Vasudeva Rao Vs ITO (ITAT Hyderabad)
In this case, the assessee entered into a Joint Development Agreement (JDA) and the Assessing Officer taxed ₹66.31 lakh as capital gains, treating the agreement as a “transfer” under Section 2(47). The CIT(A) upheld the addition.
The ITAT examined the terms of the JDA and found that possession was given only for a limited purpose of development, and not as contemplated under Section 53A of the Transfer of Property Act. Further, it was undisputed that no consideration was received by the assessee during the relevant year.
Relying on the Telangana High Court decision in Smt. Shantha Vidyasagar Annam, the Tribunal held that unless consideration is received and possession is handed over in the legal sense, no “transfer” occurs for capital gains purposes. Since both conditions were absent, the essential trigger for taxation under Section 45 failed.
Accordingly, the ITAT deleted the entire capital gains addition, holding that no taxable event arose in the year of JDA execution. The appeal was allowed in full
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by Shri Vasudeva Rao Dhannavada, (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 24.09.2025 for the A.Y 2014-15.
