Skip to main content

Mere License to Enter into Property for Preparing Plan & to Carry on Necessary Formalities for Construction would not amount to Transfer of Possession

In ITO v. Raj Kaiwar, a division bench of the ITAT Chennai held that mere license to enter into the property for preparing plan & to carry on necessary formalities for construction cannot be treated as transfer of Possession for the purpose of determining capital gain under the provisions of the Income Tax Act. 

 In the year 2010, assessee entered into a joint development agreement as per which, he handed over the possession of the property to the developer. As per this agreement, the assessee is entitled for 70% of the constructed area and remaining 30% will go to the share of the developer. If the assessee gets anything more than 70%, the assessee shall pay for the excess constructed area at the rate of `9500/- per sq.ft. The project was not completed within three years due to delay in getting approval from the coastal zone regulation authority, who granted the same to the developer only in 2012. 

 Assessee earned Rs. `8,46,12,019/- towards capital gain and claimed exemption under section 54 of the Income Tax Act for the entire amount. The bench noted the fact that the physical possession of the property was handed over to the assessee only after the developer obtained the permission from the authority. It was, therefor held that, a mere license to enter into the property for preparing plan and to carry on necessary formalities for the purpose of constructing the building cannot be construed as handing over of physical possession of the property.

 Article referred: http://www.taxscan.in/mere-license-enter-property-preparing-plan-carry-necessary-formalities-construction-not-amount-transfer-possession-itat/9237/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Valuation Report of Jewellery once made is effective for Four Assessment Years

The division Bench of the Delhi High Court in Pr.Commissioner of Wealth Tax vs. Raghu Hari Dalmia held that a valuation report made by a registered valuer once adopted shall be in effect for four assessment years unless an event has occurred whereby the value is increased or decreased. The High Court made it clear that the event of “search” under Section 132 of the Income Tax Act, 1961 cannot compel the assessee to undertake a fresh valuation.
2 comments
Read more

Mere Agreement To Sell The Leased Property To Tenant Would Not Terminate Landlord-Tenant Relationship

In CIVIL APPEAL Nos. 1237­1238 OF 2019, Dr. H.K. Sharma vs Shri Ram Lal, the tenant had objected against the eviction suit filed by the landlord, claiming that the landlord-tenant relationship between them had ceased to exist by virtue of an agreement for sale entered between them and that he has already paid some money in advance based on the agreement. The tenant contented as the landlord-tenant relationship did not exist, the landlord cannot evict him. The matter went through various forums and finally landed before the Supreme Court in appeal. The Supreme Court referring to the judgment in Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors., held that in the instant case the lease agreement included no clauses on the fate of the tenancy. A fortiori, the parties did not intend to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property. In other words, if the parties really intended to surrender their tenancy ...
2 comments
Read more