This case involves Ramesh Chandna appealing against the CIT(A) order concerning the computation of capital gains tax for the assessment year 2016-17.
Ramesh Chandna, a Doctor by profession, reported income from various sources including significant capital gains from the sale of inherited property, which he and his brother sold to a builder. While his brother received a straightforward cash settlement, Chandna’s compensation included both cash and a stake in the newly constructed property.
The core of the dispute lies in how the Assessing Officer (AO) calculated the capital gains. The AO’s method of computing the property’s transfer value and Chandna’s retained stake led to a higher taxable capital gain than what Chandna reported, which he contended overlooked the actual structure of the transaction and benefits received under the property development agreement.
The tribunal examined the sale and collaboration agreements detailing the distribution of property and payment. It recognized that Chandna received not just a portion of land but also significant portions of the newly constructed property, which should be factored into the capital gains calculation. The tribunal adjusted the taxable gain calculation to better reflect the actual transaction and the specific terms of Chandna’s agreement with the builder.
The tribunal’s decision clarified the treatment of complex property transactions involving redevelopment agreements in capital gains tax calculations, offering a precedent for similar cases. It underscored the importance of understanding the full context of property transactions in tax assessments.
ITA 1081/DEL/2020: Ramesh Chandna vs. ACIT Circle-61(1), New Delhi
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