He gave land given for road, sold TDRs for Rs 6.02 crore; ITAT taxes capital gains
The landowner chose to sell the TDRs he had received for surrendering 2,839 square metres of land. He sold them to a builder for Rs 6 crore but did not pay income tax on the proceeds. His understanding was that the amount received from the sale was a capital receipt and was therefore not taxable.
When the Bruhat Bengaluru Mahanagara Palike (BBMP) demanded land for road widening, a landowner agreed to surrender 2,839 square meters of his property in exchange for Transferable Development Rights (TDRs). The government awarded him TDR certificates after taking over his land.The landowner then sold these TDRs to a builder for Rs 6 crore, believing them to be capital receipts and thus not subject to income tax.
He filed a notice with the Income Tax Department, but it disagreed with his assessment.He challenged the department's decision before the National Faceless Appeal Centre (NFAC) in Delhi, but the appeal was dismissed. The landowner then went to the Income Tax Appellate Tribunal (ITAT) Bangalore to contest the tax assessment.The ITAT Bangalore ruled that the sale of TDRs was taxable as capital gains, upholding the Income Tax Department's position.
The tribunal directed the Assessing Officer (AO) to give the landowner credit for the cost of the land surrendered for the TDRs.
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