HC : Property 'transfer' not effective upon mere development agreement's execution, applies 'Chaturbhuj' ratio

Bombay HC upholds ITAT order, treats the date of handing over of physical possession of property by assessee-individual (i.e. March 1, 2008), and not the date of execution of Development Agreement (i.e. September 13, 2007), as the date of transfer for AY 2008-09; Accordingly, HC allows assessee’s capital gains exemption claim u/s. 54EC by holding that the investments made by assessee in August 2008 was within the 6 months deadline prescribed u/s. 54EC; Revenue had denied Sec 54EC relief by contending that 'transfer' of asset was effected on the date of execution of Development Agreement (i.e. September 2007) and not the date of handing over of physical possession of property; HC notes the ratio of co-ordinate bench ruling in Chaturbhuj Dwarkadas Kapadia wherein it was held that the date of execution of contract is relevant provided the terms of the contract indicate passing off or transferring of complete control over the property in favour of the developer; HC notes that the terms of the development agreement provide that only upon full payment of consideration, the construction shall be undertaken by the developer; HC further observes that on the date of execution of the development agreement, the entire consideration was not received by assessee; HC also observes that when the possession was handed over by assessee to the developer on March, 1, 2008 the entire consideration under the development agreement was received by assessee and complete control over the property was passed on to the developer; Thus, upholds ITAT order holding date of parting with possession as the date of transfer, remarks that “This finding is fully consistent with the law laid down by the Division Bench in the case of Chaturbhuj Dwarkadas Kapadia.”:HC