Taxation of long-term capital gains arising from a development ...

Non-resident taxed on capital gains from development deal despite jurisdiction challenge.

Case Laws     Income Tax

November 19, 2024

Taxation of long-term capital gains arising from a development agreement u/s 153C read with Section 144C(3) of the Income Tax Act. The assessee, being an NRI, was assessed to have no source of income in India and was taxable under the residual charge at Delhi. The jurisdiction of the Assessing Officer (AO) u/s 153C read with Section 144C(3) was challenged, but the ITAT held that the AO having territorial jurisdiction where the property is situated and where the necessary documents/information is available should be the appropriate forum for adjudication. Section 127 was not applicable as there was no transfer of jurisdiction from one authority to another. The ITAT upheld the CIT(A)'s decision that a transfer took place on account of the Joint Development Agreement (JDA) entered on 30.12.2015, as the assessee was entitled to receive built-up flats, indicating a transfer of land/capital asset. The taxable event occurred in the assessment year 2016-17, and the income was rightly charged in that year. The valuation of the property at Rs. 5,000 per sq.yd by the AO was upheld, rejecting the registered valuer's valuation of Rs. 8,000 per sq.ft, as the valuation report did not.

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