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2012 (7) TMI 238 - AT - Income TaxTaxability of income from transfer of development rights - assessee jointly with the trust granted development rights to party in respect of part of the land for a consideration in which the share of the assessee was @ 32% receiving a sum of Rs.92.00 lacs during the assessment year and balance in instalments in subsequent years - assessee offering income from transfer of development rights @ 25% of the receipt taking the transfer as integral part of the development project - Held that:- The assessee had development rights in respect of certain piece of land, but instead of developing the land he transferred the development rights in respect of part of the land to a separate construction company and as per the agreement, the assessee jointly with the trust was required to convey the land to the proposed buyers and possession of the land had also been given during the year along with development rights. Thus parting away with the development rights in respect of part of the land forever, conclusion is derived that this was an independent activity having no connection with the development of the remaining part of the land. As the assessee was following mercantile system of accounting as per which income accrues when it becomes due for payment, thus the entire amount became due to the assessee in the relevant year on signing of development agreement and on handing over of the possession of the land - postponement of payment does not stop accrual of income - alternate claim of the assessee that in case the entire income was assessed, the cost of acquisition of development right has to be allowed as deduction is acceptable - partly in favour of assessee.
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