Dr. Arvind S Phadke, Pune v. ACIT, Range-5, Pune

ITA 236/PUN/2013 | 2008-2009
Pronouncement Date: 30-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 23624514 RSA 2013
Assessee PAN ABQPP0889B
Bench Pune
Appeal Number ITA 236/PUN/2013
Duration Of Justice 1 year(s) 3 month(s) 7 day(s)
Appellant Dr. Arvind S Phadke, Pune
Respondent ACIT, Range-5, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-04-2014
Assessment Year 2008-2009
Appeal Filed On 23-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO.236/PN/2013 (ASSESSMENT YEAR : 2008-09) DR. ARVIND S. PHADKE 799/A BHANDARKAR ROAD PUNE 411 004. PAN : ABQPP0889B . APPELLANT VS. ADDL. COMMISSIONER OF INCOME TAX RANGE- 5 PUNE. . RESPONDENT ASSESSEE BY : MR. SUNIL GANOO DEPARTMENT BY : MR. P. L. PATHADE ORDER PER G. S. PANNU AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III PUNE DATED 30.12.2011 WHICH IN TURN HAS ARISEN FROM AN ORDER DATED 31.12.2010 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL ASSESSEE HAS RAISED FOLLOWING GR OUNDS OF APPEAL :- 1.) IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE CIT(A) HAS ERRED BOTH ON FACTS AS WELL AS IN LAW IN CONFIRMING THE DATE OF TRANSFER OF PROPERTY CTS NO.799/A BHANDARKAR ROAD PUNE U/S 2 (47) AS 13.09.2007 THAT IS THE DATE OF EXECUTION OF DEVELOPMENT AGREEM ENT AS AGAINST DATE OF TRANSFER AS 1 ST MARCH 2008 I.E. THE DATE OF POSSESSION AND DISALLO WING INVESTMENT OF CAPITAL GAIN U/S 54EC ALLEGING SAME T O BE OUT OF TIME. APPELLANT PRAYS FOR DETERMINATION OF DATE OF TRANSF ER AS 1 ST MARCH 2008 AND ALLOWING THE DEDUCTION U/S 54EC. 2) CIT(A) HAS ERRED IN HOLDING THAT RENT PAID BY RU DRA BUILDCON PVT. LTD. RS.2 55 000/- TOWARDS ALTERNATE ACCOMMOD ATION IS PART OF CONSIDERATION FOR TRANSFER. APPELLANT PRAYS FOR DELETION OF THE SAME. 3) CIT(A) HAS ERRED IN CONFIRMING ADDITIO N/ DISALLOWANCE UNDUE SECTION 14A OF RS.36 024/- SAME MAY PLEASE BE CANCELLED. 4) APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. ITA NO.236/PN/2013 A.Y. 2008-09 3. THE APPELLANT BEFORE US IS AN INDIVIDUAL WHO FIL ED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 DECLARING INCOMES ON AC COUNT OF LONG TERM CAPITAL GAIN ON SALE OF PROPERTY; FROM BUSINESS & P ROFESSION OF MEDICAL PRACTITIONER; AND OTHER SOURCES. IN THE SCRUTINY ASSESSMENT THE TOTAL INCOME HAS BEEN ASSESSED AT RS.3 50 17 100/- AS AGAINST TH E RETURNED INCOME OF RS.2 12 15 713/. THE SUBSTANTIVE DISPUTE IS WITH R EGARD TO A PART DISALLOWANCE OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 54EC OF TH E ACT WHILE COMPUTING LONG TERM CAPITAL GAIN ON SALE OF IMMOVABLE PROPERT Y WHICH IS MANIFESTED IN GROUND OF APPEAL NO.1 ABOVE. 4. IN BRIEF THE FACTS RELEVANT TO CONSIDER THE CON TROVERSY RAISED IN GROUND OF APPEAL NO.1 CAN BE SUMMARIZED AS FOLLOWS. IN TH E RETURN OF INCOME ASSESSEE HAD DISCLOSED LONG TERM CAPITAL GAIN ON SA LE OF LAND OWNED BY HIM AT 799/A BHANDARKAR ROAD PUNE. THE LONG TERM CAPITA L GAIN WAS COMPUTED AT RS.5 32 00 000/- OUT OF WHICH DEDUCTIONS (I) U/S 54 OF THE ACT AMOUNTING TO RS.1 20 00 000/- TOWARDS INVESTMENT IN A NEW RESIDE NTIAL PROPERTY BY WAY OF DEPOSIT IN CAPITAL GAINS SCHEME; AND (II) U/S 54EC OF THE ACT TO RS.50 00 000/- TOWARDS INVESTMENT IN NHAI BONDS WER E CLAIMED. ACCORDINGLY NET TAXABLE CAPITAL GAIN WAS DISCLOSED AT RS.2 74 88 690/-. SUBSEQUENTLY ASSESSEE FILED A REVISED RETURN ON 13.10.2008 WHER EIN A FURTHER DEDUCTION U/S 54EC OF RS.50 00 000/- WAS CLAIMED ON ACCOUNT INVES TMENT IN THE BONDS OF REC LTD. MADE ON 22.08.2008. THE LONG TERM CAPITAL GAIN WAS FURTHER RE- COMPUTED AND SCALED DOWN BY A SUM OF RS.37 60 000/- BY FILING A RE-REVISED RETURN ON 31.03.2008 ON THE GROUND THAT THE SALE CO NSIDERATION ON TRANSFER OF LAND HAD DECREASED AS A RESULT OF SUPPLEMENTARY DEE D ENTERED INTO WITH THE PURCHASER DATED 30.03.2010. AFTER THE RE-REVISED R ETURN THE LONG TERM CAPITAL GAIN STOOD AT RS.1 87 28 690/- AS AGAINST RS.2 74 8 8 690/- DECLARED IN THE ORIGINAL RETURN OF INCOME. ITA NO.236/PN/2013 A.Y. 2008-09 5. THE DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE RELATES TO THE CLAIM OF DEDUCTION U/S 54EC OF THE ACT MADE BY THE ASSESSEE ON ACCOUNT OF INVESTMENT IN THE SPECIFIED BONDS. AS DETAILED ABO VE ASSESSEE CLAIMED DEDUCTION U/S 54EC OF THE ACT IN TERMS OF INVESTMEN T OF RS.50 00 000/- MADE IN THE BONDS OF NHAI ON 28.03.2008 AND OF RS.50 00 000/- IN THE BONDS OF REC LTD. ON 22.08.2008 THEREBY CLAIMING DEDUCTION OF RS.1 CRORE U/S 54EC OF THE ACT. THE ASSESSING OFFICER NOTED THAT THE ASSE SSEE WAS REQUIRED TO MAKE INVESTMENTS IN THE SPECIFIED BONDS WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF ASSET IN ORDER TO CLAIM EXEMPTION U/ S 54EC OF THE ACT. AS PER THE ASSESSING OFFICER THE INVESTMENT IN THE BONDS OF NHAI MADE ON 28.03.2008 OF RS.50 00 000/- WAS WITHIN THE SPECIFI ED PERIOD WHEREAS THE BALANCE INVESTMENT OF RS.50 00 000/- MADE IN THE BO NDS OF REC LTD. ON 28.02.2008 WAS BEYOND THE PERIOD PRESCRIBED IN SECT ION 54EC OF THE ACT. ACCORDINGLY HE ALLOWED EXEMPTION TO THE EXTENT OF RS.50 00 000/- RELATING TO THE INVESTMENT IN THE BONDS OF NHAI AND THE BALANCE OF RS.50 00 000/- INVESTED IN THE BONDS OF REC LTD. ON 28.02.2008 WAS DENIED. THE CIT(A) HAS ALSO SUSTAINED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE INVESTMENT MADE IN THE BOND OF REC LTD. OF RS.50 00 000/- ON 22.08.2008 WAS NOT WITHIN SIX MONTHS FROM THE DATE OF TRANSFER OF ASSET AND ACCORDINGLY CLAIM OF RS.50 00 000/- WAS DENIED. THE ASSESSEE I S IN APPEAL BEFORE US ON THE AFORESAID ISSUE. 6. THE AFORESAID DISPUTE HINGES AROUND THE DATE OF TRANSFER OF ASSET I.E. THE LAND SOLD BY THE ASSESSEE WHICH HAS RESULTED IN CAPITAL GAINS ACCRUING TO THE ASSESSEE. THE ASSESSEE ENTERED INTO AN AGREEME NT WITH M/S RUDRA BUILDCON PVT. LTD. ON 13.09.2007 WHEREBY IT ASSIGNE D THE DEVELOPMENT RIGHTS IN RESPECT OF THE AFORESTATED LAND FOR A TOTAL CONS IDERATION OF RS.5 32 00 000/-. THE ASSESSEE CONTENDED THAT THE DATE OF TRANSFER OF ASSET WAS 01.03.2008 WHEN HE GAVE PHYSICAL POSSESSION OF THE LAND TO THE DEVELOPER I.E. M/S RUDRA BUILDCON PVT. LTD. AND ACCORDINGLY IT WAS CANVASSED THAT THE INVESTMENT MADE ITA NO.236/PN/2013 A.Y. 2008-09 ON 22.08.2008 OF RS.50 00 000/- IN THE BONDS OF REC LTD. WAS WITHIN THE PERIOD PRESCRIBED IN SECTION 54EC OF THE ACT. THE ASSESSING OFFICER ON THE OTHER HAND OBSERVED THAT HAVING REGARD TO THE PROV ISIONS OF SECTION 2(47)(V) R.W.S. 45(1) OF THE ACT THE TRANSFER OF THE LAND I N QUESTION TOOK PLACE ON THE DATE OF AGREEMENT ITSELF I.E. 13.09.2007. AS PER T HE ASSESSING OFFICER THE DEVELOPER TOOK POSSESSION OF THE PROPERTY AS A PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRA NSFER OF PROPERTY ACT 1882 (4 OF 1882) (IN SHORT THE TRANSFER OF PROPERTY ACT). AS PER THE ASSESSING OFFICER RECKONED FROM SUCH DATE OF TRANSFER I.E. 13.09.2007 THE INVESTMENT MADE IN THE BONDS OF REC LTD. ON 22.08.2008 WAS BEYOND THE PERIOD OF SIX MONTHS PRESCRIBED IN SECTION 54EC OF THE ACT AND THEREFORE THE ASSESSEE WAS NOT ELIGIBLE FOR SUCH DEDUCTION. IN VIEW OF THE AFORES AID BACKGROUND THE CRUX OF THE CONTROVERSY BEFORE US IS AS TO WHETHER THE ASSE SSING OFFICER WAS JUSTIFIED TO INFER THAT A TRANSFER IN RELATION TO THE LAND IN QUESTION HAD TAKEN PLACE ON 13.09.2007 IN TERMS OF CLAUSE (V) OF SECTION 2(47) OF THE ACT HAVING REGARD TO THE TERMS AND CONDITIONS CONTAINED IN THE DEVELOPME NT AGREEMENT DATED 13.09.2007. OSTENSIBLY THERE IS NO DISPUTE THAT A TRANSFER HAS INDEED TAKEN PLACE IN PURSUANCE TO THE AGREEMENT DATED 13.09.200 7 WHICH HAS RESULTED IN ACCRUAL OF CAPITAL GAINS IN THE HANDS OF THE ASSESS EE WITHIN YEAR UNDER CONSIDERATION. HOWEVER THE DISPUTE REVOLVES AROUN D THE DATE OF SUCH TRANSFER NAMELY WHETHER IT IS 13.09.2007 I.E. THE DATE OF AGREEMENT OR 01.03.2008 THE DATE OF HANDING-OVER OF PHYSICAL PO SSESSION BY THE ASSESSEE. 7. IN THIS BACKGROUND THE RIVAL COUNSELS HAVE MADE THEIR RESPECTIVE SUBMISSIONS. THE APPELLANT HAS ALSO FURNISHED A PA PER BOOK CONTAINING THE COPIES OF THE AGREEMENT DATED 13.09.2007 CONFIRMAT ION OF POSSESSION OF THE LAND GIVEN ON 01.03.2008 OTHER CORRESPONDENCE WITH THE DEVELOPER ETC.. THE ASSESSEE HAS ALSO FURNISHED IN THE PAPER BOOK THE W RITTEN SUBMISSIONS AND OTHER MATERIAL THAT WAS PUT-FORTH BEFORE THE LOWER AUTHORITIES. THE RELEVANT MATERIAL AND EVIDENCE HAS BEEN PERUSED. THE LEARNE D DEPARTMENTAL ITA NO.236/PN/2013 A.Y. 2008-09 REPRESENTATIVE ON THE OTHER HAND REFERRED TO THE DISCUSSION MADE BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS. 8. AS PER THE APPELLANT THE DEVELOPMENT AGREEMENT DATED 13.09.2007 ALLOWED A LIMITED POSSESSION TO THE DEVELOPER WHIC H WAS ALSO SUBJECT TO A FUNDAMENTAL CONDITION THAT THE CONSIDERATION PRICE OF RS.5 32 00 000/- WOULD BE PAID WITHIN THE INSTALLMENT DATES CONTAINED IN T HE AGREEMENT. THE LEARNED COUNSEL POINTED OUT WITH REFERENCE TO THE AGREEMENT THAT THE ENTIRE CONSIDERATION WAS NOT RECEIVED WITHIN THE PERIOD PR ESCRIBED IN THE AGREEMENT AND IN-FACT DISPUTE WITH THE DEVELOPER STILL CONTIN UES ON ACCOUNT OF NON- RECOVERY OF THE FULL CONSIDERATION. THEREFORE ACC ORDING TO THE LEARNED COUNSEL THE GIVING OF POSSESSION IN TERMS OF THE A GREEMENT WAS SUBJECT TO A CONDITION WHICH WAS NOT COMPLIED WITH AND THEREFOR E ACCORDING TO HIM THERE COULD NOT BE A TRANSFER WITHIN THE MEANING OF CLA USE (V) OF SECTION 2(47) OF THE ACT. IT WAS EXPLAINED THAT THOUGH THE AGREEMENT WA S REGISTERED ON 14.09.2007 BUT THE PHYSICAL POSSESSION OF THE PROP ERTY WAS GIVEN ON 01.03.2008 AND THEREFORE THE DATE OF TRANSFER WAS R IGHTLY CONSIDERED BY THE ASSESSEE TO BE 01.03.2008. IN SUPPORT OF HIS PROPO SITION THE LEARNED COUNSEL HAS RELIED ON THE FOLLOWING DECISIONS : (I) CIT VS. GEETADEVI PASARI (2009) 17 DTR 280 (BOM); (II) ACIT VS. MRS. GEETADEVI PASARI 104 TTJ 375 (MUM); AND (III) MR. SADIQ SHAIKH & ANOTHER VS. DCIT VIDE ITA NOS. 87 & 88/PNJ/2013 ORDER DATED 31.07.2013 OF THE PANAJI BENCH OF THE T RIBUNAL. 9. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE POINTED OUT THAT ON THE DATE OF EXE CUTION OF DEVELOPMENT AGREEMENT ASSESSEE HAD ALSO GIVEN AN IRRECOVERABLE POWER OF ATTORNEY TO THE NOMINEE OF THE DEVELOPER. IT WAS THEREFORE CONTEND ED THAT THE ASSESSEE WAS WRONG IN SAYING THAT THE TRANSFER OF TITLE CANNOT B E DETERMINED TILL TRANSFEREE PAYS THE ENTIRE CONSIDERATION AND ACCORDING TO THE REVENUE THE NON-RECEIPT OF THE CONSIDERATION IN TERMS OF THE AGREEMENT IS NOT GERMANE TO THE APPLICABILITY ITA NO.236/PN/2013 A.Y. 2008-09 OF CLAUSE (V) OF SECTION 2(47) OF THE ACT. THE LEA RNED DEPARTMENTAL REPRESENTATIVE FURTHER POINTED OUT THAT THE CLAUSES IN THE DEVELOPMENT AGREEMENT CLEARLY INDICATED THAT THE TRANSACTION HA S THE EFFECT OF ENABLING THE ENJOYMENT OF THE PROPERTY BY THE DEVELOPER FOR THE PURPOSES OF DEVELOPMENT AND THEREFORE IN TERMS OF THE RATIO OF THE JUDGEMEN T OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPA DIA VS. CIT 260 ITR 491 (BOM) THE DATE OF TRANSFER OF LAND HAS BEEN RI GHTLY HELD TO BE 13.09.2007 I.E. THE DATE OF DEVELOPMENT AGREEMENT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THIS CASE THE REVENUE HAS PRESSED INTO SERVICE SUB-CLAUSE (V) OF SECTION 2(47) OF THE ACT TO SAY THAT THE DATE OF THE DEVELOPMENT AGREEMENT DATE D 13.09.2007 IS THE DATE OF TRANSFER OF LAND IN QUESTION. SECTION 2(47) OF THE ACT DEFINES THE EXPRESSION TRANSFER IN RELATION TO A CAPITAL ASSET FOR THE PURPOSES OF THE ACT. SUB-CLAUSE (V) OF SECTION 2(47) OF THE ACT READS AS UNDER :- 2(47) TRANSFER IN RELATION TO A CAPITAL ASSET INCLUDES (I) (II) (III) (IV) (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSE SSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED I N PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 (4 OF 1882) 11. THE AFORESAID SUB-CLAUSE (V) SEEKS TO PROVIDE T HAT ALLOWING POSSESSION OF ANY IMMOVABLE PROPERTY IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT WOULD FALL WITHIN THE MEANING OF THE EXPRESSION TRANSFER IN RELATION TO A CAPITAL ASSET. IN THE PRESENT CASE AS PER THE REVENUE BY WAY OF THE DEVE LOPMENT AGREEMENT DATED 13.09.2007 ASSESSEE HAS ALLOWED THE TRANSFER EE TO OBTAIN POSSESSION OF THE LAND AS PART PERFORMANCE OF A CONTRACT OF TH E NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. AS NO TED EARLIER ASSESSEE HAS ASSIGNED DEVELOPMENT RIGHTS IN RESPECT OF HIS LAND TO THE DEVELOPER IN TERM OF ITA NO.236/PN/2013 A.Y. 2008-09 AGREEMENT DATED 13.09.2007. IT IS ALSO MADE OUT TH AT AN IRRECOVERABLE POWER OF ATTORNEY HAS ALSO BEEN EXECUTED BY THE ASSESSEE IN FAVOUR OF THE DEVELOPER. THE SAID POWER OF ATTORNEY WAS GIVEN TO CARRY ON ALL SUCH WORKS AND PERFORM SUCH ACTS AS LISTED OUT IN PARAGRAPH 3 OF THE AGREEMENT THAT WERE NEEDED TO COMPLETE THE DEVELOPMENT OF THE PROPERTY AND IT WAS TO REMAIN IN EXISTENCE TILL THE COMPLETION OF THE DEVELOPMENT. THE RELEVANT CLAUSES OF THE AGREEMENT IN THIS CONTEXT HAVE BEEN REPRODUCED BY T HE CIT(A) IN PARA 3.3 OF HIS ORDER AND THE SAME ARE NOT BEING REPEATED HERE FOR THE SAKE OF BREVITY. THE CASE MADE OUT BY THE REVENUE IS THAT SUCH CLAUS ES IN THE DEVELOPMENT AGREEMENT INDICATE THAT THERE WAS PASSING OR TRANSF ER OF CONTROL OVER THE PROPERTY IN FAVOUR OF THE DEVELOPER ON THE DATE OF AGREEMENT I.E. 13.09.2007 ITSELF WHICH WAS REGISTERED ON 14.09.2007. RELIANC E HAS BEEN PLACED BY THE REVENUE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) TO SAY THAT ON CE UNDER SOME CLAUSE OF THE AGREEMENT A LIMITED POWER OF ATTORNEY IS INTEND ED TO BE GIVEN TO THE DEVELOPER TO DEAL WITH THE PROPERTY THEN THE DATE OF AGREEMENT WOULD BE RELEVANT DATE TO DECIDE THE DATE OF TRANSFER U/S 2( 47)(V) OF THE ACT. AS PER THE REVENUE IN THE PRESENT CASE AN IRRECOVERABLE POWE R OF ATTORNEY WAS GIVEN TO THE DEVELOPER FOR DEVELOPMENT OF THE PROPERTY AND T HEREFORE TRANSFER HAS TAKEN PLACE ON 13.09.2007 HAVING REGARD TO SECTION 2(47)(V) OF THE ACT. 12. FACTUALLY FROM THE ORDERS OF THE AUTHORITIES B ELOW AS ALSO FROM A CONFIRMATION LETTER OF THE DEVELOPER DATED 19.11.20 10 A COPY OF WHICH HAS BEEN PLACED AT PAGES 13 AND 14 OF THE PAPER BOOK I T IS NOT IN DISPUTE THAT THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED-OVER TO THE DEVELOPER ON 01.03.2008 THOUGH THE DEVELOPMENT AGREEMENT IS ENTE RED ON 13.09.2007. IT IS ALSO NOT IN DISPUTE THAT THE ENTIRE CASH CONSIDE RATION OF RS.5 32 00 000/- AGREED IN THE AGREEMENT DATED 13.09.2007 WAS NOT PA ID IMMEDIATELY AND PART OF IT NAMELY RS.2 62 00 000/- WAS TO BE PAID BY A SUBSEQUENT DATE I.E. 15.10.2007. AT THIS STAGE WE MAY REFER TO CERTAIN CLAUSES IN THE AGREEMENT ITA NO.236/PN/2013 A.Y. 2008-09 WHICH REFLECT THE UNDERSTANDING BETWEEN THE PARTIES WITH REGARD TO ALLOWING OF POSSESSION. THE FIRST IS THE FOLLOWING CONTENT IN THE PREAMBLE OF THE AGREEMENT :- AND WHEREAS IT WAS ACCEPTED AND AGREED AS BETWEEN THE PARTIES THAT THE DEVELOPER/ PROMOTER WILL PAY TO THE OWNER THE WHOLE OF THE CONSIDERATION PRICE FOR THE OWNER HAVING AGREED TO TRANSFER THE ENTIRE DEVELOPMENT RIGHTS IN THE SCHEDULE- I PROPERTY IN F AVOUR OF THE DEVELOPER/ PROMOTER SUCH PAYMENT BEING MADE BEFORE THE OWNER I S CALLED UPON BY THE DEVELOPER/ PROMOTER TO DELIVER PEACEFUL AND VACANT POSSESSION OF THE WHOLE SCHEDULE- I PROPERTY TO THE DEVELOPER/ PROMOTER FOR THE PURPOSE OF EXECUTING THE DEVELOPMENT PROJECT. 13. OSTENSIBLY THE AFORESAID WOULD REVEAL THAT THE DELIVERY OF PEACEFUL AND VACANT POSSESSION OF THE PROPERTY WAS TO BE PROCEED ED WITH ONLY AFTER THE DEVELOPER PAID WHOLE OF THE CONSIDERATION PRICE TO THE ASSESSEE-OWNER. FURTHER THE FOLLOWING CLAUSE IS ALSO RELEVANT :- THE ABSOLUTE AND VACANT POSSESSION OF THE SAID PRO PERTIES IS DEEMED TO BE HANDED OVER TO THE DEVELOPER UPON REALIZATION OF THE CHEQUES GIVEN AS FULL AND FINAL PAYMENT OF THE CONSIDERATION AS MENT IONED IN I & II IN CLAUSE I AND THEREAFTER ONLY THE DEVELOPER OR THEIR ASSIGNEE / NOMINEE WILL BE ENTITLED TO COMMENCE THE DEVELOPMENT OF THE SAID PROPERTIES. 14. THE AFORESAID CLAUSE REFLECTS THAT THE POSSESSI ON WHICH IS SAID TO HAVE BEEN GIVEN TO THE DEVELOPER WAS SUBJECT TO THE REAL IZATION OF THE CHEQUES AND THE FINAL PAYMENT OF CONSIDERATION MENTIONED THEREI N. WE ARE ONLY TRYING TO POINT OUT THAT THE POSSESSION UNDERSTOOD BY THE ASS ESSING OFFICER BY A READING OF THE DEVELOPMENT AGREEMENT IS A CONDITION AL POSSESSION. 15. AT THIS POINT WE MAY ALSO REFER TO THE PLEA OF THE REVENUE THAT THE ASSESSEE HAD AUTHORIZED THE DEVELOPER TO CARRY OUT CERTAIN ACTS IN RELATION TO THE DEVELOPMENT OF THE PROPERTY AND FOR THAT MATTER A REFERENCE HAS BEEN MADE TO PARA 3.3 OF THE ORDER OF THE CIT(A) WHERE T HE RELEVANT CLAUSES OF THE AGREEMENT HAVE BEEN EXTRACTED. NO DOUBT THE ASSESS EE AUTHORIZED THE DEVELOPER TO UNDERTOOK DEVELOPMENT AND OTHER STEPS STIPULATED IN THE AGREEMENT. SO HOWEVER FOLLOWING CLAUSES WOULD SHO W :- ITA NO.236/PN/2013 A.Y. 2008-09 D. AFTER THE FULL PAYMENT OF CONSIDERATION TO UNDE RTAKE THE DEVELOPMENT OF THE SAID PROPERTIES AND CONSTRUCT TH EREUPON THE PERMISSIBLE TENEMENTS AND BUILDINGS IN ACCORDANCE WITH THE APPR OVED SCHEME AND PLANS AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS LAI D DOWN BY THE CONCERNED AUTHORITY FROM TIME TO TIME; TO SELL/ LEASE/ ALLOT/ ALIENATE OR IN ANY WAY DEAL WITH THE CONSTRUCTED SHOPS/ PREMISES/ FLATS/ PARKIN G SPACES ETC. ON OWNERSHIP BASIS OR OTHERWISE TO THE VARIOUS PROSPECTIVE PURCH ASERS/ LESSEES/ ALLOTTEES ETC. THEREOF FOR SUCH CONSIDERATION AS THE DEVELOPE RS MAY IN THEIR ABSOLUTE DISCRETION DEEM FIT. E. AFTER THE FULL PAYMENT OF CONSIDERATION AT THE D ISCRETION OF THE DEVELOPERS TO INCORPORATE AND REGISTER AN APARTMENT CONDOMINIUM AND ASSOCIATION OF APARTMENT OWNER IN ACCORDANCE WITH T HE RELEVANT PROVISIONS OF LAW AND TO FINALLY CONVEY AND TRANSFER TO SUCH ASSO CIATION AND/OR IT MEMBERS OR TO THE NOMINEES OF THE DEVELOPERS THE SAID PROP ERTIES MORE FULLY DESCRIBED IN THE SCHEDULE HEREUNDER WRITTEN ALONG WITH THE BU ILDING/S CONSTRUCTED THEREON BY THE DEVELOPERS IN ACCORDANCE WITH THE SC HEME AS MAY BE ENVISAGED DECIDED OR IMPLEMENTED BY THE DEVELOPERS ON THE SAID PROPERTIES IN THEIR ABSOLUTE DISCRETION. THE COSTS OF INCORPO RATION OF THE SAID APARTMENT CONDOMINIUM AND ALL OTHER EXPENSES AND OUTGOINGS WH ATSOEVER RELATED THERETO AS ALSO ONE TIME COMMON AREA MAINTENANCE CH ARGES MAY BE RECOVERED BY THE DEVELOPERS FROM THE SAID ASSOCIATI ON AND ITS MEMBERS OR THE PERSONS TO WHOM SUCH CONSTRUCTED FLATS/ UNITS M AY BE SOLD/ ALLOTTED. TO ENTER INTO AGREEMENTS WITH THE INTENDING PURCHASERS / ALLOTTEES OR THE PURCHASERS OF THE SHOPS/ FLATS/ UNIT/ PREMISES I TH E PROPOSED BUILDING/S OR SUCH TERMS AND FOR SUCH CONSIDERATION AS THE DEVELOPERS IN THEIR ABSOLUTE DISCRETION MAY THINK PROPER AND AGREE UPON; AND TO ENFORCE THE TERMS OF THE ABOVE MENTIONED AGREEMENTS AND TO ENSURE THE COMPLI ANCE THEREOF AND TO DO ALL ACTS DEEDS AND THINGS IN ACCORDANCE WITH AND I N FURTHERANCE TO THE SAID AGREEMENT OR OTHERWISE. THAT THE DEVELOPER WAS COMPETENT TO UNDERTOOK DEVEL OPMENT AND OTHER ACTS WHICH INCLUDED TAKING OF POSSESSION ONLY AFTER PAY MENT OF FULL CONSIDERATION. OSTENSIBLY IT IS NOT IN DISPUTE THAT AS ON THE DAT E OF AGREEMENT I.E. 13.09.2007 THE FULL PAYMENT OF CONSIDERATION HAD NOT TAKEN PLA CE AND IN-FACT IN THE COURSE OF HEARING THE LEARNED COUNSEL MADE A STATEMENT AT BAR THAT EVEN WHEN ASSESSEE GAVE PHYSICAL POSSESSION OF THE PROPERTY O N 01.03.2008 FULL CONSIDERATION WAS STILL NOT PAID TO THE ASSESSEE. 16. BE THAT AS IT MAY WE ARE POINTING OUT THE AFOR ESAID CONTOURS OF THE DEVELOPMENT AGREEMENT ONLY TO SAY THAT THE ALLOWING OF POSSESSION ON 13.09.2007 FOR THE PURPOSES OF CARRYING OUT DEVELOP MENT ACTIVITY WAS SUBJECT TO CONDITION WHICH WAS NOT FULFILLED AT THAT STAGE . THEREFORE UNDER THESE CIRCUMSTANCES THE DATE OF DEVELOPMENT AGREEMENT I. E. 13.09.2007 COULD NOT BE THE DATE ON WHICH ASSESSEE PASSED OR TRANSFERRED COMPLETE CONTROL OVER ITA NO.236/PN/2013 A.Y. 2008-09 THE PROPERTY IN FAVOUR OF THE DEVELOPER. PERTINENT LY WHEN THE FULL CONSIDERATION WAS NOT PAID AND THE HANDING-OVER OF VACANT AND ABSOLUTE POSSESSION OF THE PROPERTY WAS SUBJECT TO FULL AND FINAL PAYMENT OF CONSIDERATION WHICH DID NOT HAPPEN ON THE DATE OF DEVELOPMENT AGREEMENT THUS THE SAME WOULD NOT BE SAID TO BE THE DATE OF TRANSFER EVEN IN TERMS OF SECTION 2(47)(V) OF THE ACT. A SOMEWHAT SIMILAR SI TUATION HAD ARISEN IN THE CASE OF GEETADEVI PASARI (SUPRA) BEFORE THE MUMBAI BENCH OF THE TRIBUNAL. IN THE SAID CASE THE ASSESSEE AND THE CO-OWNERS ENTER ED INTO A DEVELOPMENT AGREEMENT WITH THE DEVELOPER FOR DEVELOPMENT OF THE PROPERTY ON 29.03.1994 AND ON THAT DATE A SUM OF RS.30 00 000/- WAS PAID B Y THE DEVELOPER AS EARNEST MONEY. POSSESSION OF PROPERTY WAS HANDED-O VER TO THE DEVELOPER ON 10.04.1998 WHEN THE BALANCE CONSIDERATION WAS PAID. ACCORDINGLY ASSESSEE TREATED THE DATE OF TRANSFER AS 10.04.1998 AND OFFE RED TO TAX LONG TERM CAPITAL GAIN IN ASSESSMENT YEAR 1999-2000. THE ASSESSING O FFICER HOWEVER HELD THAT THE TRANSFER WAS COMPLETE ON THE DATE WHEN THE DEVELOPMENT AGREEMENT WAS EXECUTED I.E. ON 29.03.1994 AND THEREFORE THE C APITAL GAINS WAS CHARGEABLE TO TAX IN ASSESSMENT YEAR 1994-95 WHEN T HE TRANSFER WAS COMPLETE AS POSSESSION WAS DEEMED TO BE HANDED-OVER TO THE PURCHASER AND HE INVOKED SECTION 2(47)(V) OF THE ACT IN SUPPORT. THE TRIBUNAL NOTED THAT WHEN ONLY A SMALL PORTION OF CASH CONSIDERATION WAS RECEIVED ON THE DATE OF AGREEMENT AND WHEREAS THE POSSESSION WAS GIVEN TO T HE DEVELOPER ON 10.04.1998 I.E. AFTER FULFILLMENT OF OTHER TERMS OF AGREEMENT IN SUCH CIRCUMSTANCES IT COULD NOT BE SAID THAT THE DATE OF AGREEMENT WAS RELEVANT TO DECIDE THE YEAR OF CHARGEABILITY OF CAPITAL GAINS A ND THEREFORE IT WAS HELD THAT THE ASSESSING OFFICER WAS WRONG IN TAXING THE CAPIT AL GAINS IN ASSESSMENT YEAR 1994-95. THE SAID DECISION OF THE TRIBUNAL HA S ALSO BEEN AFFIRMED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GE ETADEVI PASAR REPORTED AT 17 DTR 280 AFTER DULY CONSIDERING THE EARLIER J UDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADA S KAPADIA (SUPRA) WHICH ITA NO.236/PN/2013 A.Y. 2008-09 HAS BEEN RELIED BY THE REVENUE BEFORE US. THE FOLL OWING SHORT DISCUSSION IN THE JUDGEMENT OF THE HONBLE HIGH COURT IS WORTHY O F NOTICE :- 2. BY THE ABOVE APPEAL THE APPELLANT REVENUE IS S EEKING TO RAISE THE FOLLOWING THREE SUBSTANTIAL QUESTIONS OF LAW : '(A) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE TRIBUNAL WAS JUSTIFIED IN CONCLUDI NG THAT THE CAPITAL GAINS IS NOT CHARGEABLE TO TAX IN THE ASST. YR. 199 4-95 EVEN THOUGH THE AGREEMENT WAS ENTERED INTO ON 29TH MARCH 1994 ? (B) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE HON'BLE TRIBUNAL WAS JUSTIFIED IN CONCLUDI NG THAT THE SAID PROPERTY WAS NOT TRANSFERRED BY THE ASSESSEE TO THE PURCHASER WITHIN THE MEANING OF S. 2(47)(V) OF THE IT ACT IN THE ASS T. YR. 1994-95 IN SPITE OF THERE BEING GLARING EVIDENCE TO REBUT THE CLAIM OF THE ASSESSEE THAT THE POSSESSION WAS GIVEN ON 10TH APRIL 1998 ? (C) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE HON'BLE TRIBUNAL WAS JUSTIFIED IN CONCLUDI NG THAT THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE O F CHATURBHUJ DWARKADAS KAPADIA VS. CIT (2003) 180 CTR (BOM) 107 : (2003) 260 ITR 491 (BOM)ARE NOT APPLICABLE TO THE FACTS AND CI RCUMSTANCES OF THE CASE ?' 3. MR. GOPAL THE LEARNED COUNSEL FOR THE RESPONDEN T POINTED OUT THAT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT (2003) 180 CTR (BOM) 107 : (2003) 260 ITR 491 (BOM) WHEREIN ALMOST ID ENTICAL ISSUES WERE INVOLVED AND THE SAME WAS ALSO RELIED UPON BY THE T RIBUNAL IN ITS ORDER. 4. IN THE AFORESAID JUDGMENT THIS COURT HAD CLEARL Y TAKEN A VIEW THAT THE RELEVANT ASSESSMENT YEAR FOR THE PURPOSE OF COM PUTATION OF CAPITAL GAINS WILL BE THE ASSESSMENT YEAR IN WHICH THE ASSESSEE W AS ACTUALLY PHYSICALLY PUT IN POSSESSION AND IN THE INSTANT CASE THERE IS NO DISPUTE THAT THOUGH THE AGREEMENT WAS ENTERED INTO ON 29TH MARCH 1994 THE ASSESSEE (SIC- PURCHASER) WAS PUT J IN POSSESSION ONLY IN THE YEAR (ON) 10TH APRIL 1998. 5. IN VIEW THEREOF THE ASSESSEE WILL BE LIABLE FOR BEING ASSESSED FOR CAPITAL GAINS ONLY IN THE ASST. YR. 1999-2000. UNDE R THESE CIRCUMSTANCES WE DO NOT FIND ANY SUBSTANTIAL QUESTION OF LAW INVOLVE D IN THE ABOVE APPEAL. THE APPEAL IS DEVOID OF MERITS AND THE SAME STANDS DISM ISSED. 17. THE AFORESAID PRECEDENT IN OUR VIEW FULLY COV ERS THE PRESENT SITUATION INASMUCH AS IN THE PRESENT CASE ALSO THOUGH THE AGR EEMENT WAS ENTERED ON 13.09.2007 THE DEVELOPER WAS PUT IN PHYSICAL POSSES SION ONLY ON 01.03.2008 AND ON THE DATE OF THE AGREEMENT THE COMPLETE CONSI DERATION WAS NOT PAID. THEREFORE ON THIS SCORE ITSELF WE ARE UNABLE TO UP HOLD THE STAND OF THE REVENUE AND INSTEAD ARE INCLINED TO UPHOLD THE PLEA OF THE ASSESSEE THAT THE TRANSFER HAS TAKEN PLACE ON 01.03.2008. ITA NO.236/PN/2013 A.Y. 2008-09 18. APART FROM THE AFORESAID DISCUSSION WE MAY ALS O EXAMINE THE AFORESAID ISSUE IN A DIFFERENT LIGHT. IN THIS CONT EXT WE MAY REPRODUCE HEREINAFTER SECTION 53A OF THE TRANSFER OF PROPERTY ACT WHICH READS AS UNDER :- 53A. PART PERFORMANCE. WHERE ANY PERSON CONTRACT S TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SI GNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY AND THE TRAN SFEREE HAS IN PART PERFORMANCE OF THE CONTRACT TAKEN POSSESSION OF TH E PROPERTY OR ANY PART THEREOF OR THE TRANSFEREE BEING ALREADY IN POSSES SION CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT THEN NOTWITHSTAN DING THAT THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED OR WHERE THERE IS AN INSTRUMENT OF TRANSFER THAT THE TRANSFER HAS NOT B EEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING I N FORCE THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM EN FORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN P OSSESSION OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRA CT. PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF T HE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 19. THE AFORESAID PROVISION OF THE TRANSFER OF PROP ERTY ACT HAS BEEN INCORPORATED IN THE ACT IN TERMS OF SUB-CLAUSE (V) TO SECTION 2(47) OF THE ACT. BECAUSE OF INSERTION OF SUB-CLAUSE (V) OF SECTION 2 (47) OF THE ACT BY THE FINANCE ACT 1987 W.E.F. 01.04.1988 A TRANSACTION F ALLING WITHIN THE SITUATION CONTEMPLATED BY SECTION 53A OF THE TRANSFER OF PROP ERTY ACT IS LIABLE TO BE TREATED AS A TRANSFER IN RELATION TO CAPITAL ASSE T FOR THE PURPOSES OF THE ACT EVEN IN THE ABSENCE OF A CONVEYANCE DEED. SECTION 53A OF THE TRANSFER OF PROPERTY ACT DEALS WITH THE DOCTRINE OF THE PART PE RFORMANCE OF A CONTRACT AND AS PER THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RELIANCE INTERNATIONAL CORPORATION PVT. LTD. 211 ITR 666 (D EL) THE AFORESAID PROVISION OF THE TRANSFER OF PROPERTY ACT DOES NOT CONFER TIT LE ON THE TRANSFEREE ON POSSESSION BUT MERELY IMPOSES A STATUTORY BAR ON TH E TRANSFEROR. IN OTHER WORDS THE DOCTRINE OF PART PERFORMANCE IS A DEFENS E AND IT IS A RIGHT TO PROTECT THE TRANSFEREES POSSESSION AGAINST ANY CHALLENGE T O IT BY THE TRANSFEROR ITA NO.236/PN/2013 A.Y. 2008-09 CONTRARY TO THE TERMS OF THE CONTRACT. THE MOOT QU ESTION IS IN CASE A CONTRACT OF THE AFORESAID NATURE PROVIDES A CONDITIONAL POSS ESSION CAN IT STILL BE CONSIDERED AS A TRANSFER FOR THE PURPOSES OF SECT ION 2(47) OF THE ACT. A PERUSAL OF SUB-CLAUSE (V) OF SECTION 2(47) OF THE A CT AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD REVEAL THAT IN ORDER TO ATTRACT THE SAID PROVISIONS THERE MUST BE AN AGREEMENT TO SELL AND PART PERFORMANCE OF THE CONTRACT WHICH IS COVERED BY SECTION 53A OF THE TRA NSFER OF PROPERTY OF ACT BY GIVING POSSESSION OF THE PROPERTY. IT IS ALSO WELL -UNDERSTOOD THAT SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD BE TRIGGERED ONLY IF THE TRANSFEREE HAS PERFORMED OR IS UNCONDITIONALLY WILLING AND READY TO PERFORM HIS PART OF THE CONTRACT. IN OTHER WORDS IF AN AGREEMENT PROVIDES THAT THE TRANSFEREE WILL NOT DO CERTAIN ACT SPECIFIED IN THE AGREEMENT UNLESS HE FULFILLS CERTAIN CONDITIONS MENTIONED THEREIN IT COULD NOT BE ASSUMED THAT THE TRANSFEREE IS WILLING TO PERFORM THE REMAINING PART OF THE CONTRACT UNCONDIT IONALLY. IN THE PRESENT CASE EVIDENTLY THE POSSESSION GIVEN TO THE DEVELOP ER IN TERMS OF THE AGREEMENT ON 13.09.2007 TO UNDERTAKE DEVELOPMENT WA S CONDITIONAL AS WE HAVE INFERRED EARLIER. IT IS ALSO NOT IN DISPUTE T HAT THE CONDITION WAS TO PAY FULL AND FINAL CONSIDERATION BEFORE CARRYING OUT THE DEV ELOPMENT ACTIVITY AND THE TRANSFEREE DEVELOPER DID NOT PAY THE COMPLETE CONSI DERATION. IN ANY CASE THE FACT THAT THE POSSESSION ENVISAGED IN THE AGREEMENT DATED 13.09.2007 WAS A CONDITIONAL POSSESSION IS NOT DISPUTED. THEREFORE IN SUCH A SITUATION IT COULD NOT BE SAID THAT THE DEVELOPMENT AGREEMENT OF SUCH TYPE WOULD BE AN AGREEMENT WHICH IS ENVISAGED TO TRIGGER THE OPERATI ON OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. ON THIS COUNT ITSELF WE FIND THAT THERE IS NO JUSTIFICATION FOR THE REVENUE TO ESTABLISH THE DATE OF TRANSFER ON THE STRENGTH OF SECTION 2(47)(V) OF THE ACT. HENCE WE ARE UNABLE TO UPHOLD THE STAND OF THE REVENUE ON THIS COUNT ALSO. 20. ON THE CONTRARY SINCE THERE IS NO DISPUTE TO T HE ASSERTIONS OF THE ASSESSEE THAT ACTUAL POSSESSION OF THE PROPERTY WAS GIVEN IN MARCH 2008 AS ITA NO.236/PN/2013 A.Y. 2008-09 CONFIRMED BY THE DEVELOPER IN ITS CONFIRMATION LETT ER DATED 19.11.2010 WE DEEM IT FIT AND PROPER TO HOLD THAT THE DATE OF TRA NSFER HAS TO BE UNDERSTOOD AS 01.03.2008 AND ACCORDINGLY THE PERIOD AVAILABLE WI TH THE ASSESSEE TO MAKE THE INVESTMENT QUALIFYING FOR DEDUCTION U/S 54EC HA S TO BE CALCULATED ACCORDINGLY. IN THIS VIEW OF THE MATTER THE INVES TMENTS IN THE BONDS OF REC LTD. OF RS.50 00 000/- MADE BY THE ASSESSEE ON 22.0 8.2008 IS WITHIN THE PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER AS P RESCRIBED IN SECTION 54EC OF THE ACT AND ACCORDINGLY THE ASSESSEE IS ELIGIBLE FO R DEDUCTION OF RS.50 00 000/- U/S 54EC OF THE ACT ALSO. THUS ON GROUND OF APPEAL NO.1 ASSESSEE SUCCEEDS. 21. THE SECOND GROUND OF APPEAL IS WITH REGARD TO A N ADDITION THE TAXABLE INCOME OF RS.2 55 000/- MADE BY THE ASSESSING OFFIC ER. THE SAID ADDITION IS ON ACCOUNT OF THE LAND DEVELOPMENT AGREEMENT ENTERE D BY THE ASSESSEE WITH RUDRA BUILDCON PVT. LTD.. IN TERMS OF THE SAID DEV ELOPMENT AGREEMENT APART FROM THE CASH CONSIDERATION THE DEVELOPER ALSO OFF ERED TO THE ASSESSEE A SEPARATE TENEMENT WHICH WAS TO BE CONSTRUCTED BY TH E DEVELOPER ON ITS OWN COST. TILL DEVELOPER WAS TO CONSTRUCT AND PUT THE ASSESSEE IN POSSESSION OF SUCH TENEMENT THE DEVELOPER WAS TO PROVIDE AN ALTE RNATIVE AND SUITABLE ACCOMMODATION TO THE ASSESSEE AND THE EXPENSE ON PR OVIDING OF SUCH ALTERNATE ACCOMMODATION WAS ALSO TO BE BORNE BY THE DEVELOPER. THE ASSESSING OFFICER NOTICED THAT IN THIS CONTEXT THE DEVELOPER HAD INCURRED A SUM OF RS.2 55 000/- ON ACCOUNT OF LEAVE AND LICENSE AG REEMENT FOR THE ALTERNATE ACCOMMODATION PROVIDED TO THE ASSESSEE. THE ASSESS ING OFFICER WAS OF THE VIEW THAT THE SAME WAS PART OF THE CONSIDERATION AN D ALTERNATIVELY SINCE THE AMOUNT HAS BEEN RECEIVED WITHOUT ANY CORRESPONDING LIABILITY IT WAS LIABLE TO BE TAXED AS A REVENUE RECEIPT. THE CIT(A) HAS ALSO AFFIRMED THE ACTION OF THE ASSESSING OFFICER AGAINST WHICH ASSESSEE IN APPEAL BEFORE US. ITA NO.236/PN/2013 A.Y. 2008-09 22. BEFORE US THE ISSUE RAISED BY THE ASSESSEE IS THAT THE COST OF PROVIDING ALTERNATE ACCOMMODATION TO THE ASSESSEE WAS IMBEDDE D IN THE COST OF CONSTRUCTION OF THE TENEMENT TO BE BORNE BY THE BUI LDER AND CANNOT BE SEEN DIFFERENTLY. IT IS ALSO POINTED OUT THAT SUCH COST HAD NO RELATION TO THE PROPERTY TRANSFERRED TO THE BUILDER FOR DEVELOPMENT PURPOSES AND THEREFORE IT COULD NOT BE TREATED AS SALE CONSIDERATION. IT WAS POINTED O UT THE IMPUGNED SUMS HAVE BEEN PAID TO THE LANDLORD OF THE PROPERTY WHICH WAS TAKEN ON RENT BY THE BUILDER FOR PROVIDING IT TO THE ASSESSEE. IT IS AL SO POINTED OUT THAT THE SAID AMOUNT COULD NOT BE A REVENUE RECEIPT AS HELD BY TH E LOWER AUTHORITIES ON AN ALTERNATIVE BASIS. 23. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REVENUE. 24. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THE PRESENT CASE ASSESSEE WAS OWNER OF LAND AT 799/A BHANDARK AR ROAD PUNE AND ASSIGNED THE DEVELOPMENT RIGHTS IN SUCH LAND TO A B UILDER M/S RUDRA BUILDCON PVT. LTD. VIDE AGREEMENT DATED 13.09.2007. APART F ROM RECEIVING THE CONSIDERATION PRICE IN CASH ASSESSEE WAS ALSO ENTI TLED TO RECEIVE FROM THE DEVELOPER A TENEMENT CONSTRUCTED OVER A PORTION OF LAND AND SUCH CONSTRUCTION WAS TO BE UNDERTAKEN BY THE DEVELOPER AT HIS OWN CO ST. WHILE UNDERTAKING DEVELOPMENT AND CONSTRUCTION THE DEVELOPER WAS TO P ROVIDE AN ALTERNATIVE ACCOMMODATION TO THE ASSESSEE FOR HIS USE AND THE A SSESSING OFFICER HAS POINTED OUT THAT A SUM OF RS.2 55 000/- WAS SPENT B Y THE DEVELOPER ON ACCOUNT OF SUCH ALTERNATIVE ACCOMMODATION. IN OUR CONSIDERED OPINION THE TAXABILITY OF THE AFORESAID SUM HAS TO BE SEEN AS A PART AND PARCEL OF THE TRANSACTION RESULTING IN ASSESSEE GETTING POSSESSIO N OF THE CONSTRUCTED TENEMENT FROM THE DEVELOPER. OSTENSIBLY THERE IS NO JUSTIFICATION FOR THE REVENUE TO SAY THAT IT IS A REVENUE RECEIPT BECAUSE IT IS NOBODYS CASE THAT THE ARRANGEMENT WITH THE DEVELOPER UNDERTAKEN BY THE AS SESSEE IS IN THE COURSE ITA NO.236/PN/2013 A.Y. 2008-09 OF ANY BUSINESS ACTIVITY. THEREFORE IN OUR CONSID ERED OPINION THE ASSESSING OFFICER SHALL RE-WORK THE TOTAL INCOME OF THE ASSES SEE ON THE IMPUGNED ASPECT IN THE AFORESAID LIGHT. ACCORDINGLY ASSESSEE SUCC EEDS ON THIS GROUND FOR STATISTICAL PURPOSES. 25. THE LAST GROUND IN THIS APPEAL IS WITH REGARD T O A DISALLOWANCE OF RS.36 024/- SUSTAINED BY THE CIT(A) OUT OF A TOTAL DISALLOWANCE OF RS.41 389/- MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 1 4A OF THE ACT. 26. IN BRIEF THE FACTS ARE THAT ASSESSEE WAS FOUND TO HAVE EARNED CERTAIN INCOMES WHICH DID NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT AND ACCORDINGLY THE ASSESSING OFFICER INVOKED SECTION 1 4A OF THE ACT AND SOUGHT TO DISALLOW SUCH EXPENDITURE WHICH WAS INCURRED IN RELATION TO EARNING SUCH INCOMES. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD MADE SUBSTANTIAL INVESTMENTS IN SHARES AND OUT OF THE EXPENDITURE IN CURRED ON ACCOUNT OF BANK CHARGES TELEPHONES VEHICLE PETROL SALARY ETC. CERTAIN PORTION THEREOF WOULD BE ATTRIBUTABLE TO THE EARNING OF THE EXEMPT INCOME WHICH WAS DISALLOWABLE U/S 14A OF THE ACT. BY APPLYING RULE 8D OF THE INCOME TAX RULES 1962 THE ASSESSING OFFICER MADE A DISALLOWANCE OF RS.41 389/ - WHICH WAS CARRIED IN APPEAL BEFORE THE CIT(A). 27. THE CIT(A) HAS UPHELD THE ACTION OF THE ASSESSI NG OFFICER IN-PRINCIPLE. HOWEVER THE CIT(A) FOUND MERIT IN THE PLEA OF THE ASSESSEE THAT THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.5 365/- COMPUTED BY THE ASSESSING OFFICER WAS UNJUST AND SINCE THE ENTIRE EXPENDITURE WAS DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE AND NOT CLAIMED AS AN EXPEN DITURE AGAINST ANY INCOME. ACCORDINGLY HE RETAINED THE DISALLOWANCE OF RS.36 024/- AGAINST WHICH ASSESSEE IS IN APPEAL BEFORE US. ITA NO.236/PN/2013 A.Y. 2008-09 28. BEFORE US THE ONLY ISSUE RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE INVOKING OF SECTION 14A OF THE ACT IS NOT JUSTIFIED IN THE PRESENT CASE BECAUSE THE MANDATORY SATISFACTION ENV ISAGED IN SECTION 14A(2) OF THE ACT HAS NOT BEEN RECORDED BY THE ASSESSING O FFICER. 29. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS REFERRED TO THE DISCUSSION IN THE ORDER OF THE ASSE SSING OFFICER TO POINT OUT THAT THE DISALLOWANCE HAS BEEN COMPUTED AFTER COMPLYING WITH THE REQUIREMENTS OF LAW. 30. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN OUR CONSIDERED OPINION THE PROPOSITION ADVANCED BY THE LEARNED CO UNSEL FOR THE ASSESSEE CANNOT BE DISPUTED SO HOWEVER WE DO NOT FIND THAT THE ASSESSMENT ORDER IN THE PRESENT CASE SUFFERS FROM THE VICE THAT IS SOUG HT TO BE MADE OUT BY THE ASSESSEE. IN-FACT THE ASSESSING OFFICER HAS NOTED THAT ASSESSEE HAS INCURRED EXPENSES ON ACCOUNT OF TELEPHONE PRINTING STATIONE RY VEHICLE RUNNING ACCOUNT WRITING CHARGES ETC. AND HE RIGHTLY CONCLU DED THAT CERTAIN EXPENSES HAVE BEEN INCURRED FOR EARNING OF EXCEPTED INCOME. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE DISCUSSION IN THE ORDER IN OUR VIEW THE REQUISITE SATISFACTION MANDATED IN SE CTION 14A(2) OF THE ACT STANDS FULFILLED IN THE PRESENT CASE AND THE ACTION OF THE ASSESSING OFFICER IN INVOKING SECTION 14A OF THE ACT IS HEREBY AFFIRMED. THUS ON THIS ISSUE ALSO ASSESSEE FAILS. 31. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED : 30 TH APRIL 2014. SUJEET ITA NO.236/PN/2013 A.Y. 2008-09 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III PUNE; 4) THE CIT-III PUNE; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE