External Development Charges Collected In Advance By Builder From Prospective Flat Owners, Can't Be Brought To Tax: Delhi ITAT

The Delhi Income Tax Appellate Tribunal (ITAT) ruled that external development charges collected in advance by a builder from prospective flat owners should not be treated as taxable income. The tribunal clarified that such charges are collected on behalf of a government body for infrastructure development and, therefore, cannot be considered the builder's income. This decision is significant for real estate developers, ensuring that funds collected for external development purposes are not subjected to income tax, thus preventing double taxation on amounts meant for public infrastructure projects.