2019 (3) TMI 391

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....60 lakhs in the year under consideration. 2. The facts relating to the issue are stated in brief. The assessee is a owner of property called "Mahesh Kutir" in Chembur, which was purchased by him in the year 1999. The building was having two storeys. Consequent to the amendment of D.C regulations, the additional construction became permissible on the above said land on purchase of TDR from the market. Accordingly, the assessee entered into a development agreement on 27-07-2002 and also a supplementary agreement on 11-08-2002 with M/s U.S.Magnet Pvt Ltd. As per the above said agreements, the assessee was entitled to receive a sum of Rs. 49.50 lakhs in cash and two flats that are going to be constructed. 3. The AO noticed that the assess....

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.... is no transfer at all. 5. The Ld CIT(A), however, affirmed the order passed by the AO. The Ld CIT(A), by taking support of various case laws, held that (a) the development rights are capital asset (b) transfer of development right involves "transfer" within the scope of Income tax Act. The Ld. CIT(A) further held that, under the development/supplementary agreement, there was only "promise of allotment" of the flats in the new building. He held that the flats were actually allotted to the assessee only on 15-04-2007 and hence the assessing officer was right in assessing the capital gains in AY 2008-09. The assessee is aggrieved. 6. The submission of the Ld AR is that the assessee has received the part consideratio....

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.... undisputed fact remains that the assessee has entered into development agreements in the year 2002. As per the supplementary agreement, the assessee was to receive Rs. 49.50 lakhs and two flats from the developer. Hence the flats received by the assessee are only a part of total sale consideration receivable by the assessee as per the development agreement. There cannot be any dispute that the capital gains liability shall arise upon completion of "transfer" of Capital asset. Hence the assessee cannot postpone the capital gains tax liability on account of delay in receipt of sale consideration and on the very same criteria, the AO cannot bring capital gains to taxation in the year of receipt of part of sale consideration. Accordingly we ar....