| COURT: | Bombay High Court |
| CORAM: | G. S. Kulkarni J, M. S. Sanklecha J |
| SECTION(S): | 37(1), 5 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Accrual of income, capital gains, Development agreement, real income theory |
| COUNSEL: | Jignesh R. Shah |
| DATE: | February 11, 2015 (Date of pronouncement) |
| DATE: | February 24, 2015 (Date of publication) |
| AY: | 2007-08 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| (i) Even if gains have accrued on execution of the development agreement as per Chaturbhuj Dwarkadas, the subsequent modification/ supercession of the agreement means that gains are not taxable as per real income theory, (ii) expenditure on buy-back of shares of warring shareholders is business expenditure | |
In Chaturbhuj Dwarkadas Kapadia, the issue was to determine the year in which the property was transferred for the purpose of capital gains. In this case the issue is what is the consideration received for the transfer of an asset. No income is accrued or received of the value of 18000 sq.feet of constructed area under the development agreement because the said agreement was not acted upon as it came to be uperseded/modified by the Tripartite agreement. This was the position when the return of income was filed. On the application of the real income theory, there would be neither accrual nor receipt of income to warrant bringing to tax to the constructed area of 18,000 sq.ft which has not been received by the assessee (CIT vs. Shoorji Vallabhdas 46 ITR 144 (SC) followed)
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