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July 2026

In the absence of consideration and absolute possession, capital gains cannot be taxed u/s 45(1).

By Jagdish T Punjabi, Chartered Accountant Devendra Jain & Aditya Bhatt, Advocates
Reading Time 3 mins

28. TS-567-ITAT-2026(HYD)

Vasudeva Rao v. ITO

A.Y.: 2014-15

Date of Order: 17.4.2026

Sections: 2(47), 45

In the absence of consideration and absolute possession, capital gains cannot be taxed u/s 45(1).

FACTS

The assessee, for the first time, filed a return of income in response to a notice issued under section 147 of the Act, declaring total income to Rs 11,029 being interest income. In the course of assessment proceedings, the assessee denied any liability to capital gains tax on account of execution of Joint Development Agreement (JDA) dated 11.1.2013, in respect of which the Assessing Officer (AO) had information in his possession. Since the share of the assessee in respect of land which was subject matter of JDA was 1/8th, the AO taxed 1/8th of the total consideration of Rs 5.30,50,000 under JDA i.e. Rs 66,31,250 to be the long-term capital gains taxable in the hands of the assessee.

Aggrieved, the assessee preferred an appeal to the CIT(A) who upheld the action of the AO.

The primary issue raise

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