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2018 (11) TMI 1901 - AT - Income TaxLong term capital gains - assessee had entered into Development Agreement - assessee had acquired the property in the year 1989 which was registered in the name of assessee - AO holds that the said property was acquired out of funds of husband as the assessee had no income - plea of assessee was that the said property was acquired out of joint funds and jointly belongs to all the members of family i.e. assessee, her husband and her sons and daughters - assessee in the year under consideration had entered into Development Agreement and had received an advance which was in the form of security deposit - HELD THAT:- The assessee is in appeal for assessment year 2012-13 i.e. the financial year in which the Development Agreement was entered into between the parties. At the time of entering into Development Agreement, the assessee received only sum of ₹ 5,50,000/- which was though called as entire consideration amount, was actually part of consideration amount since the assessee was also entitled to receive six constructed flats on different floors in the proposed building. The main part of consideration i.e. value of constructed portion to be received by the assessee, was definitely in future. In such circumstances, where the assessee though had parted with the possession of property for the purpose of development of the said project and had also received so-called consideration for the property, but had not received the main part of consideration i.e. constructed flats, then such a transaction of entering into Development Agreement would not make the assessee liable to pay capital gains tax on entering into such Development Agreement. The said transaction does not amount to transfer under section 2(47) of the Act and in the absence of the same, the assessee is not liable to pay capital gains tax under section 45. No capital gains has arisen in the hands of assessee on the date of entering into Development Agreement and the computation of long term capital gains in the hands of assessee is not warranted, since the property has not been developed and the assessee has not received constructed portion which is allocated to her share. In such circumstances, order of CIT(A) is reversed and hold that there is no merit in assessing the income from capital gains in the hands of assessee in the year under consideration. The ground of appeal No.1 raised by the assessee is thus, allowed. Whole capital gains are not to be assessed in the hands of assessee since the assessee was holding the said property on behalf of its family and after family partition, each of the family member shall have equal share - In view of holding that the capital gains do not arise in the year under consideration, the said issue becomes academic at present and hence, we do not address the same.
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