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Nov 06, 2025
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Wife wins case against tax department after getting Rs 1.85 crore compensation from builder for construction delay; ITAT Mumbai rules in her favour
A husband-wife duo entered into a development agreement with a builder from Mumbai, which stated that they would receive a certain number of apartments in exchange for their land. The agreement included a clause that if the builder failed to deliver the apartments on time, then she and her husband will be entitled to some compensation.
The builder failed to give possession of the apartments on the promised time and so he paid Rs 1.85 crore as compensation to her. He also paid compensation to her husband. She reported this money (Rs 1.85 crore) in her income tax return (ITR) as long-term capital gains (LTCG).
However, the income tax department believed that Section 50C of the Income Tax Act, 1961 is applicable in this case even for the cash compensation received and thus applied the stamp duty valuation at Rs 3.51 crore and calculated her long-term capital gains accordingly.
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