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Tax Publishers ITO v. Abdul Kayum Ahmed [ITA No. 5851/Mum/2018, dt. 6-7-2020] : 2020 TaxPub(DT) 2744 (Mum.-Trib.) Developmental rights transferred by civil contractor with part consideration received in assessment year and offered as business income and possession given -- Applicability of capital gains section 2(47)(v) thereof. *Facts:* Assessee a civil contractor transferred developmental rights in a property to one Shivalik Ventures for a consideration of Rs. 336 lakhs of which Rs. 100.8 lakhs was received and offered as business income adopting proportionate revenue recognition method under AS-9 of ICAI. Assessing officer in a reopened assessment questioned taxability of the balance amount as well under section 2(47)(v) alleging applicability of section 53A of Transfer of Property Act, 1882. On appeal the reassessment was negatived by Commissioner (Appeals). An aggrieved department went in higher appeal to ITAT- Held in favour of assessee against the department holding that section 2(47)(v) would apply only to a transfer arising under capital gains and not to a case where assessee has claimed it as business income. Assessee had adopted proportionate revenue recognition method consistently and has offered balance income to tax in the future years as well adopting mercantile system of accounting. The balance consideration cannot be alleged as income even if possession was granted in the said year of assessment under real income principles under income from business or profession. CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) : 1962 TaxPub(DT) 0307 (SC) read into. *Editorial Note:* Reference be made to M/s. Shivalik Venture Pvt. Ltd. v. DCIT (Mumbai-ITAT) -- ITA No. 2008/Mum/2012/Assessment Year 2009-10, decided on 19-8-2015 : 2015 TaxPub(DT) 3245 (Mum-Trib) wherein the said entity Shivalik Ventures have transferred a similar property development rights to its subsidiary and claimed the transfer benefit to fall under section 47(iv) thus the capital gains being exempt from tax. On a claim by department that the said capital gains needs to be taxed under MAT provisions; the ITAT held it in favour of the assessee. Is it the same property involved in this case or the reopening in this case itself was an after effect of Shivalik Venture ITAT decision is not known. It appears so however that both these cases are interrelated. Reference be made to Article titled -- "MAT provisions whether exclude tax free/exempt capital gains?"

Tax Publishers

ITO v. Abdul Kayum Ahmed [ITA No. 5851/Mum/2018, dt. 6-7-2020] : 2020 TaxPub(DT) 2744 (Mum.-Trib.)

Developmental rights transferred by civil contractor with part consideration received in assessment year and offered as business income and possession given -- Applicability of capital gains section 2(47)(v) thereof.

Facts:

Assessee a civil contractor transferred developmental rights in a property to one Shivalik Ventures for a consideration of Rs. 336 lakhs of which Rs. 100.8 lakhs was received and offered as business income adopting proportionate revenue recognition method under AS-9 of ICAI. Assessing officer in a reopened assessment questioned taxability of the balance amount as well under section 2(47)(v) alleging applicability of section 53A of Transfer of Property Act, 1882. On appeal the reassessment was negatived by Commissioner (Appeals). An aggrieved department went in higher appeal to ITAT-

Held in favour of assessee against the department holding that section 2(47)(v) would apply only to a transfer arising under capital gains and not to a case where assessee has claimed it as business income. Assessee had adopted proportionate revenue recognition method consistently and has offered balance income to tax in the future years as well adopting mercantile system of accounting. The balance consideration cannot be alleged as income even if possession was granted in the said year of assessment under real income principles under income from business or profession.

CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) : 1962 TaxPub(DT) 0307 (SC) read into.

Editorial Note: Reference be made to M/s. Shivalik Venture Pvt. Ltd. v. DCIT (Mumbai-ITAT) -- ITA No. 2008/Mum/2012/Assessment Year 2009-10, decided on 19-8-2015 : 2015 TaxPub(DT) 3245 (Mum-Trib) wherein the said entity Shivalik Ventures have transferred a similar property development rights to its subsidiary and claimed the transfer benefit to fall under section 47(iv) thus the capital gains being exempt from tax. On a claim by department that the said capital gains needs to be taxed under MAT provisions; the ITAT held it in favour of the assessee. Is it the same property involved in this case or the reopening in this case itself was an after effect of Shivalik Venture ITAT decision is not known. It appears so however that both these cases are interrelated.

Reference be made to Article titled -- "MAT provisions whether exclude tax free/exempt capital gains?"