Analysis of Section 45(5A) of Income Tax Act, 1961
Sub section (5A) to section 45 has been inserted under the Income Tax Act, 1961 to provide taxability of capital gains arising to the land owner being Individual or HUF, in case of transfer of land or building or both to the developer under a joint development agreement which is in the nature of ‘specified agreement’. In fact, the issue to determine the year in which the land etc. can be said to have been transferred and may be brought to tax and the determination of the value of consideration received in kind has been controversial. Joint development agreements are structured in complex manner and it becomes difficult & controversial to determine the year of transfer of land etc. and the value of sale consideration to be received in the form of developed real estate. There have been conflicting judicial decisions rendered on these issues by the different courts.
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