DRF EMPLOYEES WELFARE SOCIETY,HYDERABAD V. ITO, WARD- 6(1), HYDERABAD

SA 8/HYD/2026

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The case involves DRF Employees Welfare Society, which filed a stay application against the recovery of an outstanding demand of Rs.176,26,21,697. This demand arose from the addition made by the Assessing Officer concerning capital gains from land transferred under a Joint Development Agreement (JDA) to a developer-builder. The society argued that the capital gains should be taxed in the hands of its individual members, not the society itself, as the members had already declared these gains in their individual tax returns. Additionally, the society contended that the transaction under the JDA was not completed in the assessment year 2018-2019, and the full value consideration for the land was not determinable at that time. The Revenue opposed the stay, emphasizing the separate legal entity of the society and its tax liabilities under the JDA.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837552 (ITAT-HYDERABAD)
• Duration Of Justice: 7 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 20-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2018-2019
• Appeal Filed On: 13-02-2026
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V KOTESWARAMMA
• Assessee Lawyers: CHYTHANYA K K
• Keywords: Fair market value; Source of fund; Application of stay

Judgement Text

" आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G. ACCOUNTANT MEMBER S.A.No.8/Hyd./2026 Arising out of आ.अपी.सं /ITA No.156/Hyd./2026 Assessment Year 2018-2019 DRF Employees Welfare Society, Hyderabad – 500 016. Telangana. PAN AAAAD0604L vs. The Income Tax Officer, Ward-6(1), Hyderabad. (Applicant) (Respondent) िनधाŊįरती Ȫारा /Assessee by: Sri Chythanyak K, Sr. Advocate राज̾ व Ȫारा /Revenue by: MS V Koteswaramma, Sr. AR सुनवाई की तारीख/Date of hearing: 20.02.2026 घोषणा की तारीख/Pronouncement: 20.02.2026 आदेश/ORDER PER VIJAY PAL RAO, V.P. : By this stay application the assessee is seeking stay against the recovery of the outstanding demand of Rs.176,26,21,697/- arising from the addition made by the Assessing Officer on account of capital gain in the hand of Printed from counselvise.com 2 SA.No.8/Hyd./2026 the assessee society in respect of the land which was given to the developer-builder under Joint Development Agreement [in short “JDA”]. 2. Sri Chythanyak K, Sr. Advocate appearing for the assessee submitted that the Assessing Officer has made this addition in the hand of the assessee which is Employees Welfare Society whereas the Members of the Society have offered the capital gain in respect of this transaction in their individual capacity which is also accepted by the Revenue. He has pointed out that in one of the Members return of income was also taken-up for the scrutiny and the Assessing Officer has accepted the capital gain offered by the Member to tax. Thus, the learned Sr. Counsel has submitted that the capital gain arising from the land in question handing over to the developer under the JDA is not assessable to tax in the hand of the assessee society but the same is assessable to tax in the hand of the individual Members. He has thus, submitted that the Assessing Officer has wrongly assessed the income in the hand of the assessee society. Printed from counselvise.com 3 SA.No.8/Hyd./2026 2.1. The second leg of the argument of the Sr. Counsel is that the transaction of transfer under the JDA is not completed during the year under consideration as the building plan was sanctioned by the Authority on 19.01.2019 and thereafter, a sharing agreement was entered into between the Developer and the Assessee Society to share the built up area in the ratio of 70 : 30. Thus, the income if any, arising from the transaction under the JDA would be assessed only in the assessment year 2019-2020 and not for the assessment year under consideration i.e., 2018-2019. 2.2. The next contention of the learned Sr. Counsel is that the full value consideration in respect of the transfer of the property/land in question is not determinable and therefore, as per the provisions of sec.50D the stamp duty i.e., 70% value of the land ought to have been taken into consideration. Thus, he has contended that if full value consideration is taken as per the provisions of sec.50D of the Act then, the tax liability would have been reduced to Rs.24.64 crores out of which, the assessee has already paid a sum of Rs.3 crores in instalments of Rs.25 lakhs per month Printed from counselvise.com 4 SA.No.8/Hyd./2026 as per the Order of the Assessing Officer granting the stay against the demand. He has also filed the said Order of the Assessing Officer dated 25.04.2022. 2.3. The learned Sr. Counsel further contended that the Assessing Officer has taken the full value consideration as per the GST paid by the Builder-Developer for the entire super built-up area as well as the entire land in question instead the share of the builder. Thus, the learned Authorised Representative of the Assessee has submitted that the assessee is having a good prima facie case on merits. Further the Society is not having its own independent source of fund, but it was only the Members fund applied for construction of the residential building under the JDA. Thus, the learned Sr. Counsel has submitted that the balance outstanding demand be stayed till the disposal of the appeal of the assessee which is listed for hearing on 02.06.2026. He has also given the details of the tax paid by the Members of the assessee society and submitted that more than Rs.15 crores tax has been paid by the Members in respect of the transfer of the property in question. Printed from counselvise.com 5 SA.No.8/Hyd./2026 3. On the other hand, the learned Sr. DR has vehemently opposed to the stay against the recovery of the demand in question and submitted that the assessee society is a separate body and assessable to tax as Association of Persons [in short “AOP”] and therefore, the Assessing Officer has rightly assessed the income in the hand of the assessee as per the JDA executed by the assessee society transferring the land in question in favour of the Developer who is having 70% share in the developed area and also sold 748 flats as noted by the Assessing Officer while passing the impugned order. The learned DR has further submitted that it is not only a JDA but the Society has also given GPA in favour of the Developer who has sold 748 flats to different buyers realising substantial revenue. She has thus, submitted that there is no infirmity in the Order of the Assessing Officer in assessing the capital gain in the hand of the assessee society. The learned DR has further submitted that once the flats were sold by the builder then, it is not a case of in- determination of the fair market value of the property and therefore, the provisions of sec.50D are not applicable. Printed from counselvise.com 6 SA.No.8/Hyd./2026 4. We have considered the rival submissions as well as the relevant material on record. There is no dispute about the fact that the assessee society has entered into the JDA with M/s. My Home Constructions Pvt. Ltd., under which, the assessee society and its members will get 30% share of the developed area/constructed area and the builder will have 70% share of the developed area. The learned Sr. Counsel has raised various questions including the assessability of the capital gain in the hand of the Society instead of individual Members. However, this is a highly debatable issue which can be considered and decided only after hearing of the appeal and examination of the relevant record and therefore, the contention as raised by the learned Sr. Counsel regarding the taxability of the capital gain in the hand of the assessee society, the determination of the fair market value and applicability of sec.50D involve factual as well as legal issues and no view can be expressed on this issues while deciding the stay applications. Accordingly, in the facts and circumstances of the case, we prepone the hearing of the appeal of the assessee from 02.06.2026 to Printed from counselvise.com 7 SA.No.8/Hyd./2026 16.03.2026. The date was also given as per the convenience of the learned Sr. Counsel for the Assessee and noted down by both the parties. The Registry is directed to list this appeal of the assessee in the category of ‘Out of turn hearing’. To protect the interests of the assessee till the hearing of the appeal, we direct the Assessing Officer not to take any coercive action for recovery of the outstanding demand till the next date of hearing. Since the date of hearing of the appeal is preponed to 16.03.2026, therefore, the interest of the Revenue is also taken care of. Both the parties are directed not to take any adjournment of the hearing and file their paper book if any, well in advance with advance copy to the other party. 5. In the result, stay application of the assessee is dismissed in above terms. Order pronounced in the open Court at the conclusion of the hearing i.e., on 20.02.2026. Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 20th February, 2026. VBP Printed from counselvise.com 8 SA.No.8/Hyd./2026 Copy to : 1. DRF Employees Welfare Society, # 7-1-27, Ameerpet, Hyderabad - 500 016. Telangana. 2. The Income Tax Officer, Ward-6(1), D-Block, IT Towers, 10-2-3, AC Guards, Hyderabad – 500 004. 3. The Pr. CIT, Hyderabad. 4. The DR, ITAT, “A” Bench, Hyderabad. 5. Guard file. BY ORDER Printed from counselvise.com VADREVU PRASADA RAO Digitally signed by VADREVU PRASADA RAO Date: 2026.02.23 15:01:52 +05'30' "