Case Law Details
Prestige Estates Projects Ltd Vs ACIT (ITAT Banglore)
Now the issue before us is with regard to whether the amount paid by the assessee towards interest free security deposit to various land owners whether it constitutes as “Consideration” in terms of Transfer of Immovable Property. In the present case, as per JDA cum General Power of Attorney, land owners have agreed to transfer a portion of land (68.34%) belonged to them in lieu of share in the super-structure (31.66%) which should be constructed by the assessee. The value of 31.66% of the constructed area promised to be transferred by the assessee has been accepted as “Consideration” for transfer of 68.34% of land by the land owners. The assessee has paid refundable security to the land owners amounting to Rs.21.85 Crores. According to ld. DR, the payment of refundable security deposit is nothing but a part of sale consideration for transfer of immovable property in favour of the present assessee. Further it was submitted by the ld. DR that the refundable security deposit of Rs.21.85 Crores paid to the land owners which is actually not refundable and the same is to be adjusted with the sale proceeds of the constructed area. So, the nomenclature given by the assessee to such amount as refundable security deposit should not take away the essence of the transaction and it is nothing but advance sale consideration paid by the assessee to the land owners for transfer of immovable property. The basic condition to apply the provisions of Section 194-IA of the Act is that there should be a consideration for transfer of immovable property. The consideration as mentioned in JDA is the value of 31.66% of the constructed area which is to be transferred by the assessee as consideration for transfer of 68.34 of land by the land owners. In the present case, we have gone through the JDA cum General Power of Attorney to see whether there is a transfer within the meaning of Section 2(47)(v) of the Act or whether the transferee and transferor on the facts of the present case can be considered to have “performed or is willing to perform”, their respective obligation under the JDA cum General Power of Attorney.
It is specifically mentioned in caluse 1 of JDA that the assessee is only permitted by the land owners to enter upon the scheduled property to develop the scheduled property by constructing a residential apartment building as per the terms mentioned in JDA. It is also specifically mentioned tin Clause No. 1.2 that the permission to enter by way of license so granted shall not however be construed as delivery of position of the scheduled property in part performance of any conduct as defined u/s. 53A of the Transfer of Property Act r.w.s.2(47)(v) 86 (vi) of the Income Tax Act, 1961. Further it was mentioned that Clause No. 2.1 states that within four months from the date of this Agreement, the present assessee to get prepared development plan, building plan and all other drawings as per the buildings by law, rules and regulations in force for development of the scheduled property into residential apartment buildings with the required parking spaces, common amenities like club house, etc and present the same for the approval of the first party for obtaining consent from the transferee. After obtaining the consent from the land owners, the assessee shall take appropriate steps to obtain No Objection Certificate, other permissions required for undertaking the Project within 12 months from the date of the JDA. As seen from the above, it is actually mentioned that the assessee is only permitted by the land owners to develop the scheduled property as residential apartment buildings and also mentioned that it cannot be construed as delivery or possession in terms of Section 53 of the T.P. Act r.w.s. 2(47)(v) of the Act. Legal possession of scheduled property are continue to remain with the possession of the land owner.
There is a time limit to get the permission from the competent authority which is 12 months from the date of Agreement, thereafter 60 months time to complete the construction of residential apartment buildings form the receipt of the sanction plan, thereafter grace period has been given which show that the time is the essence of the contract. In the Assessment Year under consideration, nothing is brought on record to show that the assessee got approval of the sanctioned plan vis-à-vis any construction is started. Being so, the argument of the ld. DR is that there was a transfer of immovable property in the assessment year under consideration is not tenable. This is so, because the transferee is not able to complete any act as mentioned in JDA cum General Power of Attorney. The transferee only made payment of interest free refundable security deposit of Rs.21.85 Crores to the land owners as per clause No. 15. There was a condition in Clause No. 15 that the security deposit paid by the present assessee to the land owner shall be recovered through sale of the part of the owners constructed area. The ld. DR submitted that this is the payment of security deposit which is nothing but the payment of advance sale consideration on transfer of immovable property.
In our opinion, even if it is advance payment, it is not linked to the transfer of immovable property as enumerated in Section 194-IA of the Act, since the condition laid down in Section 2(47)(v) of the Act was not complied with within the meaning of Section 53A of the T.P. Act, so as to deduct TDS by the assessee on the said refundable security deposit. The assessee cannot be hold as the assessee in default u/s. 201(1) and 201(1A) of the Act. It is ordered accordingly.
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