Case Law Details
Principal CIT Vs Mr. Fardeen Khan (Bombay High Court)
FACTS –
Assessee entered into Development agreement with M/s. Godrej on 20.04.2007. As per development agreement, amount of INR 13.75 Crore was paid as deposit to the assessee. INR 55 Crore was notional cost of the land and on sale of constructed property, 30% of its sale proceeds were to be received by the assessee.
During the assessment proceedings, AO called upon assessee to explain why the transaction of developing houses on its land should not be considered as transfer in terms of section 2(47)(v) and 2(47)(vi) and chargeable to ‘capital gain’.
Assessee submitted that the land was then converted into stock-in-trade on 01.04.2007. Assessee submitted that development agreement not being registered under the Indian Registration Act was not transfer as per section 2(47)(v) and even section 2(47)(vi) would not apply as there was no transfer of land to M/s. Godrej.
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