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2011 (10) TMI 491 - AT - Income TaxLong term Capital gain - Transfer of Capital asset - JV between assessee company and other company PEPL for the purpose of property development - Revenue contended such transactions to come within definition of transfer attracting long term capital gains - Held that:- In present case, nothing has happened other than the execution of the agreements and bringing a small initial amount by PEPL and initiating the commencement of the project activities. As far as the land is concerned, there is only an agreement. Assessee is not transferring any right or any property to PEPL, instead it is assigning its landed property in favour of the SPV contemplated by the joint venture. Also, assessee is not selling its land to the proposed JV. It is to be seen that the newly formulated JV is nothing but an extension of the existing company. There cannot be a sale to oneself. Nothing is exchanged and no right is relinquished by the assessee in the impugned previous year. Therefore, execution of the development agreement, shareholders agreement and the power of attorney do not bring into existence any tangible asset that could be transferred between the parties. Hence, no transfer of capital asset took place and addition made towards long-term capital gains is directed to be deleted. Expectations and contemplations incorporated in the agreements are the business propositions made by the concerned parties, which have been deduced into enforceable agreements. Even though the agreements are enforceable, they themselves do not take the character of immovable properties. Lease rent received form Hotel - Business income or Income from other sources - Held that:- Since there is vacuum in the assessment order in this respect. Hence, matter should go back to the Assessing Officer for deciding the issue afresh in accordance with law - Decided partly in favor of assessee.
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