Under Section 45, paragraph 1, of the Income Tax Act 1961, all profits or profits derived from the transfer of assets acquired in the previous year, unless otherwise stated in sections 54, 54B, etc. relating to income tax, are considered “capital gains” and are considered to be the income of the previous year during which the transfer took place. Under the current provisions of Section 45, the capital gain in the transfer year is taxable only in certain cases. The definition of “transfer” includes, among other things, any agreement or transaction in which rights are transferred in the event of partial performance of the contract, even if the title has not been transferred. In such a scenario, the execution of the joint development contract between the property owner and the developer triggers the capital gains tax debt in the hands of the owner, the year in which the property is given to the developer for the development of a project. Section 98 provides that the provision can be ignored or redefined or treated as if it had not occurred. There are other consequences, such as for example.B. the nature of the transaction may be changed from capital to income or, conversely, deduction for expenses may be denied. The location of the transaction can also be considered changed. It was also anticipated that the transaction could also be examined in defiance of any corporate structure. 8.Therefore, in the case of common development agreements, for the harmonious interpretation of Section 45, paragraphs 5A, 54 and 54F, capital gains resulting from the transfer of real estate or real estate, or both, should be taxed in the year in which the lessor realizes the dissimilarity of home sales, and the capital gains tax obligation should be limited to units sold during this year. iv.
in a case where the asset is proposed by the owner in or in which it is proposed to provide that, in this case, the capital gains set by the general provisions of the Act are considered to be income from the previous year in which the transfer took place and calculated in accordance with the provisions of the Act , regardless of these provisions. Only applies if a registered contract is executed. In this case, in addition to non-compliance with various JDA clauses, ITAT also ignored the action of the company assessing the conversion of capital into stock into trade in previous valuation years and treated the transfer only as a capital asset. It was found that capital gains from the conversion of land to SIT and related commercial benefits (i.e. the proportional area retained by the proponent, 4000 Sq. Ft) are taxable in AY 21-22, the year in which the project is completed and in which Assesse receives its share in the developed project.