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Nov 15, 2025
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Homeowners, not housing society, must pay capital gains tax on sale of development rights to builders, rules ITAT Mumbai
On October 27, 2025, the Income Tax Appellate Tribunal (ITAT) Mumbai ruled that short term capital gains (STCG) from transferring development rights to a builder under a registered agreement, should be taxed in the individual homeowner’s hands rather than the housing society’s.
This ruling came about after a case was filed by the RBI Employees Bhagvati Co-op. Housing Society Ltd which is a Co-operative Housing Society registered under the Maharashtra Co-operative Housing Society Act 1960. The housing society filed this case against the income tax department after they added Rs 5 crore (4,97,63,657) to their STCG income and slapped on a penalty of Rs 1.5 crore (1,53,76,971).
Chartered Accountant Suresh Surana said to ET Wealth Online that in this case of ITO vs RBI Employees Bhagvati Co-operative Housing Society Ltd., the assessee, a residential society in Mumbai, entered into a redevelopment agreement with a developer.
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