Case Law Details
Vankadari Chinna Reddappa Chetty Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that income from sale of developed flat, obtained under Joint Development Agreement (JDA), is to be treated as income from short term capital gain/ long term capital gain and not as income from business.
Facts- The assessment under section 143(3) of the Income Tax Act was completed treating income from LTCG from sale of residential flats under JDA and LTCG from sale of agricultural plots as ‘Income from Business’.
Aggrieved by the assessment order, the assessee preferred an appeal before CIT(A). Subject to this, the assessee was also subject to a search proceeding u/s. 132 of the Income Tax Act 1961 Consequent to such search, an assessment under section 153C of the Income Tax Act 1961 was carried out an order under section 143(3) of the Income Tax Act 1961 was passed. Against the assessment order assessee filed an appeal before the ITAT.
Conclusion- This assessment has been settled by the assessee under VSVS Scheme, 2020 when it is pending before ld. CIT(A) vide order dated 23.3.2021 indicating full and final settlement of tax arrears u/s 5(2) r.w.s. 6 of Direct Tax Vivad Se Vishwas Act, 2020 in Form 5 has been passed by the Principal Commissioner of Income Tax (Central), Bengaluru confirming the payment of Rs.1,64,73,385/- under VSVS scheme, 2020. Thus, it means that assessment of income from “Ramya Residency” project has been accepted by the department as income from short term capital gain. Being so, lower authorities are not justified to treat the profit from same Ramya Residency as income from business instead of claim of assessee as income from short term capital gain/long term capital gain as the case may be in the assessment order passed u/s 143(3) of the Act dated 28.3.2016. Accordingly, we direct the AO to treat the income from profit earned from the sale of flat in Ramya Residency through JDA as income from short term capital gain/long term capital gain only instead of income from business. Ordered accordingly.
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