Brief of the Case
Punjab & Haryana High Court held In the case of Bikramjit Singh Gill vs. CIT that no possession had been given by the transferor to the transferee of the entire land in part performance of Joint development Agreement (JDA) dated 25.2.2007. The possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee.
Facts of the Case
The appellant, an individual is a member of M/s Defence Services Cooperative House Building Society Limited Mohali consisting of various members. The society is owner of 27.3 acres of land in Village Kansal in District Mohali. The members of the society had been allotted plots measuring 500 and 1000 square yards. The appellant is having a plot measuring 500 square yards.
On 27.4.2007, the society entered into tripartite JDA with two parties named HASH and THDC to develop the land and it was agreed that in lieu of grant of development rights, the developers will pay a monetary consideration of Rs. 80 lacs to be paid in installments as per time schedule prescribed in clause 4 of the JDA and additionally one built up flat measuring 2250 square feet in the project to be given to each individual member of the society having plot size of 500 square yards in the land owned by the society. On 25.2.2007, the assessee having plot of 500 square yards received part of the entire consideration.
The Assessee filed his Original return of income was on 26.9.2008 for the assessment year 2008-09 declaring income of Rs. 2,72,496/- which was processed under section 143(1) of the Act. The sources of income were shown as salary and business income. On 7.1.2010, revised computation of income was filed by the appellant during the assessment proceedings declaring income of Rs. 22,50,730/- which included capital gains on the consideration of advances and part payment under the JDA. On 17.2.2010, notice under Section 148 of the Act was issued to the appellant. The appellant filed written reply to the notice on 26.3.2010 stating therein that revised return already filed on 1.1.2010 be treated in response to the notice. On 5.5.2010, the appellant filed computation of income before the Assessing Officer declaring income of Rs.22,50,730/- from salary, business income and long term capital gain. On 27.12.2010, assessment order was passed for the assessment year 2008-09 under Section 143(3) of the Act at an amount of Rs.1,78,09,240/- wherein the Assessing Officer brought consideration receivable by the appellant under the JDA and the value of flat to be received by the assessee, to tax under the head capital gain.
Held by CIT (A)
CIT (A) dismissed the appeal of the assessee relying upon the order passed in the appeal of Shri Nirmal Singh Kahlon, another member of the society.
Held by ITAT
ITAT upheld the order of CIT (A). It was held that entire consideration will be subject to capital gain.
Held by High Court
It was not disputed between the parties that the issue involved herein is squarely covered by the judgment of Charanjit Singh Atwal vs. ITO, Ward No.VI (I) Ludhiana in ITA No.200 of 2013. In this judgment it was held that no possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.2.2007 so as to fall within the domain of Section 53A of 1882 Act. The possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee.
Further held that Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA dated 25.2.2007 having been executed after 24.9.2001, the agreement does not fall under Section 53A of 1882 Act and consequently Section 2 (47)(v) of the Act does not apply.
The contention of ld counsel of the assessee is valid that whatever amount was received from the developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JDA dated 25.2.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law.
Finally it was concluded that he Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs.
Accordingly, appeal of the assessee allowed.