The taxability of capital gains arising on transfer of title to land from the land owner to the developer in a Joint Development Agreement (JDA) has always been a heated issue. The taxation of Joint Development Agreement was never jointly agreed by the A.O. and the Assessee. There were a few hiccups in the law that were driving a way for litigation from decades:
Irrational determination of date of transfer to be the date on which JDA is entered, by verbatim application of Section 2(27) of the Income Tax Act, 1961.
Vague mode of determination of sale consideration on execution of JDA using fair market value by application of Section 50D of the Income Tax Act, 1961. The fair market value arrived by assessee never appeared to be fair to the A.O. and vice verse!
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