If you find a new flat on the exchange of your old flat, then you will not have to pay tax on it. The Mumbai Income Tax Apelet Tribunal (ITAT) has given this decision. He has said that if a person acquires a new flat in the old flat exchange, then he will not have to pay tax under Section 56 of the Income Tax Act. This section includes provisions of ‘other sources from income’. Let’s understand what the whole matter is.
What is the whole matter?
Anil Pitale bought a flat in 1997-98. He exchanged it in 2017 and took a new flat. Income Tax Department (Income Tax Department)) The difference between the stamp duty value of the new flat and the indexed cost of the old flat was considered as taxable income. The value of stand duty of the new flat was 25.17 lakhs, while the indexed cost of the new flat was 5.43 lakhs. This difference of both was Rs 19.74 lakh, which was considered by the Income Tax Department under Section 56 (2) (X). The Income Tax Commissioner (Appeal) also considered it right.
On what basis did ITAT decide
ITAT refused to accept it as correct. He said that the provisions of section 56 (2) (X) are not applied in the deal of such redevelopment. The tribunal also said that the provision of Capital Gens Tax should be implemented on such transactions. It states that if the profit from the property transactions is invested to buy a new residential property, then the capital gence is exempted from tax.
A large number of taxpayers will get relief
ITAT also said that Tax Authorities used section 52 (2) (X) in this case, which is not good. This order of ITAT has brought relief to a large number of taxpayers who find a new flat on the old flat exchange.