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TMI Blog2016 (8) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had received ₹ 65 lakhs as goodwill, (not refundable). Whether mere receipts of ₹ 65 lakhs as goodwill amounts to transfer as separate assessable asset is the main query. In our considered view, the goodwill is generated only because the assessee had entered into the development agreement not otherwise. Hence, the assets under consideration are composite assets linked to development of land. Hence, it cannot be separated. In this case, assessee had received the goodwill and handed over the land for development. The payment of goodwill is prior condition for handing over of land for development. This being the case, the expression goodwill is nothing but part performance towards development of land. It has to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) is erroneous to the extent it is prejudicial to the assessee herein. 2) The learned CIT (A) erred in confirming the action of the Assessing Officer in assuming ₹ 32,50,000/- as Long Term Capital Gain arising out of the transfer of goodwill . 3) The learned CIT (A) in confirming the action of the Assessing Officer in assuming the receipts of ₹ 3,12,000/- as income under the head other sources . 2. Briefly the facts of the case are that the Assessee is a HUF and notice u/s 148 of the Act was issued on 04/03/2011. In response, assessee filed return of income for the AY 2009-10 on 02/04/2011 admitting total rental income of ₹ 1,18,760/-. The AO completed the assessment on 21/12/2011 u/s 143(3) r.w.s. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains, being only in the nature of an advance. The CIT(A) extracted the important portions of the written submissions filed by the assessee in his order at pages 3 to 5 of his order. 5. After considering the submissions of the assessee, the CIT(A) discussed the issue at length and examined the same with various case laws and confirmed the addition to the extent of ₹ 27,50,000/-, the amount of which was received during the current year, by observing as under: 5.12 Applying all the aforementioned legal cannons and decisions to the case of the assessee, I find that there is no doubt about the fact that the transfer of property took place. The assessee has recognised that the transfer took place. The only bone of contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the year since the amounts received were non-refundable and accrued to the assessee at the time of payment. These grounds of appeal are decided in favour of revenue. 6. Before us, the ld. AR submitted that the assessee Shri S. Malla Reddy along with Shri Pochi Reddy, who are the absolute owners of the land admeasuring 6500 sq.yds. in part Survey No. 495, 496, 505, 506 and 515 at Attapur, Rajendra Nagar Mandal, R.R. District, Hyderabad. Further, he submitted that they have entered into development agreement with Shri S. Pandu Ranga Reddy and Shri K. Krishna Reddy for the purpose of constructing multiplex cinema theatre and as per the terms of the agreement development ratios are fixed at 50:50 between the first party and second party. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D/o. Sri S. Pochi Reddy. 9. Kum. Sekursa Vinitha Reddy (Minor), D/o Sri S. Pochi Reddy The first party Nos. 8 9 are minors. Being the Minors under the guardianship of their natural Guardian/Father: Sri Sekursa Pochi reddy, S/o late Sri S. Srisailam Reddy. The said development agreement was entered with three parties as under: M/s K. Krishna Reddy Contractors. Represented by its Managing Partners: 1. Sri Kondakalla Krishna Reddy, S/o Sri Agi Reddy 2. Sri Kondakalla Vikram Reddy, S/o Sri K. Krishna Reddy 3. Sri Kondakalla Chakradhar Reddy, S/o Sri K. Krishna Reddy 6.2 The ld. AR submitted that in the earlier two unregistered agreements the developers were Shri S. Pandu Ranga Reddy and Shri K. Krishna Reddy, whereas, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposal. In that process, they agreed to receive developmental goodwill of ₹ 65 lakhs, out of which ₹ 10 lakhs were received during previous AY and balance ₹ 55 lakhs during the current AY 2009-10. The main issue before us is, whether these receipts of ₹ 55 lakhs are in the nature of advance or goodwill. Also, whether the goodwill is separate from the development of land. It is fact that the assessee had received ₹ 65 lakhs as goodwill, (not refundable). Whether mere receipts of ₹ 65 lakhs as goodwill amounts to transfer as separate assessable asset is the main query. In our considered view, the goodwill is generated only because the assessee had entered into the development agreement not otherwise. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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