Keshava Reddy Vs DCIT (ITAT Bangalore)
Material Facts
The assessee filed four appeals for Assessment Years 2014-15, 2018-19, 2019-20 and 2020-21 concerning taxability of income arising from a Joint Development Agreement (JDA) entered into with M/s Ecstasy Projects Pvt. Ltd. for development of land into a residential project. Under the JDA, the assessee received 44 flats upon completion of the project. During the relevant years, the assessee sold one flat in AY 2018-19 and 38 flats in AY 2019-20, while five flats remained unsold. Following a search under Section 132, assessments were made under Section 153A for AYs 2014-15, 2018-19 and 2019-20. The Assessing Officer brought to tax capital gains on the JDA, capital gains on sale of flats and deemed rental income on unsold flats. The CIT(A) confirmed the additions.
Procedural History
The assessee challenged the additions before the Tribunal and also raised technical grounds regarding the validity of assessments under Section 153A. The Tribunal decided the appeals on the merits without adjudicating the technical grounds.
Legal Issues
- Whether capital gains on transfer of land under the JDA were taxable in AY 2014-15 or AY 2018-19.
- Whether the developer’s cost of construction could be adopted as the sale consideration.
- Whether the assessee was entitled to deduction under Sections 54/54F.
- Whether capital gains on sale of flats were correctly computed.
- Whether deemed rental income under Section 23(5) was chargeable on the unsold flats.
Relevant Statutory Provisions
- Sections 2(47)(v), 23(5), 45(1), 45(5A), 53A of the Transfer of Property Act
- Sections 54 and 54F
- Sections 132 and 153A of the Income-tax Act, 1961
Parties’ Submissions
