DCIT Vs Mathikere Ramaiah Seetharam (ITAT Bangalore)
The Income Tax Appellate Tribunal, Bangalore, disposed of a batch of five appeals involving multiple assessment years, filed by both the Revenue and the assessee. The principal dispute raised by the Revenue concerned the tax treatment of amounts received under a Joint Development Agreement (JDA) relating to land. For the assessment year 2013–14, the Assessing Officer treated the assessee as being engaged in the business of property development, recharacterised the land as stock-in-trade, and taxed the receipts from the JDA as business income after allowing certain expenses. The Commissioner (Appeals) reversed this view, holding that the land was consistently shown as a capital asset, that mere entry into a JDA and revenue sharing did not convert it into stock-in-trade, and that the assessee’s role was limited to contribution of land while development was undertaken by the developer. It was also held that the receipts were advances and that no transfer under section 2(47) had occurred in the relevant year. A key factor was that identical issues had already been decided in favour of the assessee in earlier years by the Tribunal, and on the principle of consistency, the addition was deleted.
On appeal, the Tribunal noted that the issue was squarely covered by its earlier orders in the assessee’s own case, where it had been held that additions cannot be sustained merely on admissions in statements without corroborative evidence, and that income from sale of flats received under development agreements is taxable in the year of execution of sale deeds, not in the year of receipt of advances. Since the Revenue could not show any distinguishing facts or any reversal of the earlier decisions, the Tribunal upheld the Commissioner (Appeals)’s order and dismissed the Revenue’s appeal for 2013–14.
