Estin Tie Up Pvt. Ltd. Vs A.C.I.T. (ITAT Kolkata)
ITAT Kolkata held that ownership, transfer, and transaction resulting into profit from business or profession and capital gain in respect of joint development agreement needs more verification. Accordingly, matter remanded back for fresh adjudication.
Facts- The assessee is a private limited company engaged in the business of real estate. The return of the assessee was selected for scrutiny and order u/s 143(3) of the Act was passed wherein AO made an addition of ₹76,04,62,428/- on account of long-term capital gains on transfer of land, leading to the assessed income of ₹76,05,98,310/-. Aggrieved with the assessment order, the assessee filed an appeal before CIT(A). CIT(A) partly allowed the appeal of the assessee. Being aggrieved, both assessee and revenue has preferred the present appeal.
Conclusion- Held that the Bench was of the view that the matter needs to be examined by considering the entirety of the facts of the case and the order of the Ld. CIT(A) is set aside and the issue is remanded to him to decide the appeal afresh. Since the facts of the assessee being 100% subsidiary of the developer was not before the Ld. AO, it needs to be examined as to whether the transfer can be said to have taken place at all. The land till date is not registered in the name of the developer or even the assessee and only the demerger had taken place. It is to be examined as to who is the actual owner of the land and in case it is not the assessee then the entire transaction would result into profit from business or profession and not the capital gains as without the rightful ownership and in view of the decision of the Hon’ble Supreme Court in the case of CIT vs Balbir Singh [2017] 86 taxmann.com 94 (SC) after 01.04.2001, the transfer of immovable property can only be done through a registered sale deed. The assessee not being the owner of the land, there is no question of any transfer to the developer or charging of capital gains as the builder has merely constructed property on the land which continues to be in the possession of the original owner and the assessee is getting the proportionate share of profit on the land sold which is to be treated either as business income being an adventure in the nature of trade or income from other sources as the case may be. All these issues need to be examined by the Ld. CIT(A) by calling for the remand report from the Ld. AO as well as the details from the assessee and therefore, the issue is remanded for adjudication afresh and to give a categorical finding regarding the grounds of appeal raised by the assessee as well as the grounds of appeal raised by the Revenue before us and also after considering finding of the facts which now emerged.
