2026 (5) TMI 38

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....tion and hence no taxable transfer arises. 3. The Ld. Commissioner of Income Tax (Appeals) and the Ld. Assessing Officer grossly erred in not appreciating the hard fact and reality that the FAILED JOINT DEVELOPMENT AGREEMENT will not trigger capital gains as there is no transfer of property as defined in the Act. 4. The fact and reality that the builder has handed over back the ORIGINAL TITLE DEEDS OF LAND along with the ORIGINAL link documents to the Appellant expressing his inability to complete the project itself proves that there is no transfer of land in favor of the Builder and hence no capital gains. 5. The Ld. Commissioner of Income Tax (Appeals) grossly erred in upholding the taxing of the capital gains by the Ld. Assessing Officer, even after observing in page no 8 line no.11 of CIT(A) order The Assessing Officers action of taxing the capital gains, though taken on the basis of the executed JDA without deeper verification, stands justified in law because the appellant has not rebutted it with credible proof Despite the appellant having duly explained the factual position and ongoing legal disputes. 6. The lower authorities erred in not ....

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....elopment Agreement dated 21-11-2013 and hence there is no Long Term Capital Gains 13. The major observation of the Ld. CIT(A) in dismissing the appeal is that the appellant has not produced any credible evidence and the appellants contention is that no proper opportunity nor time has been given to do so in view of the precarious situation wherein the Appellant has been place in the form of loss of his wifes death and travelling to Australia to stay with daughter for mental relief etc., 14. The appellant craves leave of honor to add, alter, amend or withdraw any of the above grounds at the time of hearing. PRAYER In the light of the above submissions, the Appellant prays the Honorable Bench to delete the addition made by the Ld. Assessing Officer and confirmed by Ld. Commissioner of Income Tax (Appeals) amounting to Rs. 66,31,250 in as much as the computation of capital gains in the assessment order is not in line with the provisions of the Income Tax Act and also there is no transfer of property under the Act to trigger capital gains and also the appellant has not received any consideration either in cash or in kind. ALTERNATIVELY the Honorabl....

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....vities and not in the nature of possession contemplated under section 2(47)(v) of the Act read with section 53A of the Transfer of Property Act, 1882. The Ld. AR placed reliance on the decision of the Hon'ble jurisdictional High Court of Telangana in the case of Smt. Shantha Vidyasagar Annam vs. ITO (170 taxmann.com 754), wherein it has been 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 accrue in the year of execution of the JDA. Accordingly, it was submitted that the addition made by the Ld. AO is liable to be deleted. 6. Per contra, the Learned Departmental Representative ("Ld. DR") relied upon the orders of the Ld. AO and the Ld. CIT(A) and submitted that execution of the JDA itself constitutes "transfer" within the meaning of section 2(47)(v) of the Act. It was contended that once the development agreement is executed, the provisions of section 45 of the Act get attracted and therefore, the Ld. AO has rightly brought the capital gains to tax. 7. We have carefully considered the rival submissions and perused the material available on record. We have also gone through p....

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....eement, 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 been paid.....