The question before the High Court was whether the Tribunal was right in the circumstances of the case interpreting the terms of development agreement and rejecting the contention that the entire transfer took place in an earlier year and no potion of the capital gains is taxable in this year. Question is answered in favour of the assessee. Court also held that cost of construction referred in the agreement is held to be reasonable and the developer providing rent free accommodation is not assessable as capital gains. As regards sale of land and residential house to developer and construction of residential house by developer is entitled to exemption. (AY. 2001-02)
P. Madhusudhan v. ACIT (2019)419 ITR 194/(2020) 189 DTR 163 (Mad)(HC)
S. 45 : Capital gains–Transfer of land to developer-No Objection Certificate obtained in June 1994-Built-up area handed over in financial year relevant to AY. 2001-02-Transfer took place when agreement for development of land was approved-Cost of construction referred in the agreement is held to be reasonable-Developer providing rent free accommodation is not assessable as capital gains-Sale of land and residential house to developer-Construction of residential house by developer-Entitled to exemption. [S. 2(47)(v), 54, 54F, 269UL, Transfer of Property Act, 1882, S. 53A]