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2016 (9) TMI 452 - ITAT HYDERABAD

2016 (9) TMI 452 - ITAT HYDERABAD - TMI - Transfer of land under section 2(47) - Held that:- The physical possession was never handedover to the developer in which event it cannot be said that there is a transfer of property within the meaning of section 2(47) of the I.T. Act. ITAT, in the first round of litigation, recorded a finding based on the terms of development agreement but proceeded, on a cautious assumption, that the finding is on account of the fact that the said development agreement .....

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Act what is taxable is the real income and mere hypothetical income should not be taxed. In the wake of the findings and conclusions of the Arbitral Tribunal, we are of the firm view that no transfer took place with regard to the land which was hitherto given for development since physical possession was continuously enjoyed by the assessee and his family members and thus even under the Income Tax Act the transfer cannot be said to have taken place in the year under consideration. We hold accor .....

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ration is whether there is transfer of land under section 2(47) of the Act in the facts and circumstances of the case ? 2. Facts necessary for disposal of the appeal are stated in brief. For the year under consideration, the assessee declared total income of ₹ 1,51,250 apart from agricultural income of ₹ 3500. Consequent to the search and seizure operations under section 132 of the Act in the case of Shri Suresh Kumar Shah (HUF), a notice under section 153A was issued in the case of .....

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urrounded by rocky mountains and it is not amenable for any agricultural operations. Therefore, the claim of the assessee that it was agricultural land was not accepted and capital gains on the sale of the said land was brought to tax. 2.1. Apart from sale of landed properties, the assessee, his wife and son jointly handedover ac.14.00 of land for development into colony/huge settlement and entered into an irrevocable power of attorney with the developer. According to the A.O. the owners have ha .....

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in the second round, the learned CIT(A) observed that the Appellate Tribunal set aside the issue, relating to the transfer of property under section 2(47)(v) of the Act, to decide the same afresh while commenting that certain rights were assigned to the developer who, inturn, made substantial payment in which event it has to be considered as transfer . The Tribunal also observed that the possession and control of the property is already vested with the transferee and the impugned development agr .....

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s accrued to an assessee during the assessment year when it was liable to pay capital gains tax and the transfer can be said to have taken place when the assessee executed an irrevocable license. In the present case also, development agreement was entered by the assessee with M/s. Dakshin Shelters P. Ltd., on 12.04.2006. The A.O. charged the capital gains based on the year of agreement only and hence, cancellation of such agreement in a later year do not alter the situation. The learned CIT(A) t .....

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he schedule property was not parted/delivered by the claimants in favour of the respondents, as mentioned in para- 10 or elsewhere of the development agreement, and further admitted that the claimants have been in actual physical, continuous and uninterrupted possession and enjoyment over the entire schedule property since beginning to till date and thus, have every right to continue their physical possession and enjoyment over the schedule property. Learned Counsel for the assessee submitted th .....

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which was not available before the Tribunal in the first round of litigation and though the same was produced before the Ld. CIT(A) in the set aside proceedings, he has erred in interpreting that the consent Award cannot alter the factual matrix of the case. It deserves to be noticed that the ITAT, in it s order dated 16.12.2011, observed that there is transfer of land under the development agreement since it was not cancelled later on and still in operation. Upon cancellation of the agreement t .....

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al Tribunal had passed a consent decree wherein it was admitted that the physical possession of the schedule property was not parted/ delivered by the party of the first part in favour of the party of second part and in fact, the respondent therein admitted that the assessee was in actual, physical, continuous and uninterrupted possession and enjoyment over the entire schedule property since the beginning to till date; Ld. D.R. also admitted that this material was available for the first time be .....

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agreement was cancelled wherein it was admitted that the party of the first part was always in actual physical possession and enjoyment of the entire scheduled property. Since the parties to the agreement having approached the Arbitral Tribunal, which has passed a consent decree in favour of the assessee, the findings therein have to be taken into consideration. No doubt, the Appellate Authorities in the earlier rounds of litigation have interpreted the terms of the development agreement but th .....

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