Transfer - AOP - joint pooling of resources by three different parties wherein assessee contributed land

1. [TS-5553-ITAT-2016(PUNE)-O]: Land contribution to AOP under JV-agreement not taxable u/s 45(3) absent transfer - Pune ITAT allows assessee’s appeal (individual land-owner) for AY 2009-10, deletes addition on account of capital gains on receipt of security deposit pursuant to a joint venture agreement (‘JVA’); Revenue assessed value of security deposit as capital gains on the ground that assessee’s contribution of land to the AOP (formed for development of land) amounted to transfer of capital asset; On perusal of the JVA, ITAT notes that assessee had not transferred land to the AOP but it was a case of joint pooling of resources by three different parties wherein assessee contributed land (on which development was to be carried out) whereas other members contributed TDR rights, finance, etc… Read more

Applicability of Sec. 50C

2. [TS-6252-ITAT-2016(AHMEDABAD)-O]: Sec. 50C amendment removing hardship by implementing Easwar committee recommendations, held retrospective -Ahmedabad ITAT deletes addition u/s 50C (relating to substitution of sale consideration with stamp duty valuation) while computing capital gains on transfer of land by assessee-individual during AY 2008-09; Assessee had entered into ‘agreement to sell’ for land in June, 2005, but the sale deed could be executed only in April, 2007, AO adopted the stamp duty valuation as on April 24, 2007 and made addition u/s 50C; ITAT accepts assessee’s stand that amendment to Sec 50C should be treated as retrospective in nature and accordingly, stamp duty valuation as on ‘agreement to sell’ date and not sale deed execution date should be considered… Read more

3. [TS-171-ITAT-2011(MUM)-O]: Sec 50C applicable on transfer of depreciable assets covered u/s 50 - A Special Bench of Mumbai ITAT has held that provisions of sec 50C would be applicable even for transfer of depreciable capital assets covered by sec 50. Accordingly, rejecting assessee’s contentions, Special bench of ITAT held that capital gain arising from sale of office building would be computed by adopting stamp duty valuation which was higher than sale value… Read more. 

4. [TS-155-ITAT-2011(MUM)-O]: Sec.50C applicable on transfer through 'development agreement' - Mumbai bench of ITAT held that development agreement for land and building entered into by assessee with a developer resulted into ‘transfer’ of capital asset. The key fact considered by ITAT while arriving at its conclusion was that there was a demolition of existing building. ITAT also held that since stamp duty valuation was higher than the agreement value, provisions of sec 50C would be applicable. ITAT accordingly held that assessee would be required to pay capital gains tax based on stamp duty valuation even in respect of transfer pursuant to development agreement… Read more

Housing Deduction u/s 80-IB

5. [TS-279-SC-2015-O]: Pre-2005 approved housing projects but completed later eligible for Sec 80IB deduction - SC lays down interpretation of Finance Act, 2005 amendment to clause (d) of Sec 80IB(10) introducing 'commercial area' restriction to housing project eligible for incentive deduction; Housing projects sanctioned and commenced prior to April 1, 2005 but completed (by stipulated date) thereafter also entitled for the deduction; Having already approved Brahma Associates ratio that 2005 amendment prospective in nature, SC rejects Revenue's argument of 'retroactive' application though not 'retrospective' application of amendment; Sec 80IB(10) - clause (d) to be treated as inextricably linked with approval and construction of housing project and assessee cannot be called upon to comply with condition which was not in contemplation of assessee or Legislature when the project was approved… Read more

6. [TS-5499-HC-2016(MADRAS)-O]: Reverses ITAT ruling, allows Sec 80-IB housing-deduction; "Development & construction" tests satisfied - Madras HC reverses ITAT order, grants deduction u/s 80IB(10) for AY 2001-02 [in respect of an undertaking engaged in housing projects subject to a condition that the “development and construction” of such project commences on or after October 1, 1998]; Revenue had denied deduction u/s 80IB(10) on the ground that assessee should be deemed to have commenced development and construction, from the time of commencement of pre-construction work (i.e. removing hut dwellers, digging bore well, getting electricity connection, etc.) although the actual date of commencement of construction was October 15, 1998… Read more

7. [TS-5260-SC-2016-O]- Dismisses Revenue’s SLP challenging grant of Sec.80IB housing deduction on 'part project'- SC dismisses Revenue’s SLP against Delhi HC judgement in the case of Omaxe Buidhome Pvt. Ltd. for AYs 2007-08 to 2009-10; HC had granted Sec. 80IB(10) deduction to assessee-builder/developer in respect of real estate developments that were complete on a stand-alone basis, despite forming part of a housing project (comprising of other housing schemes that were not eligible for deduction); HC had dismissed Revenue’s contention that deduction u/s 80IB(10) is available only if the 'project as a whole' is compliant with the conditions stipulated under Sec. 80IB(10) while distinguishing Revenue’s reliance on Bombay HC ruling in Brahma Associates… Read more

TDS applicability on Real Estate Transactions

8. [TS-5860-HC-2015(KERALA)-O]: Assessee liable to deduct tax at source u/s 194LA/194IA irrespective of taxability of the amount of compensation paid on acquisition of land in the hands of the recipient - HC dismisses assessee’s writ; Holds that availability of exemption of compensation amounts from Income Tax, is a matter to be considered in the individual assessments of the recipients of the said amounts & the same cannot have a bearing on the liability of the assessee to deduct tax at source while making the payments; Observes that Sec. 194LA and Sec.194IA do not contemplate an exemption to the assessee from discharging his obligation to deduct tax at source… Read more

9. [TS-5723-HC-2015(KARNATAKA)-O]: Allows writ against property registration denial, Sec.194IA-TDS inapplicable for consideration payment pre-June'13 - HC allows assessee's writ against property registration denial for non-deduction of TDS u/s 194IA (inserted w.e.f June 1, 2013 relating to TDS on transfer of immovable property); Holds assessee-transferee not liable to deduct TDS u/s 194IA as entire sale consideration for the property was paid in March 2012 i.e before insertion of Sec 194IA… Read more

10. [TS-6223-ITAT-2015(DELHI)-O]: Applies DTAA's non-discrimination article; No Sec 195 TDS on land payments to non-resident - ITAT rules that assessee (a resident) not liable to deduct TDS u/s 195 on payment for land to a non-resident seller (AY 2006-07), invokes non-discrimination clause under Article 26 on India US DTAA; Upholding CIT(A)’s order, ITAT rules that “since there is no provision in the Income tax Act 1961, requiring a resident to deduct tax at source from sale proceeds of land payable to any other resident, therefore, in view of Article 26(4) reproduced hereunder, the assessee could not be burdened with the requirement of TDS in case of payment to non-resident”… Read more