Case Law Details
Adinarayana Reddy Kummeta Vs ACIT (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). Accordingly, I agree with the order of the CIT(A), confirming the capital gains during the year.
FULL TEXT OF THE ITAT JUDGMENT
These are four appeals by different assessees against the order(s) of the Commissioner of Income Tax (Appeals)-5, Hyderabad, for the AY. 2009-10. Since common issues are involved in all these appeals, these are heard together and decided by this common order. For the purpose of convenience, the facts in ITA No. 1714/Hyd/2016 in the case of Shri M. Bali Reddy are considered here under:
2. Briefly stated, assessee is a salaried employee, has filed his return of income for the AY. 2009-10 on 29-07-2009 admitting the total income at Rs. 8,62,770/-. The return was processed u/s. 143(1) of the Income Tax Act [Act]. Subsequently, on 17-12-20 13, a notice u/s. 148 was issued by the Assessing Officer (AO) for the year under consideration. Assessment u/s. 143(3) r.w.s. 148 was made on 10-03-20 15 on a total income of Rs. 34,04,239/- in which an addition of Rs. 25,41,474/- was made under the head Short Term Capital Gains in respect of Development agreement – cum – GPA entered into by assessee with M/s. Diamond Infra relating to assessee’s land of 267 Sq. Yds., bearing Plot No. 20, situated in Survey No. 145/2, Hydernagar Village, Bala Nagar Mandal, Ranga Reddy District, which was registered on 12-05-2008.
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