Where the assessee purchased development rights, entered into a Joint Venture agreement, and agreed to contribute the said development right as ‘capital contribution’ at an agreed consideration to the AOP. The Assessing Officer while framing assessment treated transfer of the development rights under Section 50C of the Act.
The Tribunal held that the introduction of development rights by way of capital contribution under section 45(3) of the Act by the assessee is even though a transfer but it is not a sale because there neither any receipt nor any accrual of any consideration, as held by the Hon’ble Supreme Court in the case of Sunil Siddharthbhai Vs. CIT (1985) 156 ITR 509 (SC). Further this Tribunal case of Voltas Ltd Vs. ITO [2016] 74 taxmann.com 99 (Mumbai), wherein it is held that the provisions of section 50C of the Act could not be applied to sale development rights of land owned by the assessee. Therefore, the provisions of section 50C of the Act are not applicable in the instant case and provision of section 45(3) of the Act will be applied.