TaxTMI 
TaxTMI 
2014 (12) TMI 888
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....was transferred to the developer or not?, if yes, then capital gain ought to be computed at Rs. 5,95,23,974/- computed by the Assessing Officer or some other figures is to be computed. 3. The brief facts of the case are that the assessee has filed his return of income on 31.12.2007 declaring an income of Rs. 3,54,480/-. The case of the assessee was selected for scrutiny assessment and notices u/s 143(2), 142(1) were issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that the assessee along with his brother Mr. Nandish Reddy were the owner and in possession of 2 acres and 14 guntas of land comprised at Survey No.36/5, Doddanekundi Village, KR Puram Hobli, Bangalore East Taluk. They entered into a joint development agreement on 9.8.2006 with M/s Akme Project Ltd. As per the agreement, the assessee and his brother jointly received refundable deposit of Rs. 1.00 crore for allowing the development on their land. The developer would construct a saleable area of 3.00 lakh square feet at its own cost, the assessee and his brother are entitled for 50% of the built up area i.e. 1.50 lakh sft minimum. The assessee and his brother had given ....
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....The emphasis was that only permissive possession was given to the developer and not the absolute possession of the property. It was given a license to do certain acts on behalf of the owner for development of the property. 6. The CIT (A) on an analysis of the agreement has held that no transfer of the asset in the case of the assessee as on the date of entering into joint development and executing the power of attorney taken place. Therefore, capital gain is not assessable, but the learned first appellate authority further observed that it is a case of exchange of assets, it is the market value of the built up area had to be considered as consideration for computation of LTCG in the year in which the built up area is handed over to the land owners. 7. Before us, the learned DR contended that the assessee and his brother have relinquished the 50% share in the land in favour of the builder by execution of the joint development agreement. They have fixed the consideration at 1.50 lakhs sft of constructed area. The consideration is in kind, whose value can be determined. They have given the possession of the land to the developer. Fifty per cent of the land of course would remain wit....
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....ntract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882); A bare reading of the above provision, it would reveal that in order to determine the capital gain as arisen to an assessee, there are basically three ingredients: i) There must be a capital asset; ii) It must have been transferred during the accounting period relevant to the assessment year. iii) Capital gain must have arisen to an assessee of such an asset. 11. The dispute between the assessee and the Revenue is that on execution of the joint development agreement on 9.8.2006, no transfer has taken place. The assessee has just exchanged the assets. He along with his brother has given the land to the developer who will develop that land and provide the developed area to the assessee. On the day when developer would hand over the developed area, only then the transfer of the land in lieu of the developed area would crystallize. For buttressing this contention the assessee has been harping upon clause 4.1 of the joint development agreement. The learned CIT (A) has noticed various clauses of the agreement in the impugned order while reproducing the written submissions of the assessee. W....
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....sis. It had shown sale price of assets as receipt. Subsequent to its year of accounting, assessee agreed to accept in lieu of cash fully paid-up shares in purchaser company for the amount representing WDV of said vehicle which was much lower then the price at which assets were sold. The assessee was assessed to capital gains tax on sum representing selling price less WDV of assets. The issue arose before the Hon'ble Court was whether without any understating that price was to be paid to any future time, price become payable forthwith in the relevant accounting period and assessee obtained a right to receive price in that year and its profit, therefore, capital gains has arisen in that assessment year. The Hon'ble Court has held that right to receive the price had accrued to the assessee in the accounting year relevant to the asst. yr. 1947-48. The Hon'ble Court further held that in the subsequent years what parties did would not have any bearing on their tax liability for that year. Similarly, Hon'ble Andhra Pradesh High Court has also considered this issue in the case of G.M. Omarkhan (116 ITR 950). The Hon'ble Court has considered four questions of law in this....
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....d in favour of the developer by the land owners which authorized a provisional permission of entering into the land, later on the owners agreed to execute an irrevocable general power of attorney in favour of the developer or their nominees authorizing them to book and sell the dwelling units falling to their shares. But the case in hand, by virtue of the development agreement, as seen from clause 5.2, the owners have agreed that the developer could sell, transfer the area to its clients. There is inherent difference between the facts of both the cases. 14. In the cross objection, it has been pleaded that market value of the land to be transferred to the developer as on the date of the joint development agreement should be adopted as a consideration. Section 48 of the I.T. Act contemplates that the income chargeable under the head, capital gains shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset, the following amounts namely; a) expenditure incurred wholly or exclusively in connection such transfer b) the cost of acquisition of the asset and the cost of any improvement. 15. Thus, from the....