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TMI Blog2019 (1) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act instead of short term capital gain as held by the AO? 2. The issue arises in following background. 3. The respondent assessee is a partnership firm. In the return of income filed for Assessment Year 2007+08, the assessee had offered certain receipts to tax as long term capital gain. The Assessing Officer, however, was of the opinion that the gain would give rise to short term capital gain. 4. The assessee had acquired a plot of land at Jogeshwari in the year 1960 for a consideration of Rs. 70,000/. During the period relevant to the Assessment Year 2006-07, the assessee entered into a development agreement on 28.11.2005 with one M/s K. Reheja Universal Pvt. Ltd. ("M/s. K. Raheja" for short) for development of such land. As per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, in the present appeal, the Revenue has pressed only one such objection namely that the assessee was incorrectly treating the capital gain as long term instead of offering to short term capital gain tax. 7. The assessee carried the matter in appeal. The Commissioner of Income Tax [CIT(A)] allowed the assessee's appeal accepting the assessee's contention that there was no conversion of the land with FSI available thereon vide development agreement dated 28.11.2005. The CIT(A) held that the transfer by way of distribution on retirement of the partners was 50% of the assets of the firm. The same was, therefore, transfer of long term capital asset. 8. The Tribunal, in appeal filed by the Revenue, confirmed the view of the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% of the land with use of FSI available on such land. Under the development agreement, therefore, the assessee can be seen to have divested itself of a portion of the land with the rights attached to such land and having retained the remaining portion. This development agreement under no circumstances, can be seen to have given rise to acquisition of the land or rights therein by the assessee on the date of agreement. Consequently, therefore, when two partners representing 50% share in the profit as well as the assets of the firm retired, the assessee distributed 50% of the rights in land which remained with the assessee upon execution of the development agreement and offered the notional value to long term capital gain, which the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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