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2014 (12) TMI 888 - AT - Income TaxLand transferred to the developer under the JDA as per section 2(47)(v) or not - Computation of Capital gain - Whether on execution of joint development agreement by the assessee along with his brother Mr. Nandish Reddy on 9.8.2006 with M/s. Akme Projects Ltd, the land comprising 2 acres and 48 guntas was transferred to the developer or not – Held that:- The assessee and his brother have executed an irrevocable license in favour of the builder to enter into the scheduled property and develop the same by putting up the construction - assessee has divested the possession of the land to the developer and in lieu of that, he along with his brother would receive consideration in the shape of 50% constructed area the similar issue has been decided in Additional Commissioner Of Income-Tax, AP Versus GM Omar Khan [1977 (9) TMI 12 - ANDHRA PRADESH High Court] - the moment the owners have handed over the possession to the developer a right to receive the developed area would accrue to the owners - it is a consideration in kind, which has a value, which can be worked out. Assessee contended that the market value of the land to be transferred to the developer as on the date of the joint development agreement should be adopted as a consideration - full consideration is the cost of construction incurred by the builder on the assessee's share of constructed area, because the assessee would receive constructed area in lieu of the land share - whatever is the expenditure incurred for constructing that area is a consideration in kind to the assessee - there cannot be any fault in the computation of capital gain made by the AO – thus, CIT (A) was not justified in holding that no capital gain has accrued to the assessee on account of transfer of land in this year – thus, the order of the CIT (A) is set aside and that of the AO is restored – decided in favour of revenue.
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