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2016 (4) TMI 646 - AT - Income TaxCapital gain - selection of assessment year - whether the “transfer” of property took place in the year relevant to the assessment year 2003-04 and hence the capital gains assessed in AY 2007-08 was not in accordance with the law? - Held that:- The factors such as “date of possession, substantial compliance of the contract etc.” are not relevant in the case of development agreements. The aim of the builder under the development agreement was to make profits by completing the building and therefore, no interest in the land stands created in their favour under such agreements. Thus the said agreements are only a mode of remunerating the builder for his services of constructing the building. The assessees were entering into development agreements with the builders by conferring privileges of ownership to them and were claiming that the capital gains would arise only after registering the conveyance deed. Accordingly the section 2(47)(v) was brought into the statute to plug this kind of loop hole. Thus by considering the object of the Development Agreements and also the purpose of introduction of section 2(47)(v) of the Act,finally held that the year of chargeability in the case of Development Agreements is the year in which the contract was executed. In view of the foregoing discussions, we are of the view that the assessees herein succeed in the additional ground urged by them. Accordingly we hold that the capital gain arising on entering of development agreement is not taxable in the assessment year 2007-08, but taxable in AY 2003-04. - Decided in favour of assessee
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