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2015 (8) TMI 363 - AT - Income TaxYear of taxability of capital gains - Revenue bringing to tax the capital gains on the reason that transfer has occurred during the year - whether there was no transfer of property as per Section 2(47) under Clause-5 and Clause-3(b) of the development agreement dt. 11-02-2004? - Held that:- There is no dispute with reference to the fact that the first agreement was dt. 11-02-2014 in which assessee was entitled to 50% of the constructed area. In case, the possession was given as per the contention of Revenue consequent to this agreement, certainly the capital gains was leviable in AY. 2004-05 itself, as the agreement entered has been fulfilled by giving possession if not immediately but after some time. Therefore, following the principles of jurisdictional High Court in the case of Potla Nageswara Rao Vs. DCIT [2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT ], which Ld.CIT(A) relied upon, the capital gains is certainly attracted on entering into development agreement, even if consideration was not received. In that way, assessee's contention that capital gains cannot be brought to tax in this assessment year( AY 2005- 06) is valid. Both AO and CIT(A) are not correct in contending that year of possession or the deemed possession is the year of capital gains, ignoring the year of agreements entered by assessee and the terms of agreement. If this logic of Revenue is accepted, then a situation may arise that parties try to incorporate a clause that possession was handed over much earlier to defeat the levy of capital gains. It also does not answer sale to existing tenant who is in possession of property from a longer period. Therefore taking possession alone in to consideration for levy of capital gains ignoring the date of agreement and terms of agreement is not according to law. - Decided in favour of assessee,
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