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Facts
The assessee entered into a Joint Development Agreement (JDA) for a sum of Rs. 12,47,22,564/-. The Assessing Officer (AO) reopened the assessment and treated the assessee's share in the JDA as long-term capital gain. The CIT(A) upheld the addition.
Held
The Tribunal held that since the Revenue had accepted in the cases of other co-owners that no capital gain arose from the same JDA, it could not take a different stand for the present assessee, following the Supreme Court's decision in Union of India vs. Kaumudini Narayan Dalal. Therefore, the addition was directed to be deleted.
Key Issues
Whether the transaction under the Joint Development Agreement (JDA) constitutes a 'transfer' for capital gains tax purposes, and whether the land was stock-in-trade or a capital asset.
Sections Cited
147, 144, 144B, 139, 148, 2(47)(v)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Shri Allrui Srinivas Raju, (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 17/10/2025 for the A.Y.2016-17.
“Under facts and circumstances of the case 1. The Appellant order of the Learned Commissioner of Income Tax Appeals- (NFAC), New Delhi ['the Ld. CIT(A)] for the assessment year 2016-2017, under section 147, read with section 144 and 144B of Income Tax Act 1961, is wrong on facts and in law.
2. On the facts and circumstances of the case, and in law, the Learned C.I.T(A)/NFAC is not justified in upholding reopening of the assessment of the Appellant under section 147 of the Income Tax Act 1961, on the basis of incomplete information and on the premise that long term capital gain is exigible to tax for the assessment year 2016-2017, in respect of development agreement entered into on 10th July 2015, registered as document No.5930/2015 by four co-owners, wherein the subject land was stock in trade.
3. On the facts and circumstances of the case and in law :- (i) The Ld.CIT(A)/NFAC erred in conforming thelong term capital gain at Rs. 12,47,22,564/- on the basis of development agreement, where the land subjected to development agreement was stock in trade and not capital asset. (ii) The Ld.CIT(A) ought to have appreciated that in respect of three co- owners on similar facts, in relation to the said development agreement, where the assessment was reopened and assessments have been completed on "Nil" income, holding that there is no Income accruing to the appellant by way of "Capital Gains", based on the decision of Apex Court in the case of Balbir Singh Maini (251 Taxman 202) (2017) and therefore the assessment of long term capital gains at Rs.12,47,22,564/-, in the case of Appellant wholly unsustainable on the facts of the case. (iii) The development agreement in question perse by no stretch of imagination, can be construed as satisfying the definition of transfer, so as to apply the provisions of clause (v) of sub section (47) of section 2 of Income Tax Act 1961, to trigger the liability to capital gains tax. (iv) The developer has neither performed, nor was willing to perform the obligation under the agreement, and thus not adhering to the development agreement by the developer, will by itself suggest that the Assessing Officer is not justified to tax the hypothetical Long-Term capital gains.
In the facts and circumstances of the case :- (i) The Learned CIT(A)/NFAC is not justified in coming to the conclusion that Appellant has not furnished evidence that the subject land was stock in trade. (ii) The finding of the Assessing Officer that Appellant has not furnished any documentary evidence that the character of the land represent stock in in trade, is totally contrary to the facts on records as per the wealth tax returns and also as per the finding of the Assessing Officer in the case of other "two co-owners", whose assessments under identical circumstances were assessed on "NIL" Income. (iii) The Learned CIT(A)/NFAC failed to consider the emphatic and positive findings given by the Inspectors of Income-Tax on the subject that the whole law was barren and bereft of any development and therefore Page 2 of Allrui Srinivas Raju vs. DCIT erroneously came to wrong conclusion that Income has accrued to the Appellant.
Any other ground(s) that may be urged at the time of hearing.”
The brief facts of the case are that the assessee is an individual who filed his return of income for Assessment Year 2016–17 on 17.11.2016 admitting total income of Rs.16,31,790/-. Based on specific information flagged under the Risk Management Strategy formulated by the CBDT through the Insight portal, the Learned Assessing Officer (“Ld. AO”) observed that the assessee had entered into a Joint Development Agreement (“JDA”) for an amount of Rs.12,47,22,564/-. Accordingly, the case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (“the Act”) and notice under section 148 of the Act was issued. In response to the said notice, the assessee filed his return of income on 29.04.2021 admitting the same total income of Rs.16,31,790/- as declared in the original return filed under section 139 of the Act. During the course of reassessment proceedings, the Ld. AO observed that the assessee had entered into a JDA dated 10.07.2015 with M/s Jeedimetla Residential Homes Private Limited along with three other land owners. According to the Ld. AO, the assessee was entitled to 20% share in the transaction arising out of the said JDA. The Ld. AO therefore computed an amount of Rs.12,47,22,564/-as long-term capital gain in the hands of the assessee on account of the said JDA. Accordingly, the Ld. AO completed the assessment under section 147 read with section 144B of the Act on 18.05.2023 determining the total income of the assessee at Rs.12,63,54,350/-.
Page 3 of Allrui Srinivas Raju vs. DCIT 4. Aggrieved by the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee and confirmed the addition made by the Ld. AO.
5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. At the outset, the Learned Authorised Representative (“Ld. AR”) submitted that the solitary issue arising out of the grounds of appeal of the assessee relates to the addition of long-term capital gain of Rs.12,47,22,564/- made by the Ld. AO on account of the JDA dated 10.07.2015. The Ld. AR submitted that the assessee along with three other land owners namely A. Bhaskar Raju, D. Srinivasa Raju and D. Satyanarayana Raju had entered into the said JDA with M/s Jeedimetla Residential Homes Private Limited. The Ld. AR submitted that the case of the other three land owners were also reopened under section 147 of the Act on the allegation that profit on account of the said JDA arises in their hands also. The Ld. AR invited our attention to the copies of the assessment orders passed in the cases of A. Bhaskar Raju and D. Satyanarayana Raju placed at page nos. 66 to 73 of the paper book and submitted that in both the cases the Ld. AO has accepted that no transfer had taken place on account of the said JDA and accordingly no addition was made. The Ld. AR further invited our attention to the order passed by the Ld. CIT(A) in the case of D. Srinivasa Raju placed at page nos. 74 to 88 of the paper book and submitted that although the Ld. AO had made addition in that case, the Ld. CIT(A) deleted the addition by holding that no capital gains arise on account of the said JDA. The Ld. AR therefore submitted that when the Revenue itself has Page 4 of Allrui Srinivas Raju vs. DCIT accepted in the cases of the other three co-owners that no capital gain arises on account of the same JDA, the Revenue cannot take a different stand in the case of the present assessee. In support of his contention, the Ld. AR relied upon the decision of the Hon’ble Supreme Court in the case of Union of India v. Kaumudini Narayan Dalal 249 ITR 219, wherein it has been held that it is not open to the Revenue to accept the judgment in the case of one assessee and challenge its correctness in the case of another assessee when the facts are identical. Accordingly, the Ld. AR submitted that the addition made by the Ld. AO in the hands of the assessee is liable to be deleted.
6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities and submitted that the Ld. AO has rightly treated the assessee’s share in the JDA as taxable long-term capital gain. It was therefore submitted that the order of the Ld. CIT(A) confirming the addition made by the Ld. AO may be upheld.
We have heard the rival submissions and perused the material available on record including the case laws relied upon. The addition in the present case arises on account of the JDA dated 10.07.2015 entered into by the assessee with M/s Jeedimetla Residential Homes Private Limited. We have gone through page nos. 1 and 2 of the JDA placed in the paper book, which is to the following effect:
Page 5 of Allrui Srinivas Raju vs. DCIT Page 6 of Allrui Srinivas Raju vs. DCIT
On perusal of the above, we find that A. Bhaskar Raju, D. Srinivasa Raju and D. Satyanarayana Raju are also land owners and parties to the same JDA Page 7 of Allrui Srinivas Raju vs. DCIT along with the present assessee. We have also gone through the assessment orders passed by the Ld. AO in the cases of A. Bhaskar Raju and D. Satyanarayana Raju for Assessment Year 2016–17 placed at page nos. 66 to 73 of the paper book. On perusal of the same, we find that the Ld. AO has accepted that no transfer has taken place on account of the said JDA and accordingly no addition has been made in those cases. We have further gone through the order passed by the Ld. CIT(A) in the case of D. Srinivasa Raju placed at page nos. 74 to 88 of the paper book and on perusal of the same we find that the Ld. CIT(A) has deleted the addition made by the Ld. AO on account of the very same JDA by holding that no capital gains arise from the said transaction. Thus, it is evident that in the case of the other three co-owners who are parties to the same JDA, the Revenue has already accepted that no capital gains arise on account of the said JDA. We have also gone through the judgment of the Hon’ble Supreme Court in the case of Union of India Vs. Kaumudini Narayan Dalal (supra), which is to the following effect:
“1. The order under challenge in this appeal by the Revenue followed the earlier judgment of the same High Court in the case of Pradip Ramanlal Sheth v. Union of India [1993] 204 ITR 866. Learned counsel for the Revenue states that the papers before us suggest that a special leave petition was preferred against that judgment but he has no instructions as to what happened thereafter. Learned counsel for the respondents states that their enquiries with the Registry reveal that no appeal against that judgment was preferred by the Revenue.
If the Revenue did not accept the correctness of the judgment in the case of Pradip Ramanlal Sheth [1993] 204 ITR 866 (Guj), it should have preferred an appeal there against and instructed counsel as to what the fate of that appeal was or why no appeal was filed. It is not open to the Revenue to accept that judgment in the case of the assessee in that case and challenge its correctness in the case of other assessees without just cause. For this reason, we decline to consider the correctness of the decision of the High Court in this matter and dismiss the civil appeal.”
Page 8 of Allrui Srinivas Raju vs. DCIT 9. On perusal of above, we find that the Hon’ble Supreme Court has categorically held that when the Revenue has accepted a judgment in the case of one assessee, it is not open to the Revenue to challenge the correctness of the same judgment in the case of another assessee when the facts are identical. Respectfully following the ratio laid down by the Hon’ble Supreme Court and considering the fact that the Revenue itself has accepted that no capital gain arises in the cases of the other three co-owners who are parties to the same JDA, we hold that no capital gains can be brought to tax in the hands of the present assessee on account of the said JDA. Accordingly, the addition of Rs.12,47,22,564/- made by the Ld. AO and sustained by the Ld. CIT(A) is directed to be deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 18th March, 2026.