Loading judgment…
Facts
The assessee entered into a Land Development Agreement (LDA) with a builder for developing their property. The Assessing Officer (AO) initiated reassessment proceedings and added ₹1,33,85,300/- as long-term capital gain, alleging a transfer of property. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's order.
Held
The Tribunal held that no transfer of property occurred within the meaning of Section 2(47)(v) of the Income Tax Act as the LDA did not involve the transfer of ownership rights or possession. The agreement was later annulled, and therefore, no capital gain arose. The Tribunal relied on various High Court and Apex Court decisions to support its conclusion.
Key Issues
Whether a Land Development Agreement constitutes a transfer of property attracting capital gains tax, particularly when possession and ownership rights are not fully relinquished and the agreement is subsequently annulled.
Sections Cited
147, 148, 2(47)(v), 45, 48, 50C, 53A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA
Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 30.03.2024 for the AY 2011-12.
The only issue raised by the assessee is against the confirmation of addition by the ld. CIT (A) of ₹1,33,85,300/- as made by the ld. AO on account of long-term capital gain arising from the property given for the Joint Development Agreement.
The facts in brief are that the assessee is deriving income from business and is a senior citizen. During the year, the assessee filed the return of income on 29.09.2011, showing total income of ₹4,24,260/-. Thereafter, the case of the assessee was reopened u/s 1) Total area of land as per JDA 12,598 SFT 2) Total permitted Super Build Area to be constructed on the land (As 31495 SFT per FAR Provisions) 3) Total number of land owners One 4) Share of this Land Owner in the land Full
After hearing the rival contentions and perusing the materials available on record, we find that the assessee has entered into a Land Development Agreement with the builder as stated hereinabove and builder has been allowed to construct the property under the said development agreement. The assessee was to get 42.50% of the total constructed area and builder share was to be 57.50%. Apart from this, there has been no other performance of any act on the part of the assessee as well as the builder which showed that there was transfer of rights in favour of the builder/ developer. The copy of Joint Development Agreement, is available at page no.3 to 20 of the Paper Book of the assessee. We note that under the said agreement the builder was to obtain the permissions/sanction/ map approval of the area as is apparent from clause 6 of the agreement. We further “Heard the parties in respect of IA No.3221 of 2012. The same has been filed along with Vakalatnama of one Ratan Kumar Tulsi son of the sole respondent Dr. Mahabir Prasad who is said to have died on 16.2.2012. The prayer in the IA is to allow substitution of the three heirs and legal representatives mentioned in paragraph 1 of the IA. In the facts of the case, the prayer for substitution is allowed. Let the three heirs who are wife and sons of deceased Dr. Mahabir Prasad be substituted in his place. Mr Ajay Kumar Rastogi one of the counsels representing Ratan Kumar Tulsi undertakes to file Vakalatnama on behalf of other two heirs also within four weeks. Heard learned counsel for the appellant and learned counsel for the heirs of deceased respondent Dr Mahabir Prasad who has been substituted today. The Tribunal has considered the relevant materials and 2/ 2 has then agreed with the findings of learned CIT (A) that assessee received agriculture land on the death of his father and that land being agricultural land was a source of income for the HUF. The findings are supported by materials on record and do not suffer from any error of law.
31. The contention of the ld. D.R. that assessee has accepted Rs. 13.75 crores from Godrej Properties Ltd. pursuant to the Development Agreement, therefore, it amounts to transfer of the land to Godrej Properties Ltd. does not find any merit. There was no transfer of land as per amended provisions of section 53A of TOPA applicable for the relevant A.Y. 2008-09 under consideration accompanied by fact that there was no transfer of possession to GPL and the possession of land was with assessee only and the same has been expressly statd in clause 6 of Development Agreement. Furthermore the assessee has not received any consideration from Godrej Properties Ltd. but had received only deposit" which was to be adjusted against the sale of villas on completion of the project. It is also a matter of record that Godrej Properties Ltd. has not carried out any construction/development activity as per the project envisaged in Development agreement relied on by A.O. What was mentioned in the Development Agreement was only the value of land to provide benchmark for the purpose of sharing “8. Being aggrieved with the order dated 27th December, 2012, Respondent filed a further appeal to the Tribunal. By the impugned order, the Tribunal held that there was
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 23.02.2026.