfer" ]includes and shall be dr:emedto have always included disposing of or partingl withan asset or any interest therein, or creatinll anyanyinterest in any asset in any manner whats,tever,directly, or indirectly, absolutely or conditionally,voluntarily or involuntarily, by way of al agree ment(whether entered into in India or outside Indja)orvoluntarily or involuntarily, by way of al agree ment(whether entered into in India or outside Indja)orothenvise, notwithstanding that such transft:rofrights has been characterised as being effeckdordependent upon or flowing from the transfer of a lihareor shares of acompany registered or rncorpo -atedrights has been characterised as being effeckdordependent upon or flowing from the transfer of a lihareor shares of acompany registered or rncorpo -atedoutside India;" 12. In section 2$zl(v) of the Act, reference has been made to Section 53A of the Transfer of property Act, lg,l2, whichAct, lg,l2, whichincorporates the doctrine of equity of part performance (,f contract.Section 53A introduces in limited form the doctrine o equity ofpart performalce in India where requirements mentioned in theprovrslons aresatisfied (see Ramachandra5Sra vs.provrslons aresatisfied (see Ramachandra5Sra vs.Satyanarayana rr).Section 53A of the Transfer of property Act,1882 reads as under:Act,1882 reads as under: Part Performance:- Where any perr;on "53A.Part Performance:- Where any perr;onany perr;oncontractstc, transfer for consideration any immova bleany immova bleproperty by writing signed by him or on his behalf from which the terms necessary to constitute [the transfer ][can]be ascertained with reasonable [certaint5r,] 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, Part Performance:- Where any perr;on "53A.Part Performance:- Where any perr;onany perr;oncontractstc, transfer for consideration any immova bleany immova bleproperty by writing signed by him or on his behalf from which the terms necessary to constitute [the transfer ][can]be ascertained with reasonable [certaint5r,] 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 ][where ][there ][is ][an]instrument of transfer, that the [transfer ][has ][not ][been]completed in the manner [prescribed ][therefor ][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 a right expressly [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'"] 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] a:.1 Bhairoba Suryavanshir2, the following conditions are required to be fulfilled: "(1) there must be a contract to transfer forconsideration of any immovabie propert5r; (21 tt.e contract must be in writing, signed by thetransferor, or by someone on his behalf; (3) the vzriting must be in such words from which theterms necessary to construethe transfer can beascertained; (4) the Yansferee must inpart-performance of thecontract take possession of the property, or of any 1>artthereof; (g the transfereetransferee (g the transfereetransfereemust have done some act infurtherance of the contract; and (6) the transferee must have performed or be willingl toperform 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 deveropment agreement dated 04.05.r996 readas under: "4. That 60% of the constructed portion along with 6C% undivided share in land would be retained by the SecondParty in lieu of their developing the total area of theschedule property with their funds and tne other 4(Pkconstructed prortion al0ng with 40% undivided share nland with all the amenities will be delivered to the Fir,rtParty in lieu of utilization of the owner,s land by tte Second Party for [construction. ][The ][total ][super ][built ][up]area to be delivered [to ][the ][First ][Party ][will ][not ][be ][less ][than]6O00 sq.ft. spread [over ][Ground, ][First ][and ][Second Floors]for the first revised [sanction ][or ][in ][any ][other ][manner]agreed upon by both [parties. ][It ][is ][agreed ][that ][the ratio ][of]40% wili apply for [further ][floors, ][if ][constructed, according]to the sanction for [construction ][granted by ][the Municipal]of [Hyderabad ][or ][Government ][which ][shall]Corporation include a pent house in [the ][owner's ][portion ][wttl:, ][4ooh]terrace rights. Second Party for [construction. ][The ][total ][super ][built ][up]area to be delivered [to ][the ][First ][Party ][will ][not ][be ][less ][than]6O00 sq.ft. spread [over ][Ground, ][First ][and ][Second Floors]for the first revised [sanction ][or ][in ][any ][other ][manner]agreed upon by both [parties. ][It ][is ][agreed ][that ][the ratio ][of]40% wili apply for [further ][floors, ][if ][constructed, according]to the sanction for [construction ][granted by ][the Municipal]of [Hyderabad ][or ][Government ][which ][shall]Corporation include a pent house in [the ][owner's ][portion ][wttl:, ][4ooh]terrace rights. 6. That as a [performance guarantee ][the ][Second ][Party]an [amount ][of ][Rs.2,0O,000/- ][(Rupees two]have deposited lakhs only) with First [Party vide ][Pay ][Order ][No'OO2314]dated 04.05.1996 for [Rs.2,O0,OOO/- ][(Rupees ][two ][lakhs]only) drawn on Bank [of ][Bahrain ][and ][Kuwait ][B'S'C',]Somajiguda, Hyderabad. [The ][receipt ][of ][which ][the ][First]Party hereby admits [and ][acknowledged, ][which ][is]returnable to the Second [Party ][without ][any interest ][after]the execution of [the ][work ][entrusted ][to the ][Second ][Party]under this agreement [and ][after completion ][of ][all ][further]floors. It is hereby [clarihed ][ttrat ][4fo/o ][of ][the ][builtup]portion includes usable [area ][i.e., floor ][area ][as also ][the]other areas Iike Balcony, [Staircase, ][Lifts, ][Corridors, ][and]other common spaces [etc. ][Similarly, apart from ][this, ][40%o]of the Car Park [area ][shall ][be ][given ][to the ][First ][Party, all]these will be clearly [demarcated ][on ][the ][plan ][after]obtaining sanction [from ][the ] [or Government'] 8. The owner shall [be ][liable ][to ][pay ][Municipal ][taxes,]non-agriculfure [and other ][charge'r ][and duties relating ][to] the schedule Propert5r upto the date of deiivery of Possession to the developers.. i5. The assessee vide letter dated assessee vide letter datedvide letter datedletter dateddated11.0S.1996 handeC over thepossession of the land to the developer. The relevant extract of theaforesaid letter, rvhich is referred to by the assessing officer inpara 5.5 of the orcler reads as under:developer. The relevant extract of theaforesaid letter, rvhich is referred to by the assessing officer inpara 5.5 of the orcler reads as under: "5.5 By virtue of " Possession Letter dar.ed I 1.05.1996 ,,n. .""... dar.edsaid rand to trre oeverop?,T:fJ::::",T::::" ",,.. "[n pursuance of thd a te d 4 rh r, r,, r r u,- L :r"r::"t":ffJTT",T."") have handed :schedule land mention.t over thisot' vacant possession of thero r tL epu rpose or cerrryin g "", ;.'::T,::*: :;:::::rs 16. Thereafter, supplementary agreement dated 26.12.1996 a was executed between the parties, which contains a recital thatdeveloper had obtained municipal sanction for construcl ion ofresidentiai complex rrnder permit No.6 of 1959, dated 26.O2.16and has commenced r:onstruction work. 17. Thus, from the ,f616,,1sntioned facts, it is evident that even though there evenis a contract to transfer the immovable proiler[r,which is signed by the parties, yet the contract has not been lt i executed for consideration. [sum ][of Rs.2,00,000/- ][mentioned ][in]paragraph 6 of the development [agreement ][is ][only ][the]performance gua-rantee [which ][is refundable. The aforesaid ][amount]of Rs.2,00,00O/- 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']in [pursualce ][of ][the ][development agreement, ][the]Therefore, the immovable [property ][has ][not ][been ][handed ][over ][to]possession of the developer as [contemplated ][under ][Section ][53A ][of ][the ][Transfer]of the Property Act, [1882. Therefore, ][the ][same does ][not fall within]the definition [of ]'transfer'under [Section ][2$71 ][of ][the ][Act'] lt i executed for consideration. [sum ][of Rs.2,00,000/- ][mentioned ][in]paragraph 6 of the development [agreement ][is ][only ][the]performance gua-rantee [which ][is refundable. The aforesaid ][amount]of Rs.2,00,00O/- 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']in [pursualce ][of ][the ][development agreement, ][the]Therefore, the immovable [property ][has ][not ][been ][handed ][over ][to]possession of the developer as [contemplated ][under ][Section ][53A ][of ][the ][Transfer]of the Property Act, [1882. Therefore, ][the ][same does ][not fall within]the definition [of ]'transfer'under [Section ][2$71 ][of ][the ][Act'] 18. Insofar as reliance [placed ][by ][the ][learned Senior ][Standing]Counsel for the [Revenue ][in ][Potla ][Nageswara ][Rao ][vs' ][Deputy]Commissioner of Itlcome [Tax ][(supra) ][is ][concerned, ][the ][same is]an authority for [the ][proposition ][that ][elernent ][of ][factual ][possession]and agreement [are ][contemplated ][as ][transfer ][within ][the ][meaning of]Section 2$71 of the [Act. ][It ][has ][further ][been ][held ][that ][when ][the]transfer is complete, [the ][consideration ][mentioned ][in ][the]agreementforsalehastobetakenintoconsiderationfortheof assessment of [income. ][In ][the ][instalt ][case' ][under ][the]purpose development [agreement ][there ][is ][no ][transfer and the ][consideration]has also not been [paid' ][Therefore, ][the ][aforesaid decision ][of ][the] t\ Division Bench has no application to the fact situation of the case.Similarly, in the case of Commissioner of Income Tax Arvind's. S Phake (supra), the possession was handed over to the deveroperand the entire consideration was paid. In the instant case,consideration has not been paid. Therefore, the Divisi,tn Benchdecision of the Bombay High Court a_lso does not apply to the factsituation of the case. In Commissioner of Income Tax vs.Harbour View (suora), the Division Bench of Kerala High Court onthe facts of the case found that the possession of the prol)erty washanded over under Section 53A of the Transfer of property Act,1882. Therefore, the aforesaid decision also has no application tothe fact situation ol the case. 19' However, the finding has been recorded by the TribtLnal thatthe appellant has halded over the possession of the entireproperty enabling 1.he developer to enjoy-60% of the constructedarea of the building cannot, but be said to be perverse. Similarly,the frnding that th e assessee is liable to pay capital girins taxduring the assessment year lgg7 _gg also cannot be sustaitred. 20. For the aforementioned reasons, the substantia_l ques tions oflaw framed in this appeat are answered in favour of the assesseeand against the revenue. t I Iil III I i Il, I I I Iirit 21. In the result, [the ][orders dated 09.06'2006 ][passed ][by ][the]Income Tax Appellate [Tribunal, dated ][21.03'20O3 ][passed ][by ][the]Commissioner of Income [Tax ][(Appeals)-V, ][Hyderabad ][and ][dated]21.O2.2OO2 passed by [the ][Assessing ][Offrcer ][are ][quashed' ][The]appeal is accordingly [allowed. ][There shall ][be no ][order ][as ][to ][costs'] Miscellaneous [petitions, ][pending ][if ][any, shall stand ][closed'] Sd/- K. SRINIVASA JOINT REGISTRARSECTION /TTRUE To,1. The lncome [Tax Appellate ][Tribunal' ][Hyderabad ]['A' Bench' ][Hyderabad]1. The lncome [Tax Appellate ][Tribunal' ][Hyderabad ]['A' Bench' ][Hyderabad] The lncome [Tax ][Officer, ][Ward ][4(2)' ][Hyderabad] 2 One CC to [M/s ][R.S. ][Associates' ][Advocate ] 3 4oneCCtoMrJ.V.Prasad,seniorStandingCounselforlncomeTaxDepartment IOPUCIDepartment IOPUCI 5. Two [CoPies] VA/gh I HIGH COURT DATED:0TtO1tzLls JUDGMENTITTA.No.527 ot 2006 ALLOWING THE ITTA ?*--'t/t2-\-7I k\EIA[r]\o\(?\qJt)0 i [it\.|.i ][?[?5]rl-t-.j'trc.\".i'/lo:1.: \''cu'