DAGADU YADAO DHAWALE,PUNE vs. INCOME TAX OFFICER, WARD 4(4), PUNE

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ITA 1805/PUN/2025Status: DisposedITAT Pune12 June 2026AY 2011-126 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the transfer of capital asset, as defined under Section 2(47) of the Income Tax Act, occurred in FY 2006-07 when the assessee relinquished their rights and received consideration. Therefore, capital gains were taxable in AY 2007-08, not AY 2011-12.

What were the facts?

The assessee, an 81-year-old individual, transferred agricultural land via a Development Agreement in 2006, receiving full consideration and handing over possession. A subsequent sale deed was executed in 2010 by a power of attorney holder, but the assessee received no further consideration and did not sign it.

What were the issues?

The primary issue was whether the transfer of agricultural land for capital gains tax purposes occurred in AY 2011-12 or an earlier year based on a Development Agreement executed in 2006.

Which sections of the Income-tax Act were involved?

Section 2(47),Section 147,Section 250,Section 45

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI Dr. DIPAK P. RIPOTE & SHRI VINAY BHAMORE

For Appellant: Shri Kishor B. Phadke
For Respondent: Shri Harish Bist, Addl. CIT

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), (NFAC) [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2011-12 on 07/10/2024, emanating from the Assessment Order u/s 147 of the Act, dated 17/12/2018.

2.

Submission of Ld.AR: Ld. AR filed paper book. Ld. AR submitted that assessee is a 81 years old. Ld. AR submitted that in this case AO has erred in taxing the capital gains in AY 2011-12. Ld. AR submitted that the agricultural land was transferred vide Development Agreement dated 26/05/2006 to Rohan Builders and Developers Pvt. Ltd. by the Dagadu Yadao Dhawale and other four members of his family, who were joint owners of the ancestral agricultural land. Copy of the said Development Agreement is at Pages 10- 50 of the paper book. Ld. AR submitted that the entire consideration of Rs.83,00,000/- was paid to the land owners in 2006-07, which is

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mentioned in Clause 14 of the Development Agreement. Ld. AR submitted the possession was handed over to the developer. An irrevocable general power of attorney was executed by these five joint owners in favour of the person Bharat Desadla who was working for the developer. This Development was duly registered in 2006. However, a Sale deed was executed by Mr. Bharat Desadla and Rohan Builders and Developers Pvt. Ltd. on 24/08/2010 for the said land. On 24/08/2010 Assessee or his family members had not received any amount, neither they have signed the sale deed dated 24/08/2010. Therefore, as far as Assessee is concerned the transfer of land took place on 26/05/2006. Ld. AR pleaded that no capital gain is taxable for AY 2011-12.

3.

Submission of Ld.DR: The Ld.DR relied on the order of the AO and CIT(A).

4.

Findings and analysis: We have heard both the parties and perused the records. Assessee is an individual senior citizen. In this case the AO had issued notice u/s 148 for AY 2011-12 based on the information regarding sale of land at Sno.47 7/1 and 7/2 village PunavaleDist Pune. The AO taxed long term capital gain for AY 2011-12. Aggrieved by the Assessment Order, the Assessee filed Appeal before CIT(A). Assessee filed additional evidence and Ld. CIT(A) called for remand report. Remand report was submitted by AO. Ld. CIT(A) confirmed the addition. Aggrieved by the order of Ld. CIT(A) Assessee filed appeal before this Tribunal.

4.1 We have studied the registered Development Agreement dated 26.05.2006 (Page 10-50 of the paper book).In this case the Five Joint owners of the Land entered into Development Agreement with Rohan Developers and Builders P. Ltd. on 26/05/2006. Assessee is one of the joint owners. The clause 14 of the said Development Agreement has specifically mentioned that Rs.83,00,000/- consideration was paid to the land owners in 2006. The details of the payment are as under : Date Amount 12.04.2006 Rs.20,00,000/- 12.04.2006 Rs.20,00,000/-

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12.04.2006 Rs.20,00,000/- 26.05.2006 Rs.5,00,000/- To be paid within 10 months from the date from the Rs.18,00,000/- date of development agreement Total Rs.83,00,000/-

4.2 The above-mentioned table appears on page No. 7 of the Ld. CIT(A)’s order. As per Clause 6 of the impugned Development Agreement, the developer had got rights to make plots, to sale to any person. It is also mentioned in the Development Agreement that the Developer will be free to develop the land as per his wish and will be free to Sale the developed portion in part or whole to any person as per his wish.The owners had agreed to execute sale agreement if required to any person identified by developer. It is also mentioned that the Development Agreement was irrevocable. The owners also executed irrevocable general power of attorney, in favour of developer.

4.3 Section 2(47) of the Income Tax Act is reproduced hereunder : “2(47) "transfer", in relation to a capital asset, includes,— (i) the sale, exchange or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or”

4.4 Thus, as per section 2(47) of the Act transfer of capital assets includes relinquishment of any rights. In the case of the assessee, as owners of the land all co-owners had given peaceful possession to the developer. The co-owners of the land had granted permission to the developers to develop the lands and sale to any person of developer’s choice. The clauses in the development agreement were irrevocable. In these facts, the assessee with other co-owners had relinquished their rights in the land. After the execution of the impugned Development Agreement the Owners had no Rights in the Land. Therefore, as far as Income Tax Act section 2(47) is concerned it was transfer of capital assets. Therefore, capital gain was taxable in the FY 2006-07 when Assessee had extinguished their rights.

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4.5 However, in the case of the Assessee the Assessing Officer issued notice u/s 148 of the Act for AY 2011-12 and taxed capital gain for AY 2011-12. We have already mentioned above that transfer of the land took place in FY 2006-07 hence, capital gain was taxable in AY 2007-08. Therefore, AO has erred in taxing the capital gain in AY 2011-12. The sale deed dated 24/08/2010 referred by the Assessing Officer is entered betweenBharat Desadla as power of attorney holder and Rohan Builders and Developers Pvt. Ltd. The said Agreement dated 24/08/2010 refers to the Development Agreement dated 26/05/2006 and admits that entire consideration was paid in FY 2006-07.

4.6 We find support from the decision of ITAT Pune in the case of Vasant Laxman Khandgev.Income Tax Officer, Ward-9(5), Pune, [2021] 187 ITD 299 (Pune - Trib.)[23-12-2020]where in ITAT held as under : Quote, “9. Now we proceed to the primary argument of the ld. AR that the transfer took place on 6-5-2000, being thedate of agreement, which has been contradicted by the Revenue by making out a case that the date ofregistration, being, 3-08-2006 is the real date of transfer attracting section 45 of the Act……………………………………………………… ………………………….. 12. Reverting to the factual panorama, it is seen that the assessee handed over possession of the property toM/s. V.S. Kolbhor& Associates in the year 2000 on receiving substantial part of consideration. This, in ouropinion, constituted transfer u/s. 2(47)(v) of the Act read with section 53A of the TPA attracting taxability ofcapital gain in the A.Y. 2001-02. As the 'transfer' took place in the said earlier year, it cannot once again takeplace in the assessment year 2007-08 attracting taxation. Setting aside the impugned order, we hold that thetransfer took place in the A.Y. 2001-2002 and not 2007-08, leading to taxation of capital gain only in theearlier year and not the latter. As the ld. CIT(A) has upheld taxability of the capital gain in the A.Y. 2007-08,we hereby overturn the same. The Revenue is at liberty to examine the taxability of the capital gain, if any,arising from the transaction in the earlier year, subject to the relevant provisions. In view of our favorabledecision on the main argument of the ld. AR, the alternate claim of the assessee and the discussion made(supra) has been rendered academic insofar as the instant appeal is concerned. We, therefore, order to deletethe addition of Rs. 75,01,926/- made in the hands of the assessee.”Unquote.

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5.

In these facts and circumstances of the case for the elaborate reasons discussed above, we hold that there was no Transfer in AY 2011-12 and hence AO is directed to delete the addition made under the head Capital Gain.

6.

Ground Nos. 1 and 2 raised by the Assessee are allowed.

7.

Since, we have allowed ground Nos. 1 and 2, ground No. 3 and 4 becomes academic in nature, accordingly dismissed un-adjudicated. Ground No. 5 in general in nature needs no adjudication.

8.

In the result, the appeal of the Assessee is partly allowed.

9.

There was a delay of 209 days in filing of appeal before ITAT. Assessee filed an affidavit along with medical certificates. Assessee is a senior citizen and was under-going treatment. Therefore, we are convinced that there was sufficient cause. Accordingly, delay condoned.

Order pronounced in the open Court on 12th June, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 12-06-2026 Ravi Kumar Digitally signed by Ravi Kumar Ravi Kumar Date: 2026.06.15 13:11:39 +05'30' आदेशकीप्रतितितिअग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘SMC’ Bench, Pune 5. ग र्डफ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकरअपीलीयअदिकरण ,पुणे / ITAT, Pune

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S.No. Details Date Designation 1 Draft dictated on Sr. PS/PS 2 Draft placed before author Sr. PS/PS Draft proposed & placed before the Second 3 JM/AM Member 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Office 9 Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order

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