AI Drafter 
TaxTMI 
TaxTMI 
2018 (8) TMI 1249
X X X X Extracts X X X X
X X X X Extracts X X X X
....the estimated full value of consideration for the purpose of computation of Capital gains which was in the womb of the future ignoring the position of law that full value of consideration cannot be estimated under Sec. 48 of the Income tax Act, 1961 2. The Learned CIT(A) erred in confirming that the transaction under Development agreement with S/Shri. Milind Madhukar Kamble and Paparao Laxminarayan Satyam as a transfer u/s. 2(47)(v) as on the date of entering the agreement. 3. The Learned CIT(A) erred in confirming the estimation of full value of consideration for the purpose of the Computation of Capital Gain when assessee claimed that Capital gain is not computable as the consideration has neither been received nor accrued during the year under assessment. 4. The Learned A.O. & CIT(A) erred in applying the valuation u/s. 50C of the Income tax Act, 1961 on the Development agreement and taxing the same as Capital gain. 5. The Learned CIT(A) erred in taxing the Capital gain as the consideration in the form of developed area of 35% is concerned, the same was neither received nor had accrued and hence no occasion to bring it to tax could arise." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e consideration at the hands of the assessee the AO determined the long term capital gain at Rs. 75,11,316/-. Though, the assessee challenged the addition made on account of long term capital gain before the CIT(A), however, the CIT(A) also sustained the addition made by the AO holding that on entering into the development agreement the assessee has transferred the immovable property in terms of Section 2(47)(v) of the Act. While doing so he relied upon certain judicial precedents including the decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT 260 ITR 491. 6. The learned A.R. submitted, though the assessee has entered into a development agreement on 05.09.2013, which falls within the relevant previous year, however, as per the terms of the development agreement the consideration to be received by the assessee is 35% of the developed residential area in the housing project and there was no consideration in terms of money. He submitted, since the project is not yet complete and the assessee has not received the consideration as per the terms of development agreement, no capital gain was accrued in the impugned assessment year. He sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reveal that the consideration to be received by the assessee in terms of development agreement on transfer of the land was 35% of the built up residential area. Therefore, until the project is complete and the assessee receives 35% of the built up residential area as per the terms of the development agreement, it cannot be said that the assessee has received consideration towards transfer of immovable property. It is a matter of record that there was some dispute between the parties with regard to completion of the project and the assessee has initiated legal action against the developer. Therefore, when there is uncertainty with regard to the fact whether assessee would be receiving even 35% of the built up residential area in terms of the agreement, there is no question of accrual of long term capital gain in the impugned assessment year, particularly when nothing has happened with regard to development of project in the impugned assessment year. Merely because the assessee has entered into a development agreement, it does not presuppose transfer in terms of Section 2(47)(v) of the Act. As per Section 53A of the Transfer of Property Act, 1882, which has been referred to in Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to which the answer was "we do not know". 8. We find that on facts the impugned order of Tribunal has held that no income has been accrued or received of the value of 18000 sq.feet of constructed area under the development agreement dated 16.6.2006. This on account of the fact that the agreement dated 16.6.2006 was not acted upon as it came to be superseded/modified by the Tripartite agreement dated 6.7.2007. This was the position when the return of income was filed. The income accrued and earned under the subsequent agreement dated 6.7.2002 was offered as capital gains in the subsequent years. Therefore, on the application of the real income theory, the Tribunal held that on these facts there would be neither accrual nor receipt of income to warrant bringing to tax to the constructed area of 18,000 sq.ft which has not been received by the respondent-assessee. As observed by the Apex Court in CIT vs Shoorji Vallabhdas 46 ITR 144 : "Income-tax is a levy on income. No doubt, the Income-Tax Act takes into account two points of time at which the liability to tax is attracted viz., the accrual of the income or its receipt; but the substance of the matter is the income.....