Brief of the case:
The assessee was the member on the co-operative society who was the owner of 21.2 acres of land and the assessee being a member was allotted one plot and the society hired one builder and entered into a JDA (Joint development agreement), not registered, that builder would develop the land and it would be given the development rights in consideration. But in between after the half of the land was developed, the builder refused to develop further.
The assessee filed his return considering the capital gain only of that amount which he had received in the year under consideration but the AO made addition for the capital gain on that amount also which he would be receiving in the subsequent year on the basis that as the builder was given the development rights by the society in the lieu of consideration so he got the possession of the building and so the plot of the assessee also stood transferred. Aggrieved by the order of the AO, assessee filed an appeal with the CIT(A) who also confirmed the order of AO. After that assessee filed an appeal with ITAT.
Facts of the case:
Asseesee being the member of the society was allotted the plot of 1000 sq. yards. He was entitled to Rs 1,65,00,000/- for the consideration of sale and 2 furnished flats of 2250 sq. feet each. Out of which he received only Rs 66 Lacs, 30 lacs was received during the year under consideration and the balance amount of 36 lacs was to be received in the subsequent year. The assessee considered only the amount which he had received during the year while calculating the capital gain for the computation of the income not the amount which he would be received in future. But AO also considered the amount which the assessee would receive in future.
Contention of the assessee:
Assessee was of the view that as the builder had refused to make the further payment and also it stopped the further development of land for which JDA was entered. So the same cannot be taxed as capital gain u/s 2(47) because the development rights could only be transferred when he develop the whole of the land of 21.2 acres of land.
Contention of the revenue:
Revenue of the view that as the builder was having the development rights as per the JDA so it was having the full control over the property so the possession stood transferred to the builder because JDA was signed in the year under consideration though the balance amount was to be transferred in the next year.
Revenue was also of the view that all the rights stood transferred as and when JDA was signed so the developer was having the full rights to develop, further lease the property ,which means that the possession stood transferred to the builder.
Held by ITAT:
ITAT 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 to attract sec 2(47). In the absence of registration of JDA, the agreement does not fall under Section 53A of 1882 Act because one of the condition of sec 53A requires the agreement to be registered and consequently Section 2(47)(v) of the Act does not apply.