Dy. Commissioner of Income Tax, Central Circle 2(4), Hyderabad. Vs. M/s. Godavari Developers, Hyderabad.

Parties Involved

Facts Summary

The assessee, M/s. Godavari Developers, is a firm in the real estate business. It filed an income return declaring total income as Nil. A search under section 132 was conducted at the premises of M/s. Ramky Estates & Farms Limited, during which a Development Agreement cum GPA dated 29.11.2007 was seized. The agreement stated that the developer paid an amount of Rs.15.52 crores as security deposit to the assessee firm in lieu of the land given for development. The Assessing Officer concluded that this amounted to a transfer of stock in trade and worked out the taxable profits at Rs.6,46,85,173/- for the assessment year 2008-09. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) contending that there was no transfer of land and that the profit sharing ratio among them was 48:52. The Commissioner of Income Tax (Appeals) held that there was no transfer of stock in trade and dismissed the appeal of the revenue.…

Legal Issues

• 1. Whether the transaction amounted to a transfer of stock in trade?
• 2. Whether the profits attributable to the transaction should be taxed in the year of agreement or the year of realization of consideration?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

Similar Judgements

• Crystal Mercantiles Private Limited Vs. ITO, Ward-7(1), Kolkata

  Kolkata 'A' Bench, Kolkata benchAY 2014-15Partly Allowed

• DCIT, Circle 4 (2), vs. Cyberwalk Tech Park Pvt. Ltd.

  Delhi Bench ‘B’ benchAY 2012-13Dismissed

• Shivam Anand vs. ITO, Ward-6(5), Patna

  Patna bench

• Ram Niranjan Banka Vs. ACIT, Circle-40

  D Bench, Kolkata benchAY 2014-15Allowed

• Dy. CIT, Circle-1, Ghaziabad Vs. M/s. Devidayal Aluminium Industries Pvt. Ltd.

  Delhi Bench benchAY 2007-08 to 2015-16Partly Allowed

• Suken Suresh Mehta Vs. Income Tax Officer