Tax Treatment Of Joint Development Agreement



Certain roles and responsibilities of each of the parties in the JDA agreements, supported by evidence demonstrating that each party played its role and played an important role in the overall development of the project. As you practice this in real estate, your thoughts on land development are highly appreciated. Sometimes the landowner can have the construction done for their own use for the purposes of their residence and agrees to share a potion with the developer even under a JDA model. In this case, the landowner never intends to sell his share of the built area. So, in such a situation, if TDR is taxable? The author believes that TDR should not be taxable in such cases, as this was never done with the intention of doing business or as part of the owner`s promotion of a transaction. The conditions of Article 7 are therefore not fully met and therefore no delivery should be made. In addition, there will never be a business motive or profit in such transactions. However, it may also be argued that the definition of the term `transaction` in Article 2(17) is very broad and covers any trade, commerce, manufacture, profession, holiday, adventure or any other similar activity, whether or not it has a financial advantage, irrespective of the volume, frequency, continuity or regularity of that activity or transaction. Therefore, the activity of transferring development rights by a landowner, whether or not it is an individual, is a service subject to GST. As indicated above, the new tax regime in Article 45(5A) applies only in the event of a transfer of capital to the JDA. In case of conversion of assets into shares in the context of negotiation by the owner before the conclusion of a registered development contract, the advantage of Article 45 (5A) is therefore The deferral of the tax debt until the date of completion of the project is not available, and the capital gain resulting from the transformation and the commercial profit resulting from the sale / disposal of shares in the trade are taxable in accordance with Article 45 (2) of the law. In accordance with Article 45(2) of the Law, profits or profits resulting from the conversion of an asset into capital by the owner of capital into an undertaking which he carries on or from his treatment by the owner are taxable for income tax plus his income in the preceding year in which those trading shares are sold or transferred by him and, for the purposes of Section 48, the fair value of the assets shall be considered to be ts at the date of such conversion or treatment as the total value of the consideration received or resulting therefrom as a result of the transfer of capital. We then appealed to the Income Tax Court, finding that the transfer was not finalised at the time of the agreement, as the buyer had not been identified during that period.

Therefore, there were no capital gains in David`s hands. .