Rajesh D Gaikawad Vs ITO (ITAT Pune)
The Pune ITAT partly allowed the assessee’s appeal against the CIT(A), NFAC order for AY 2016-17 arising from reassessment under sections 147, 144 and 144B of the Income-tax Act, 1961. There was a 296-day delay in filing the appeal, which the Tribunal condoned after finding sufficient cause. The assessee had entered into a registered Joint Development Agreement (JDA) with Map Developers on 05.02.2016. The assessee contended that the JDA specifically required removal of encumbrances, including MSEB DP box, electricity lines, drainage lines and other obstacles, before possession could be handed over to the developer.
According to the assessee, these encumbrances were not removed during AY 2016-17, possession was not handed over, the commencement certificate was received only on 01.01.2020, and the project was registered under RERA on 14.12.2020. The AO nevertheless computed long-term capital gain of Rs.44,66,499, and the CIT(A) upheld the addition. The Tribunal examined the JDA and found that possession was not given to the developer during AY 2016-17 and that the specified encumbrances remained unresolved. It held that there was no transfer of the capital asset during the relevant assessment year as envisaged under section 2(47), and consequently no capital gain arose under section 45.
