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2018 (6) TMI 1542 - AT - Income TaxIncome from capital gain - Enhancement of income - Transfer of ancestral property - JDA - hypothetical income - assessee has entered into an agreement to sell the property during the year and has received part payment and has also given part possession - Co-ownership - assessee had 30% share in the ancestral property - cancellation of agreement - Held that:- We do not find any force in the conclusion of the ld. CIT(A) because in our understanding of law qua the facts in issues, provisions of section 2(47)(v) of the Act the r.w.s 53A of the Transfer of Property Act 1882 are not applicable because this issue is now well settled by the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Balbir Singh Maini CS Atwal [2017 (10) TMI 323 - SUPREME COURT OF INDIA] wherein held a reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose -the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction. The income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, for want of permissions, the entire transaction of development envisaged in the JDA fell through. In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act. The assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessee by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains “arose” from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act. - Decided in favour of assessee.
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