Karnataka High Court
The Commissioner Of Income Tax vs Shri N Vemanna Reddy on 18 August, 2014
Bench: N.Kumar, Rathnakala
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 18TH DAY OF AUGUST 2014
PRESENT
THE HON'BLE MR. JUSTICE N. KUMAR
AND
THE HON'BLE MRS. JUSTICE RATHNAKALA
I.T.A. NO.591/2008
BETWEEN:
1.THE COMMISSIONER OF INCOME TAX
C.R. BUILDING
QUEENS ROAD,
BANGALORE
2.THE INCOME TAX OFFICER
WARD-7(3)
C.R.BUILDING
QUEENS ROAD
BANGALORE. .. APPELLANTS
(BY SRI. K V ARAVIND, ADV.)
AND:
SHRI N VEMANNA REDDY
NO.5, RUBY NEST
SR LAYOUT
MURUGESH PALYA
BANGALORE ... RESPONDENT
(BY SRI.S PARTHASARATHI, ADV.)
THIS ITA IS FILED U/S.260-A OF I.T.ACT, 1961
ARISING OUT OF ORDER DATED 7-12-2007 PASSED IN ITA
NO.3815/BNG/2004, FOR THE ASSESSMENT YEAR 1998-
99, PRAYING THAT THIS HON'BLE COURT MAY BE
PLEASED TO:
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I. FORMULATE THE SUBSTANTIAL QUESTIONS OF
LAW STATED THEREIN,
II. ALLOW THE APPEAL AND SET ASIDE THE ORDER
PASSED BY THE ITAT BANGALORE IN ITA NO.
3815/BNG/2004,DATED 7-12-2007 CONFIRM THE
ORDERS OF THE APPELLATE COMMISSIONER AND
CONFIRM THE ORDER PASSED BY THE INCOME TAX
OFFICER,WARD-7(3),BANGALORE IN THE INTEREST OF
JUSTICE AND EQUITY.
THIS APPEAL COMING ON FOR HEARING, THIS DAY,
N.KUMAR, J., DELIVERED THE FOLLOWING:
JUDGMENT
This is a revenue's appeal against the order passed by the Tribunal.
2. The substantial question of law which arises for consideration in this appeal is as under:
"Whether the Tribunal was correct in holding that capital gains tax would arise in the assessment year 1995-96 when the development agreement was entered into by the assessee with the developer for transfer of 66% interest in undivided immovable property and not when the built up area was completed and handed over to 3 the assessee in the assessment year 1998- 99?"
3. This Court, in the case of Commissioner Vs. D.K.Dayal reported in 202 Taxman 531, after noticing the case law on the point, has held that the date on which possession was handed over to the developer is relevant and therefore, the capital gain tax is payable for the assessment year in which the possession was handed over in terms of the joint development agreement. Therefore, on mere entering into a joint development agreement there is no transfer. The "transfer" in the Income Tax Act takes places on the date the possession of the property is delivered though not a registered document is executed conveying the title.
4. In the instant case, the authorities have held that the capital gain tax is payable in the assessment year 1995-96 when the joint development agreement was entered into by the assessee with the 4 developer for transfer of 66% interest in an undivided immovable property and possession of the land was handed over and not when the built up area was completed and handed over to the assessee in the assessment year 1998-99. Hence, we answer the substantial question of law raised in favour of the assessee and against the revenue and pass the following:
ORDER No merits. The appeal is dismissed.
Sd/-
JUDGE Sd/-
JUDGE RS/*