Taxability of Joint Development Agreement :
CLAUSE(S) OF FINANCE BILL, 2017 |
PARTICUL ARS OF AMENDME NTS | SECTION | AMENDMENT / NEWLY INSERTED |
APPLICABLE W.E.F. |
BRIEF OF AMENDMENT |
22 | Taxability of Joint Development Agreement |
45 (5A) | New Insertion | 1/4/2015 | There were lot of disputes in past on the taxability of Capital Gain for owner in respect of Joint Development agreement (Collaboration Agreement). To settle all the disputes sub- section 5A to Section 45 is inserted. As per this sub-section Capital Gain arising to Individual or HUF under a specified agreement will be tax to income tax in previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority. Previously as per definition of transfer taxability arises on transfer of possession to the developer. Therefore it is seen as welcome move to remove the genuine hardship. Consideration in this case will be stamp duty value of Land or building or both for his share increased by monetary consideration if any. (Author’s Note – Word cash is used in subsection (5A) and clause (ii) of Explanation, it may classified to refer to monetary consideration. Section is only for Ind and HUF, However Other assessee also suffers from same hardship, if they want to enter into JDA for its business or some other purpose, benefits of 45(5A) are not available.) |