|CORAM:||B. R. Baskaran (AM), Vivek Varma (JM)|
|CATCH WORDS:||capital gains, Development agreement, transfer|
|DATE:||November 14, 2014 (Date of pronouncement)|
|DATE:||November 17, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 2(47((v)/(vi): Mere execution of a development agreement does not result in a "transfer" if the approval of the municality is delayed and the developer has not started work|
The assessee had received advance amounts much earlier to the execution of development agreement, probably on the strength of the MOU. The property was encumbered with tenancy rights of many persons and the release of tenancy right was completed only in January, 2005. Further, the approval from municipal corporation was also got delayed and the plans were revised subsequent to AY 2000-01. The surrounding circumstances show that the developer did not start the work of development in the year relevant to AY 2001-02. As per the terms of development agreement, the assessee has given only licence to enter into the property, meaning thereby the possession was not given in the year relevant to AY 2001-02. In view of the peculiar facts narrated above, the assessee has contended that the tax authorities are not correct in holding that the transfer of property took place in the year relevant to AY 2001-02. The various case laws discussed above also support the view taken by the assessee. Hence, we agree with the contentions of the assessee in this regard. Accordingly, we hold that the transfer of property did not take place on the date of execution of development agreement and accordingly the tax authorities are not justified in assessing the capital gain in AY 2001-02.