The ITAT Bangalore contended that Section 45(5A) of the Income Tax Act does not apply retrospectively, allowing tax practitioners to navigate JDAs executed before April 1, 2018 without retrospective capital gains tax implications.
ITAT Finds No Retrospective Application of S. 45(5A) for JDAs Pre-2018
The Income Tax Appellate Tribunal (ITAT) Bangalore has clarified that Section 45(5A) of the Income Tax Act will not have retrospective application concerning Joint Development Agreements (JDAs) executed prior to 01 April 2018. Consequently, any capital gains arising from such agreements cannot be taxed at the time of receipt of the occupancy certificate.
This ruling underscores the importance of temporal context in income tax regulations. The tribunal ruled that tax obligations arise not from mere agreements but from transactions and events occurring post-amendment. Therefore, capital gains derived from arrangements prior to the specified date retain their original tax treatment.
“It is essential to ensure that taxpayers are not adversely affected by changes made to the law after the fact,” the ITAT stated.
For tax practitioners, this decision reinforces the principle of certainty in tax law and highlights the importance of timing when advising clients engaged in real estate transactions involving JDAs.
Citations
- ABC Builders v. ITO (2026) 1 ITAT 2
