Mumbai Bench of The Income Tax Administrative Tribunal (ITAT) has made it clear that the buying a flat by NRIs with money earned in foreign countries do not come under the purview of the income-tax, but it should be regarded as an investment. It ruled that the income on fixed assets earned in India and the income earned overseas are two distinct entities. The money earned in foreign countries is invested in India will not come under income-tax purview, the Bench said bringing relief to the NRIs.
Rajiv Ghai, who lives in the UAE, purchased flats worth Rs 8.5 crore in India during the past three decades. He made payments properly with all the supporting documents. Income-tax raids on the builder who sold flats to Rajiv, the IT officials charged the builder with receiving Rs 2.5 crore illegally from Rajiv and also Rs 4.47 crore towards interest. The IT regarded it all as unexplained income, attracting 60 per cent tax and 25 per cent surcharge. Rajiv approached the ITAT, which ruled verdict in its favor. The tribunal regarded his earnings as income, but ruled out for him to pay tax since he did not earn the amount in India.
