|The Tax Publishers2020 TaxPub(DT) 5523 (Hyd-Trib) : (2021) 186 ITD 0217
INCOME TAX ACT, 1961
To decide capital gain leviability on development agreement entered into by assessee, matter was remanded to AO for verifying as to whether possession was taken back by assessee or not and assessee had cancelled development agreement or not.
Capital gains - Transfer under section 2(47)(v) - Transfer of land under development agreement -
Assessee entered into development agreement and transferred the land to developer. He claimed that the developer did not perform the construction activity, and hence, argued that there was no case of capital gains. AO also found that no development had taken place on the said land. However, since the assessee had handed over the property as per the agreement to the developer, he was of the view that it was hit by section 2(47)(v) and accordingly, determined short-term capital gains. Held: The fact that no development had taken place on the land transferred by assessee to developer was verified and confirmed by AO himself. Thus, it was clear that only notional income as per development agreement had been received by assessee, however, no real income had been received. Further, till date development agreement had not been cancelled and no public notice was issued by assessee for cancellation of development agreement. Therefore, issue was remitted back to AO with a direction to decide capital gains after verifying whether possession was taken back by assessee or not and assessee had cancelled development agreement or not.
FAVOUR : Matter remanded.
A.Y. : 2007-08
IN THE ITAT, HYDERABAD 'A' BENCH
SUBSCRIBE FOR FULL CONTENT