ITO v. Abdul Kayum Ahmed [ITA No. 5851/Mum/2018,
dt. 6-7-2020] : 2020 TaxPub(DT) 2744 (Mum.-Trib.)
Developmental rights transferred by civil contractor with
part consideration received in assessment year and offered as business income
and possession given -- Applicability of capital gains section 2(47)(v)
thereof.
Facts:
Assessee a civil contractor transferred developmental
rights in a property to one Shivalik Ventures for a consideration of Rs. 336
lakhs of which Rs. 100.8 lakhs was received and offered as business
income adopting proportionate revenue recognition method under AS-9 of
ICAI. Assessing officer in a reopened assessment questioned taxability of
the balance amount as well under section 2(47)(v) alleging applicability of
section 53A of Transfer of Property Act, 1882. On appeal the reassessment was
negatived by Commissioner (Appeals). An aggrieved department went in higher
appeal to ITAT-
Held in favour of assessee against the department holding
that section 2(47)(v) would apply only to a transfer arising under capital
gains and not to a case where assessee has claimed it as business income.
Assessee had adopted proportionate revenue recognition method consistently and
has offered balance income to tax in the future years as well adopting mercantile
system of accounting. The balance consideration cannot be alleged as income
even if possession was granted in the said year of assessment under real income
principles under income from business or profession.
CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) : 1962 TaxPub(DT) 0307 (SC) read into.
Editorial Note: Reference
be made to M/s. Shivalik Venture Pvt. Ltd. v. DCIT (Mumbai-ITAT) -- ITA
No. 2008/Mum/2012/Assessment Year 2009-10, decided on 19-8-2015 : 2015
TaxPub(DT) 3245 (Mum-Trib) wherein the said entity Shivalik Ventures have
transferred a similar property development rights to its subsidiary and claimed
the transfer benefit to fall under section 47(iv) thus the capital gains being
exempt from tax. On a claim by department that the said capital gains needs to
be taxed under MAT provisions; the ITAT held it in favour of the assessee. Is
it the same property involved in this case or the reopening in this case itself
was an after effect of Shivalik Venture ITAT decision is not known. It appears so
however that both these cases are interrelated.
Reference be made to Article titled -- "MAT provisions whether
exclude tax free/exempt capital gains?"