2026 (2) TMI 145

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a settled law that mere entering into development agreement cannot construe transfer of capital asset. 4. The Ld. CIT(A) has confirmed the addition without understanding the facts and circumstances, as well as settled law and various judicial precedents. 5. The Ld. CIT(A) ought to have considered the submissions of the Appellant as there was no circumstance of arising any capital gains on entering into development agreement. 6. Without prejudice to the above, the Ld. AO ought to have allowed the claim u/s 54F as the Appellant is rightfully eligible in the light of the facts and circumstances of the case. 7. The Appellant craves to add/leave/alter/modify any other ground of appeal at the time of hearing. 3. The brief facts of the case are that the assessee is an individual deriving income from business and profession and house property. The assessee filed his return of income for the Assessment Year 2016-17 on 16.01.2018 declaring total income of Rs. 5,85,350/-. A search and seizure operation under section 132 of the Income Tax Act, 1961 ("the Act") was conducted on 09.08.2018 in the case of the assessee along with M/s Moksha Infracon Private L....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f the later decision of the Hon'ble Telangana High Court in the case of Smt. Santha Vidyasagar Annam vs. ITO, 170 taxmann.com 754, wherein it was held that where no consideration is received and possession is handed over only for limited purpose of development, no capital gains can be said to have accrued in the year of execution of the JDA. The Ld. AR further invited our attention to the fact that Shri Manohar Reddy Cheruku, who is also a party to the same JDA, was similarly situated, and this Tribunal in the case of Shri Manohar Reddy Cheruku vs. DCIT in ITA No. 1625/Hyd/2025 for AY 2016-17 vide order dated 05.12.2025 has decided the identical issue in favour of the assessee. It was therefore submitted that on the principle of consistency, the appeal of the present assessee deserves to be allowed. 6. Per contra, the Learned Departmental Representative ("Ld. DR") supported the orders of the lower authorities and submitted that as per clauses 22 and 23 of the JDA, the landowners had granted rights to the developer which amounted to transfer within the meaning of section 2(47)(v) of the Act read with section 53A of the Transfer of Property Act. Accordingly, it was submitted that ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lopment agreement, the possession of the immovable property has not been handed over to the developer as contemplated under Section 53A of the Transfer of the Property Act, 1882. Therefore, the same does not fall within the definition of 'transfer' under Section 2(47) of the Act. 18. Insofar as reliance placed by the learned Senior Standing Counsel for the Revenue in Potla Nageswara Rao (supra) is concerned, the same is an authority for the proposition that element of factual possession and agreement are contemplated as transfer within the meaning of Section 2(47) of the Act. It has further been held that when the transfer is complete, the consideration mentioned in the agreement for sale has to be taken into consideration for the purpose of assessment of income. In the instant case, under the development agreement there is no transfer and the consideration has also not been paid. Therefore, the aforesaid decision of the Division Bench has no application to the fact situation of the case. Similarly, in the case of Arvind S Phake (supra), the possession was handed over to the developer and the entire consideration was paid. In the instant case, consideration has not....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hold that no taxable capital gains arose in the hands of the assessee during the year under consideration. Accordingly, we direct the Ld. AO to delete the addition of Rs. 3,65,904/- made on account of long-term capital gains. 10. In the result, appeal of the assessee is allowed. Order pronounced in the Open Court on 16th January 2026. ============= Document 1 Activo 639hb 1272/2016 Rs. 100 एक सौ रुपये · VABANGAL. 15 MS 2015 ONE HUNDRED RUPEES 5.100 STICI INDIA INDIA NON JUDICIAL 244774 BoomTes dreimal TELANGANA N. SRILEKI LICENCED STAMP VENCOR Ucarpe No.21-11-34/2003, ALLNG.21.11- - Denide Hand Post Office Hanimkonda, Waranga Cast. Pin-506 001 Cell: 9963310000 Salvo. 22916 De: 14-09-2015. Rs.100/- Ch. Arund Byvi Wie. Ch. Manchar Boddy. N &. Itanamkonda Jur WVhour Ses Sas Estates ami others- Hanamkonda DEVELOPMENT AGREEMENT CUM IRREVOCABLE GENERAL POWER OF ATTORNEY executed on this This deed of "Development agreement cum irrevocable G.P.A" is 19th day of January 2016. BY AND BETWEEN SRI SAI ESTATES a partnership concern with Regd. Firm No. 221/2006, dated 23-11-2006, its o....