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TAXAP/2294/2009 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2294 of 2009
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JAYANTILAL
C DESAI - Appellant(s)
Versus
ACIT
CIR - 2(1) - Opponent(s)
=========================================================
Appearance :
MR
SN DIVATIA for
Appellant(s) : 1,
None for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 11/04/2011
ORAL ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The assessee
has challenged the judgment of the Tribunal dated 30.6.2009 raising
the following questions for our consideration :-
“A. Whether
on the facts and in the circumstances of the case as well as in law,
the Appellate Tribunal was justified in upholding that transfer
within the meaning of section 2(47)(v) of Income Tax Act, 1961 had
taken place in the previous year relevant to A.Y. 1995-96 so that the
long term capital loss was not admissible in A.Y. 1998-99 of
Rs.2,06,812/-?
B. Whether on the
facts and in the circumstances of the case as well as in law, the
Income Tax Appellate Tribunal was justified in upholding that long
term capital loss of Rs.2,06,812/- was not admissible in A.Y.
1998-99?
C. Whether on the
facts and circumstances of the case, the conclusion reached by Income
Tax Appellate Tribunal to uphold that the transfer of land in
question had taken place in the previous year relevant to A.Y.
1995-96 is such as could be arrived at on the basis of material on
record?”
2. Issue pertains
to the question as to when the property i.e. the land could be stated
to have been transferred particularly bearing in mind the provisions
contained under section 2(47)(v) of the Income Tax Act, 1961.
3. From the
record, it emerges as an undisputed position that the
appellant-assessee along with 5 other persons had purchased a plot of
land bearing city survey No.1/1 and 1/2 of Fatehganj area of city of
Baroda from one Union Gymkhana. Sale deed was executed on 26.3.1993
and was duly registered with the Sub-Registrar of Baroda. Before the
authorities, the case of the assessee was that upon such duly
executed registered sale deed, the appellant become the owner of the
plot of the said land. He along with the other joint owners entered
into a development agreement with one M/s. Shilp Enterprises on
22.11.1994.
4. In background
of above dates and events, before the revenue authorities, the
question arose as to what can be stated to be the date on which the
ownership of the land passed on from the assessee. The Tribunal in
the impugned judgment applied the provision of section 2(47)(v) of
the Act and held that the land should be deemed to have been
transferred on 22.11.1994 when pursuant to the development agreement
the assessee put the developer in possession of the land in question.
5. Before us,
counsel for the assessee vehemently contended that the Tribunal did
not consider certain relevant aspects of the matter though placed
before the Tribunal in form of a paper book. Our attention was drawn
to the synopsis presented by the appellant before the Tribunal in
which it was pointed out that subsequent to the sale deed dated
26.3.1993, the Deputy Collector, Baroda on 28.6.1993 issued show
cause notice why such sale should not be cancelled. By order dated
24.8.1993, he ordered maintenance of status quo. On 13.9.1995, the
Deputy Collector imposed stay on further construction.
6. Counsel,
however, candidly pointed out that subsequently such stay against
construction was modified on 12.12.1995 and by order dated 7.11.1996,
show cause notice was dropped by the Deputy Collector on payment of
conversion charges. He, however, pointed out that actual sale deed in
respect of shops and offices constructed in the commercial complex on
the land in question were executed on 14.8.1997 and thereafter.
7. Counsel,
therefore, submitted that the Tribunal erred in not examining such
important aspects of the matter while holding that in terms of
section 2(47)(v) of the Act, the land should be deemed to have been
transferred on 22.11.1994.
8. We, however,
find that the Tribunal has given detailed reasons for applying the
deeming provision under section 2(47)(v) of the Act. The Tribunal in
particular found that the possession of the land was handed over on
29.11.1994. The developer was granted right to develop the property
by virtue of the same agreement. The assessee had also received sum
of Rs.1,23,419/- before signing the agreement and the balance amount
of Rs.7,96,870/- was payable in 24 installments.
9. The Tribunal
also noted at some length different terms of the agreement in
question and found that as per clauses 1 and 2 of the conditions of
the agreement entire operation had to be completed in two years.
Clause 3 gave developer an opportunity to implement the scheme
according to his likes, to register persons for the scheme and accept
money from them and also enter into agreement with them. Clause 4
gave the developer the right to advertise in the papers about the
scheme and register members for the same and also to enter into
financial dealings with them. Clause 5 gave the developer the right
to appoint architects, engineers, prepare drawings, designs and
specifications for the project in question. Clause 6 gave the
developer the right to decide the price of the land and the
proportionate price of the undivided share which was to be conveyed
to the purchaser of the property. Several further clauses were
noticed to come to the conclusion that the assessee had not only
given possession of the land in question, received part consideration
for the same, he also virtually give all rights to the developer in
the land in question. Under the circumstances, the Tribunal was of
the opinion that it is a case where ingredients of Section 2(47)(v)
were satisfied and the capital gain or loss would arise only in the
previous year relevant to assessment year 1995-96, the date of
transfer being the date of development agreement i.e. 22.11.1994.
10. Section
2(47)(v) of the Act reads as under :-
“2(47).
“transfer”, in relation to a capital asset, includes,-
(v) any
transaction involving the allowing of the possession of any immovable
property to be taken or retained in part performance of a contract of
the nature referred to in section 53A of the Transfer of Property
Act, 1882 (4 of 1882); or”
11. We are of the
opinion that the Tribunal on the basis of evidence on record came to
correct conclusion that deeming provision under the said section
would apply. The assessee had not only transferred the possession of
the land, under an agreement executed with the developer, but
surrendered all the rights in the land such as right to develop,
right to accept members, to decide the price, to give advertisement,
to engage agencies for development and all such related activities.
12. Merely the
fact that after the appellant purchased the land through a registered
sale deed, certain legal issues arose, would not change this
position. The appellant himself has admitted that he had become full
owner of the land in question through sale deed dated 26.3.1993. Mere
fact that the Deputy Collector initially issued show cause notice to
cancel the sale deed would not change the position. Significantly the
Deputy Collector never finally acted on the show cause notice but
dropped the proceedings, of course after payment of premium.
13. In our view,
the above development would have no significance bearing on the
decision of the Tribunal.
14. In the
result, we do not find any substantial question of law. The Tax
Appeal is, therefore, dismissed.
[Akil
Kureshi, J.]
[Ms.
Sonia Gokani, J.]
mrp
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