DCIT Vs R. Muniraju (HUF) (ITAT Bangalore)
ITAT Bangalore held that irrevocable possession and irrevocable power of attorney to transfer/ sell to the developer makes it clear that absolute possession of land is given to the developer and the amounts to transfer within the meaning of section 2(47)(v) of the Income Tax Act.
Facts-
The assessee is a HUF and filed an income tax return for the AY 2010-11 on 25.11.2011. There was search u/s 132 of the Act in the residence of Shri. R. Muniraju on 07.01.2016. During the course of search, a Joint Development Agreement (JDA) dated 11.12.2009 which was executed between the assessee and M/s. Brundavan Constructions (Developer) for a development of properties situated in Arehalli village, Uttarahalli Hobli, Bangalore was seized.
AO after examining the JDA and satisfied that the same belongs to the assessee initiated proceedings u/s.153C. AO was of the view that capital gains arises at the time of execution of the JDA when possession of the property is handed over to the Developer due to the concept of part performance and proceeded to compute the capital gains for AY 2010-11. AO while computing the capital gain considered the cost of construction as per the estimation of the developer as the sale consideration and arrived at an addition of Rs.24,32,88,991 towards capital gains while completing the assessment u/s. 153C r.w.s. 153A r.w.s. 144 r.w.s. 153D of the Act. Aggrieved the assessee preferred an appeal before the CIT (Appeals).
CIT(A) dismissed the ground raised by the assessee. However, the CIT (Appeals) directed the AO to consider the guideline value of the property as the sale consideration to re-compute the capital gain and also to re-compute the capital gain of AY 2013-14 to 2017-18. The revenue and the assessee are in cross appeals before the Tribunal against the impugned order of the CIT(Appeals).
Conclusion-
The combined reading of the above clauses of the JDA and POA makes it clear that it is not the permissible possession but the absolute possession that is being given to the Developer by the assessee.
Held that here the possession is given irrevocably by the assessee to the developer and the developer is given the irrevocable power of attorney to transfer or sell the developer’s share in the undivided share of land which would mean that the developer is given the absolute possession of the land which in our considered view amounts to transfer within the meaning of section 2(47)(v) of the Act.
