The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) held that transfer of development rights between two partnership firms is not taxable under the capital gain from partners.
The Assessee,Bhagwan Laxman Rokde is an individual which according to AO he has not filed his return of income for the year under consideration. Who is engaged in the business of trading footwear and civil contractor in the name and style of M/S. Omkar Developers.
As per the information, AO found that as per the Non Filers Monitoring System ( NMS ), assessee has entered into transaction of sale of property pertaining to F.Y.2010-11 relevant to A.Y.2011-12, which was not disclosed.
Accordingly, notice under Section 148 of the Income Tax Act 1961 was issued . Thereafter before the AO the assessee submitted that assessessee has neither sold any property nor has purchased any immovable property during this year.
Subsequently , the AO rejected the contention of the assessee and concluded the assessment.
Aggrieved by the order, the assessee filed an appeal before the tribunal who dismissed the appeal. Accordingly the assessee filed a second appeal before the tribunal.
Jigar Mehta, Assessee Representative ( AR ) argued that the transaction of sale proceeds pertains to transfer of development rights by M/s. Sai Developers which is a partnership firm wherein assessee is a partner;
Although the Ashok Kumar Ambastha, revenue counsel argued that assessee instead of explaining the transaction in respect of sale of property, cash deposits and other deposits appearing in the bank account has not given any proper explanation and has been stating that he has not carried out any such transaction. Hence the sale consideration as computed under ‘income from business and profession’
After reviewing the facts the two member bench comprising Amit Shukla, ( Judicial Member ) & S Rifaur Rahman, ( Accountant Member ) quashed the reassessment proceedings and held that transfer of development rights between two partnership firms is not taxable under the capital gain from partners.
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