Development arrangement and deemed sale analysis upheld in remand for fresh examination of transaction character and exchange deed

The Karnataka HC upheld a remand where the true character of a development arrangement, exchange deed and related construction/payment material had not been properly examined. It noted that the authorities below failed to assess the transaction in the correct factual and legal setting, including the effect of article 366(29A) on deemed sale. The revisional authority's direction for fresh inquiry was therefore justified, and the assessing authority was required to re-examine the matter on the available and additional material.

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Issues: Whether the revisional authority's order remanding the matter to the assessing authority was liable to be interfered with, in a dispute concerning whether the development arrangement amounted to a sale, deemed sale, or merely an exchange.

Analysis: The dispute turned on the true character of the transaction under the development arrangement, the later exchange deed, and the material relating to construction activity and payments to sub-contractors. The Court noted that the authorities below had not examined the exchange deed and other relevant material in the proper factual and legal setting, including the effect of clause (29A) of article 366 of the Constitution on deemed sale. In these circumstances, the revisional authority's direction for fresh examination by the assessing authority was found to be justified.

Conclusion: The remand order was affirmed and the assessing authority was directed to re-examine the matter on the available and additional material.

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