SHERIFF Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In this appeal filed under section 260A of the Income Tax Act, 1961, (for short, 'the Act') the main issue raised for consideration through the six questions of law framed is whether an unregistered agreement for joint development of a property could be deemed to be a contract under section 53A of the Transfer of Property Act, and treat the same as a transfer of a capital asset under section 2(47)(v) of the Act.

(2.) The issue involved in the instant case arises from the assessment year 2008-09. Pursuant to a notice under section 148 of the Act, alleging income escaped assessment, the assessing officer held, that, an unregistered joint development agreement entered into between the assessee and another entity for development of a property belonging to the assessee, as a transfer of a capital asset as defined in section 2(47)(v) of the Act and exigible to capital gains tax under section 45 of the Act. The Appellate Authorities, including the Tribunal, concurred with the finding of the assessing officer. The Tribunal found that the property was handed over to the developer on 17-07-2007 and in turn, as contemplated in the agreement, the developer constructed residential apartments and had independent rights to sell the same on the basis of the power of attorney executed in favour of the key personnel of the builder. On the basis of the afore factual findings, it was concluded that as per the joint development agreement, the parties to the contract have performed or are willing to perform their part of the contract and hence the Income Tax Authorities were justified in bringing to tax the short-term capital gains for the assessment year 2008-09.

(3.) Aggrieved by the order of the Tribunal, the assessee preferred this appeal, which was admitted on six questions of law: However after hearing the Counsel, we reframe the questions of law into a single question as follows: whether an unregistered agreement for joint development of a property could be deemed to be a contract under section 53A of the Transfer of Property Act, for treating the same as a transfer of a capital asset under section 2(47)(v) of the Act.