Taxman alleged IT park firm was a tax dodge; ITAT rules for five landowners
The Income Tax Appellate Tribunal (ITAT) ruled in favor of five Bangalore landowners in a dispute where tax authorities alleged their partnership firm was used for tax evasion. The landowners successfully demonstrated that the firm properly managed rental income and tax filings.
Why it matters
The case clarifies the legal distinction between legitimate business structuring and tax avoidance in real estate development.
What constitutes tax avoidance? In a recent ruling, five Bangalore landowners have secured relief from ITAT in an income tax dispute over alleged undisclosed rental income.They established that the building belonged to their partnership firm, which received rent directly into its bank account, filed income tax returns and paid taxes on the earnings.What the case is aboutIn 1999, five landowners decided to develop their property into an IT park and SEZ zone. To take the project forward, they signed a memorandum of understanding (MOU) with a builder.Also Read | He bought a Rs 41.85 lakh and paid Rs 39.15 lakh but did not get possession; builder blames PMC-PMRDA jurisdiction changes, MahaRERA rejects excuse and orders interest payout to homebuyerIn 2005, the landowners and the same builder executed a registered joint development agreement (JDA).
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