Case Law Details
K. Vijaya Lakshmi Vs Asst. (ITAT Hyderabad)
As far as the issue of bringing to tax the capital gains during the year, it was the contention of assessee that possession was not given and assessee retained possession of the property thereby the capital gains arises in the year in which the new flats were handed over. Ld. Counsel in his arguments, elaborately read out various portions of the agreement to substantiate assessee’s claim, whereas the Ld.DR relied on various other clauses to state that possession was handed over. As far as the development agreement is concerned, it is noticed that assessee did permit M/s. Diamond Infra to enter into the premises, do all the necessary things for construction of apartments. It is the common agreement by many people, who has purchased lands/plots in the developed area. It is also noticed that the said assessee went to construct the apartments and hand over the flats as per the schedule to the respective persons, including assessee. Some of the agreement holders also sold the flats in semi-finished condition or in fully developed condition, whereas few like assessee retained the flats as such. Therefore, I am of the opinion that assessee did hand over the possession and provisions of Section 2(47) regarding transfer certainly get attracted. Since there is part performance of the contract in the nature referred to in Section 53 of Transfer of Property Act, 1882, Clause(v) of Section 2(47) is clearly attracted. Therefore, I agree with the stand of AO that the capital gains did arise during the year under consideration as the agreement was entered on 12-05- 2008. Accordingly, the issue of bringing to tax the capital gains during the year is to be upheld. Even though Ld. Counsel tried to distinguish the jurisdictional High Court judgment in the case of Sri Potla Nageswara Rao Vs. DCIT (supra) that it applies to a case, where there is no sale consideration and the issue is on non-receipt of sale consideration. I do not agree with that as the issue of transfer in the case of development agreement and consequent levy of capital gain in the year of entering into development agreement has been crystalised by the said judgment of the jurisdictional High Court in the case of Sri Potla Nageswara Rao Vs. DCIT (supra). Ld. Counsel relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Balbir Singh Maini (supra), where the entire transaction of development of land envisaged in JDA fell through. In those facts of the case, the Hon’ble Supreme Court held that no profits or gains arose from the transfer of capital asset so as to attract Section 45 and 48 of the Act. However, in the present case, the agreement has been undertaken and has been completed, therefore the jurisdictional High Court decision still holds good. Accordingly, I agree with the order of the CIT(A), confirming the capital gains during the year.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These are two appeals by two assessees against the orders of the Commissioner of Income Tax (Appeals)-5, Hyderabad, for the AY. 2009-10. Since common issues are involved in both of these appeals, these are heard together and decided by this common order. For the purpose of convenience, the facts in ITA No. 1561/Hyd/2016 in the case of Smt. K. Vijaya Lakshmi are adjudicated here under:
2. Briefly stated, assessee is an individual, deriving income from salary. Assessee filed her return of income admitting income from salary at Rs. 2,01,270/- for the AY. 2009-10 on 08-06-2009. She entered into an agreement with M/s. Diamond Infra. She was the owner of 270 Sq.Yds. of land situated at Sy.No. 145 (part), Plot No.9, Hydernagar Village, Balanagar, Kukatpally Municipality, Ranga Reddy District having acquired the same from the owners in the year 2000. There are 17 other persons who acquired plots in the said survey number from the same vendors. All the plot owners including assessee entered into a Development Agreement on 12-05-2008. According to the Development Agreement, each land owner would receive constructed area of 3365.29 Sq. ft. Assessee is of the view that –
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