ACIT Vs Lakshmi Technosolutions Private Limited (ITAT Hyderabad)
Joint Development Agreements: ITAT Reiterates Possession & Consideration Are Key for Taxability- Registered JDA Without Possession Not Transfer u/s 2(47)(v): ITAT Hyderabad- No Transfer on Mere JDA – Capital Gains Tax Only When Flats Sold
The dispute arose from a Joint Development Agreement (JDA) dated 16.12.2013 between Lakshmi Technosolutions Pvt Ltd & M/s Sri Balajee Nirman & Estates. Under the JDA, Assessee was to receive 47.5% of the built-up area while the developer retained 52.5%. AO reopened the assessment u/s 147 by issuing notice u/s 148 on 16.03.2021 & assessed Short Term Capital Gains of ₹32.52 crores for AY 2014-15, holding that execution of the JDA amounted to a transfer u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act.
Assessee argued that no possession of land was handed over, the JDA itself stated that entry was only for development purposes, the title deeds remained with the assessee, & only a refundable deposit of ₹1.5 crore was received. Further, no construction activity commenced in FY 2013-14; building plans were sanctioned only in February 2015, relevant to AY 2015-16. Assessee had, in later years, disclosed capital gains on actual sale of flats aggregating to ₹44.66 crores, thus avoiding double taxation.
