Topic
The Bombay High Court ruled that proceeds from selling flats in a completed real-estate project are capital gains, not business income, because the seller’s intent was investment and the holding period was long. Hence, tax authorities must prove a trade-like activity, and developers will be taxed only on capital gains.
The ITAT Delhi has ruled that maintenance charges collected by a realty company from tenants constitute business income under the Income Tax Act, not income from house property. This allows the assessee to claim full deductions under Section 37, significantly impacting real estate firms that bundle maintenance fees with rentals and altering how such income is reported and taxed across the sector.
ITAT Ahmedabad has ruled that an assessing officer cannot use rectification under Section 154 to convert income previously accepted as business income into unexplained income under Section 69A when the classification is genuinely debatable. This protects taxpayers from retrospective reclassification via procedural shortcuts, reinforcing that rectification is for clerical errors only - not for revisiting contested tax positions.
ITAT Ahmedabad ruled that borrowing funds alone cannot reclassify share sales as business income; the decisive factors are the assessee's investment intent, holding duration, and consistent accounting treatment. This clarifies a critical boundary for individual investors and traders, protecting genuine long-term gains from being wrongly taxed as business profits.
ITAT Nagpur rules that land held as stock-in-trade in a land development business is not subject to capital gains tax under Section 50C, affirming business income treatment. The decision clarifies tax liability for developers and traders, ensuring consistent application of income tax provisions on trading assets.
The ITAT Dehradun has ruled that when a business voluntarily discloses excess stock as part of its declared business income during a survey under Section 133A, it cannot be later reclassified as unexplained investment under Section 69A and taxed at the punitive rate of 60% under Section 115BBE. This protects legitimate traders from arbitrary reclassification and reinforces that disclosure in good faith during survey proceedings must be treated as business income, not hidden wealth.