ITAT Rules No Income Tax on New Flat Received in Exchange Under Section 56(2)(x)

The Mumbai Income Tax Appellate Tribunal (ITAT) has held that receiving a new flat in exchange for an old one during redevelopment by the builder or developer is not taxable under Section 56(2)(x) of the Income Tax Act.

The Tribunal observed that this transaction involves relinquishing rights to the old flat rather than acquiring property at a discounted value.

Such transactions may be subject to capital gains tax, but homeowners can claim an exemption under Section 54. Accordingly, the ITAT directed the deletion of the addition made by the tax authorities.