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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri A. Mohan Alankamony & Shri S.S. Godara
& 1478/Hyd/2016 Assessment Years: 2013-14 The Deputy Commissioner Vs. Sri Tummala Chittaiah, of Income Tax, Hyderabad. Central Circle – 2(4), Hyderabad. PAN : ABTPT7370C. (Appellant) (Respondent) Assessee by: Shri Gurram Rama Chandra Rao Revenue by: Sri Rajendra Kumar. Date of hearing: 15.02.2022 Date of pronouncement: 24.02.2022 O R D E R Per S. S. Godara, J.M. These Revenue’s twin appeals for A.Y 2013-14 arise against the Commissioner of Income Tax (Appeals) – 4, Hyderabad’s separate orders; dated 08.06.2018 and 11.06.2018 passed in case Nos. 0130 and 0506/2016-17/ITO, Ward-16(1)/CIT(A)-4/Hyd/18- 19 involving proceedings u/s 143(3) of the of Income Tax Act, 1961 [in short, ‘the Act’] respectively.
Heard both the parties. Case files perused.
We note during the course of hearing that the Revenue’s following identical substantive grounds in the instant appeal :
“1. In the facts and circumstances of the case, and in law, the Ld.CIT(A) failed to appreciate that capital gains arises when the assessee enters JDA and is squarely covered by the provisions of section 2(47) rws 53A of Transfer of Property Act.
2. In the facts and circumstances of the case, the Ld.CIT(A) erred in not following the jurisdictional HC decision in the case of Potla Nageswara Rao Vs. DCIT.
3. In the facts and circumstances of the case, the Ld.CIT(A) erred in allowing the additional ground with regard to deduction u/s 54F, even though the conditions stipulated therein are not fulfilled.”
Both the learned representatives next took us to the CIT(A)’s detailed discussion deleting long term capital gains addition in issue amounting to Rs.7,80,41,738/- and Rs.4,05,42,393/-, respectively, we note that the CIT(A)’s identical detailed discussion deciding the issue in assessee’s favour reads as under :
Both the learned representatives reiterate their respective stands against and in support of the CIT(A)’s identical detailed discussion deleting the impugned long term capital gains addition.
The Revenue’s case before us in light of the recitals for the alleged Joint Development Agreement cum General Power of Attorney dt.10.05.2012 (in both cases) that M/s. Ramky Estates & Farms Ltd (“REFL”), is that the same duly involved “part- performance” u/s 53A of the Transfer of Property Act as prescribed method of “transfer” u/s 2(47)(v) of the Act. The learned departmental representative vehemently contended in light of the hon’ble jurisdictional high court’s decision in Potla Nageswara Rao Vs. DCIT (supra) such a part-performance indeed gives rise to the consequential capital gains in light of the hon’ble apex court’s landmark decision in CIT Vs. Balbir Singh Maini (2018) 398 ITR 531 (SC). The Revenue’s further argument before us is that CIT(A) has accepted the assessee’s section 54F deduction claim without even considering as to whether the corresponding statutory conditions have been satisfied or not at the tax-payers’ behest.
Learned authorized representative has placed strong reliance on the CIT(A)’s foregoing detailed discussion holding that the impugned joint development agreement dt.10.05.2002 nowhere amounts to “transfer” u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act.
We have heard the rival arguments and find no merit in the Revenue’s stand. There could hardly be any dispute about the law having settled in hon’ble apex court’s decision in Balbir Singh Maini (supra) that a part-performance very well amounts to ‘transfer’ within the meaning of section 2(47)(v) even on “accrual” basis. The most vital question that arises for our adjudication in the instant lis therefore is as to whether the joint development agreement herein is in the form of part-performance u/s 53A or not ? The Revenue has invited our attention to the “JDA” recitals that the assessee had transferred possession of the capital asset in issue to M/s. Ramky Estates & Farms Ltd. A perusal of the said agreement rather indicates in page 8(i) that “the owner hereby agrees in favour of the Developer, its agents, employees, labourers, contractors, and the other persons as may from time to time to be deputed by the latter; license to have ingress into, egress form and regress into the Schedule property herein for the purpose of developing the scheme as settled in these presents.” We fail to understand as to how such a mere licence would amount to a ‘transfer’; or for that, part-performance u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act; respectively. We make it clear that a “license” is defined u/s 52 of the Indian Easements Act, 1882 that it is a right to do so, or continue to do in or on the grantor’s immovable property which would in the absence of such right does not amount to an easement or an interest in the property …. the right is called license”. We accordingly adopts stricter interpretation as per hon’ble apex court’s recent landmark decision in Commissioner of Customs Vs. Dilip Kumar 2018 (9) (SCC) 1 FB to hold that the assessee’s impugned lincense herein does not amount to “transfer” giving rise to capital gains. This is also for the 26 reason that the Revenue has failed to pinpoint any material that the assessee’s impugned licence is also covered under any other clauses in section 2(47) as he had not transferred or surrendered or extinguished any of his rights in favour of the developer in above terms.
Coupled with this, there is no rebuttal from the Revenue side that the CIT(A)’s findings in para 5.3.8 holding the developer not to have obtained any building sanction is contrary to the facts on record. We quote hon’ble apex court’s recent decision in Seshasayee Steel Pvt. Ltd. Vs. ACIT (2020) 115 taxmann.com (5) SC that such a licence having not acted upon by the developer to perform its obligations, does not amount to a “transfer” u/s 2(47) of the Act. We therefore uphold the CIT(A)’s findings deleting impugned long term capital gains addition in both these assessment years.
The Revenue’s latter substantive grounds raising section 54F deduction / issue become academic in light of our findings on the main issue.
No other ground has been pressed before us.
These Revenue’s twin appeals are dismissed in above terms. A copy of the common order be placed in respective case files.
Order pronounced in the Open Court on 24th February, 2022.