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Whether on the facts and circumstances of the case and in-law, the learned CIT(A) erred in deleting the addition made on account of sale of development rights amounting to Rs. 5,40,00,000 without appreciating the fact that this amount had accrued to the assessee on account of transfer of its rights in the property and therefore was liable to offer this amount for taxation as income from capital gains.

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Sec. 5 & 45 of Income Tax Act, 1961 - Capital gains - The assessment was originally completed at NIL income. Subsequently, the assessment was reopened on the basis of information received from investigation wing of the income tax department, to the effect that the assessee had transferred development rights, for a consideration of Rs 5.40 crores, to Shivalik Ventures Pvt Ltd, and out of this sum of Rs 5.40 crores, the assessee had already received Rs 86.40 lakhs during the relevant previous year. The AO proceeded to bring the entire amount of Rs 5,40,00,000 to tax in the relevant previous year. Aggrieved, assessee carried the matter in appeal. CIT(A) upheld the plea of the assessee on merits, and deleted the addition. The Tribunal on the revenue’s appeal agreed with the finding of CIT(A) held that :- It cannot be open to the AO to disregard the supplementary, or modification- whichever way one terms it, agreement, only because it’s result is clear and unambiguous negation of tax liability in the hands of the assessee. As to whether the amount is actually refunded or not, nothing turns on that aspect either. Just because the assessee does not pay the amounts to be paid by the assessee as income of the assessee. In the light of these discussions, as also bearing in mind entirety of the case, the taxability of Rs 5.40 crores, on account of what is alleged to be, transfer of development rights is wholly devoid of merits.—ITO vs. NEWTECH (INDIA) DEVELOPERS.[2020] 25 ITCD Online 094 (ITAT-MUMBAI)