SUVARNA CHANDRAKANT BOJANE ,MUMBAI V. INCOME TAX OFFICER 42(3)(4), MUMBAI

ITA 1996/MUM/2025

AI Insights

The case revolves around the appellant, Suvarna Chandrakant Bhojane, who entered into a Joint Development Agreement (JDA) with M/s. B.G. Sovani Associates for the development of his land. The Income Tax Officer (ITO) treated this agreement as a transfer of property under section 2(47)(v) read with section 53A of the Transfer of Property Act, leading to the imposition of short-term capital gains tax for the assessment year 2011-12. The appellant contested this, arguing that there was no transfer of ownership as he retained control over the property and that capital gains should only be taxed in the year the flats were handed over, not when the JDA was signed. The CIT(A) upheld the ITO's decision, which was later challenged in the ITAT.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361140 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2011-2012
• Other Referred Cases: Sadia Shiekh (Tax Appeal No. 11&12 of 2013 dated 2.12.2013), ACIT Vs. Jawaharlal Agicha (2016) 75 taxmann.com 121 (Mum-Trib)
• Laws Referred To: Income Tax Act, Transfer of Property Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: S.C. AGRAWAL
• Keywords: Capital asset; Capital Gains

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “B” Bench, Mumbai. Before Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara (AM) ITA No. 1996/MUM/2025 (Assessment Year : 2011-12) Suvarna Chandrakant Bhojane Flat No. 401, 4th Floor Wadhwa Group, Boulevard-3 LBS Marg, Ghatkopar West Mumbai-400 086. Vs. ITO 42(3)(4) Kautilya Bhavan Mumbai. PAN : AGIPB2777K Appellant Respondent Assessee by : Shri S.C. Agrawal Revenue by : Shri Leyaqat Ali Aafaqui Date of Hearing : 07/05/2025 Date of pronouncement : 20/05/2025 O R D E R Per Omkareshwar Chidara (AM) :- The main grievance of the appellant in this case is that the Ld. AO is not correct in levying capital gains tax when the land is given to the builder, M/s. B.G. Sovani Associates, for development purposes. In the grounds of appeal before the ITAT, the appellant has stated that there is no transfer of property as per section 53A of the I.T. Act and entire control over the property remains with the appellant. 2. In this case, the appellant has entered into joint development agreement (JDA) in this year and as per the agreement, the developer has agreed that the appellant would be given 30 flats to him on completion of the project. Based on this JDA, the Ld. AO held that short term gain arises in view of section 2(47)(v) r.w.s. 53A of Transfer of Property Act in this year itself. The Ld. CIT(A) agreed with the addition of Ld. AO and confirmed the same. 3. Before the ITAT, the Ld. AR of the appellant has argued as follows :- 2 a) During the year, the appellant has not transferred any ownership rights of his land and entered into a development agreement to construct the flats and hence section 2(47)(v) is not applicable, as he is still the owner of land. b) In similar circumstances, the Ld. CIT(A) has accepted the contention of appellant in his wife’s case, by following the Hon'ble Jurisdictional High Court’s case of Sadia Shiekh (Tax Appeal No. 11&12 of 2013 dated 2.12.2013), where it was held that short term capital gains would not be attracted in the impugned year where only JDA was entered into and capital gains are attracted only when flats are handed over to the appellant. c) The appellant has already paid required taxes in the year in which the flats were handed over to him. 4. The Ld. DR relied on the orders of lower authorities. 5. Both sides heard. The Hon'ble Bombay High Court in the case of Sadia Shiekh (supra) has held that the capital gains are exigible only when the flats are handed over to appellant and not when the JDA was entered into because the appellant is still the owner of the land and ownership rights were not transferred to developer in the year of entering into the JDA. Subsequently, this decision was followed by ITAT Mumbai in ACIT Vs. Jawaharlal Agicha (2016) 75 taxmann.com 121 (Mum-Trib). In view of the same, the capital gains are not attracted in this year and hence the addition is deleted. 6. The appellant’s appeal is allowed. Order pronounced in the open Court on 20/05/2025. Sd/- Sd/- (BEENA PILLAI) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 20/05/2025 3 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "