DY. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-1(2), HYDERABAD vs. KAMBAM RAJESWARI, HYDERABAD

Learned authorized representative appearing at the assessee’s behest states that he pressed for her identical sole substantive grounds in A.Y. 2008-09 on merits that both the lower authorities have erred in law and on facts in treating the corresponding Joint Development Agreement dt.14.09.2017; followed by supplementary agreement dt.19.07.2008 as an instance of transfer within the meaning of section 2(47)(v) of the Act. We note in this factual backdrop that the learned lower authorities have treated the assessee’s foregoing joint development agreement as part-performance u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act giving rise to long term capital gains as against the taxpayer’s stand that her liability to be assessed for the consequential capital gains only for the year of sale of the corresponding developed housing units. It is in this backdrop that we have gone through the foregoing twin development agreements and more particularly, the former one dated 14.09.2017, indicating the assessee to have merely admitted her developer in joint possession only as per clause 18 without conferring any right or title or share or claim or interest therein as per clause 7(i) thereof. Learned departmental representative could not rebut this clinching aspect. His only case is that once the assessee has shared her possession, it amounts to part-performance u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act in light of hon’ble jurisdiction high court’s judgment in Potla Nageswara Rao Vs. DCIT 365 ITR 249 (A.P).

We have given our thoughtful consideration to the foregoing rival pleadings and find no substance in the Revenue’s stand. This is in light of the clinching fact that the assessee had nowhere surrendered or transferred her right or title or claim in favour of the developer since she had herself made it clear that the same could not be treated as an instance of part- performance in light of the foregoing statutory provisions. We thus hold that the learned lower authorities have erred in law and on facts in treating the former assessment year herein 2008-09 as the year of chargeability of the consequential capital gains arising from the joint development agreement dt.14.09.2017. The assessee succeeds in her latter substantive grounds as well as in main appeal to this effect. All other pleadings therein are rendered academic.

We now advert to the Revenue’s cross appeals and 218/Hyd/2019 seeking to reverse the CIT(A)’s findings holding the assessee as entitled for section 54F deduction vide following detailed discussion:

It is clear that the instant issue of allowability of section 54F deduction arising from assessee’s joint development agreement involving receipt of developed area as sale consideration has already been held eligible for section 54F deduction in hon’ble jurisdictional high court’s decision in CIT Vs. Syed Ali Adil (2013) 352 ITR 418 (supra). We thus see no merit in the Revenue’s instant sole substantive grievance in both of its appeals Nos.217 and 218/Hyd/2019 which are dismissed.

To sum up, the assessee’s former appeal is partly allowed and latter appeal ITA No.216/Hyd/2019 is dismissed as rendered infructuous. Both the Revenue’s cross-appeals ITA Nos.217 and 218/Hyd/2019 are dismissed in above terms. A copy of this order may be placed in respective case files.