Sec. 45 of Income Tax Act, 1961—Capital gain —Theassessee Company filed return of income on 30.10.2007 for the Assessment Year 2007-08. Since there was a reason to believe that income has escaped assessment, the assessment was reopened under Section 147 of the Income Tax Act, 1961, and a notice under Section 148 of the said Act was issued. The said notice was followed by notices under Sections 143[2]/142[21] of the IT Act.Subsequently, the assessment was completed under Section 143[3] read with Section 147 of the IT Act on 31.03.2005. Theassessee Company, filed an Appeal before the Commissioner of Income Tax [Appeals] by invoking Section 246A[1] of the IT Act.
Theassessee Company before the Appellate Authority, contended among other things that the action on the part of the Assessing Officer in bringing to tax, as the Long Term Capital Gains, by applying Section 2[47][v] read with Section 45 of the Act, is per se unsustainable for the reason that the assessee Company had entered into an unregistered Joint Venture Agreement with Developer for developing multi-facility complex consisting of IT/ITES parks, commercial, service and residential apartments. The appellate authority partly allowed the appeal. The assessee and revenue filed the appeal before the tribunal. The tribunal had given a finding that as per the explanation under Section 147 of the IT Act, it is very clear that due to non-disclosure of Capital Gain by the assessee Company, the income chargeable to tax, had escaped assessment and theassessee Company did not produce anything before the CIT [Appeals] to show as to how there was no transfer of impugned property in the Assessment Year and how the provisions of Section 247[5] of the IT Act is applicable and consequently, held that the entire re-assessment proceeding was valid and thereby, upheld the action of the Assessing Officer.The assessee Company, challenged the legality of the order in respect of rejection of the other grounds, filed the Tax Case Appeals.
Held that the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains ''arose'' from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act.''The case was remanded to the Assessing Officer for fresh consideration and adjudication and the Assessing Officer shall complete the said exercise in accordance with law as expeditiously as possible.