Ramesh Reddy Gongalla Vs. ADIT (Int.Taxn)-1, Hyderabad

Parties Involved

Facts Summary

Ramesh Reddy Gongalla, a nonresident of India and resident of the United States, entered into a development agreement with M/s Preston Developers LLP for a 500 sq.yds site. The agreement entitled him to 47.25% of the built-up area in lieu of 52.75% of the land. However, the developer did not carry out any work due to internal disputes, leading to a stay on the developer's activities by a special court. The Assessing Officer valued the site at Rs.50,00,000/- and computed capital gains. The assessee argued that no capital gains accrued as no possession of the constructed area was handed over and the entire sale consideration was reinvested in the villa. He also pleaded that the value of the property should be referred to the Valuation Cell for determination.…

Legal Issues

• 1. Whether the Assessing Officer was justified in computing capital gains without referring the matter to the DVO for valuation?
• 2. Whether the capital gains should be computed in the year in which the possession of the constructed area is handed over?

Judgment Outcome

Decided in favour of Assessee.

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