Case Law Details
Santosh Kumar Subbani Vs ITO (ITAT Hyderabad)
In the instant case, the assessee has entered into development agreement for construction of duplex houses and assessee was to receive the constructed area of 5000 sq.ft by virtue of development agreement. However, after entering into agreement, the developer has vanished and no real development took place till date as verified and confirmed by the AO through the Departmental Inspector. It appears that neither development has taken place nor developed area was received by the assessee. This fact was confirmed by the AO himself. From the above, it is clear that there was no real income except notional income as per the development agreement, which has never been received by the assessee. In the light of the above facts, the question whether the possession is lying with the developer or taken over by the assessee is the issue, which decides the taxability of capital gains. It appears that till date development agreement was not cancelled and no public notice was issued by the assessee for cancellation of development agreement as stated by the Ld. AR during the course of appeal proceedings. Therefore, we are of the considered opinion that the issue is required to be remitted back to the file of the AO with a direction to decide the capital gains after verifying whether the possession is taken back by the assessee or not and the assessee cancelled the development agreement or not. In case, the possession is taken back by the assessee and there was no development, the assessee succeeds in appeal. Accordingly, we remit the matter back to the file of AO to decided the issue fresh as per the directions given in this order. It is needless to say that the AO must afford reasonable opportunity to the assessee. Accordingly, the grounds raised by the assessee are treated as allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal by the assessee is directed against the order of CIT(A) – 5, Hyderabad, dated 30/05/2017 for the AY 2007-08.
2. All the grounds raised in this appeal are related to taxing the short term capital gains of Rs. 4,38,029/- invoking the provisions of deemed transfer u/s 2(47(v) of the IT Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
