Devi Dayal Vs ITO (ITAT Chandigarh)
ITAT Chandigarh held that execution of Joint Development Agreement [JDA] doesn’t constitute transfer of capital asset which would result in earning of capital gain. Accordingly, addition is deleted and appeal is allowed.
Facts- The assessee is in appeal against the order of ld. Commissioner of Income Tax (Appeals) dated 18.05.2024 passed for assessment year 2008-09. The solitary issue before us is whether on entrance of a Joint Development Agreement, would it be construed that assessee has transferred his capital rights in the land which would result in any capital gain for assessment in assessment year 2008-09.
Conclusion- Held that the assessee has contributed the land as a value and the developer would infuse capital, so that this Project can be developed. If these facts are being perused in the light of the judgement of Hon’ble Supreme Court in the case of CIT Vs Balbir Singh Maini, then it would reveal that under this execution of JDA, no capital asset has been transferred which can result capital gain assessable in the hands of the assessee. Apart from above, we have been informed that assessee alongwith other land owners have already taken change of Land User Certificate for development of this property as a residential/commercial and also converted it from capital asset to stock-in-trade, thus no capital gain would be taxable upon the assessee. Because of conversion of this capital asset in stock-in-trade, incidence of taxation would arise at that point of time. Accordingly, no capital gain is assessable in the hands of the assessee for assessment year 2008-09 because nothing was sold in assessment year 200809. The Project was developed later on and it was sold later on. We have been informed that due returns have been filed subsequently. Therefore, we delete the addition and allow the appeal of the assessee.
