# NRI Inherited Land: ITAT Mumbai Sets Aside a Nil-Cost Tax Bill By Saurabh Garg, founder·6 min read·Published 2026-10-14 **Short answer:** On 12 October 2026 ITAT Mumbai set aside a tax bill that treated a non-resident's inherited land as costing nothing and taxed the full ₹5,17,15,000 sale price as long-term capital gain. The officer and the Dispute Resolution Panel had rejected her 1 April 2001 cost because she had not filed enough evidence. The Tribunal admitted new revenue and land records, which she says show the land was still farmed when it was sold in 2022, and sent the case back. The officer must now decide whether it was agricultural land outside "capital asset" under section 2(14), and if it was not, her cost as on 1 April 2001. No tax has been deleted yet. # ITAT Mumbai Sends Back a Tax Bill That Gave an NRI's Inherited Land a Cost of Zero **On 12 October 2026 the Income Tax Appellate Tribunal in Mumbai set aside an assessment that taxed the whole ₹5,17,15,000 a non-resident received for inherited land, because the officer had put its cost at nil. The Tribunal admitted fresh land and revenue records and sent the case back to the officer, who must first decide whether the land was agricultural and outside the tax on capital gains, and only then fix its 1 April 2001 cost. Nothing has been deleted yet. The seller gets a second hearing on evidence she did not file the first time.** ## The case The appeal is ITA 8696/MUM/2025, *Ms. Divya Choudhary v. ITO (International Taxation) Ward 2(1)(1), Mumbai*, for assessment year 2023-24. Bench I heard it: Beena Pillai, Judicial Member, who wrote the order, and Arun Khodpia, Accountant Member. The hearing closed on 21 July 2026 and the order was pronounced on 12 October 2026. It runs to five pages. The order records that the seller "is an individual and a non-resident for the year under consideration" (para 2). ## What happened She filed a return declaring total income of ₹2,99,202. In the same year she sold immovable property for ₹5,17,15,000. The property "devolved on the assessee through inheritance from her predecessors" (para 2). The order does not say where the land is. Before the officer she made two points. The land was agricultural land inherited from her ancestors and later converted to non-agricultural use. And for cost she took the value of the property as on 1 April 2001, the rule for inherited property (para 2). The officer found that she had not filed adequate evidence on the nature of the land, on the inheritance, or on the 2001 value. He "accordingly treated the cost of acquisition as Nil" and taxed the full sale price as long-term capital gain (para 2.1). The Dispute Resolution Panel upheld that on the same ground, a lack of documents (para 2.2). The final assessment order followed on 9 October 2025 (para 1). ## What changed at the Tribunal While the appeal was pending she applied to add new grounds and new evidence. Her representative said the land was agricultural, that farming was carried on during the relevant period, "including around the time of its transfer in the year 2022" (para 3.1), and that the revenue and land records go to whether the land was a "capital asset" under section 2(14) at all. She had not been able to put the full material before the officer or the Panel (para 3.2). The Tribunal admitted the new grounds, following the Supreme Court in *National Thermal Power Co. Ltd. v. CIT* and *Jute Corporation of India Ltd. v. CIT* (paras 3.3 and 4.1). It admitted the evidence too, because the claim had been rejected "principally for want of adequate supporting evidence" and the officer had never examined what was now filed (para 4.3). It also set out what decides whether land is agricultural. That cannot rest "merely from nomenclature or a solitary circumstance" (para 4.4). The Tribunal listed the actual use of the land, the revenue records, the farming carried on and the crops, the date and effect of any conversion order, where the land is, and the conditions in section 2(14)(iii) where they apply, all to be checked "from the primary record" (para 4.4). ## What the officer must now decide The Tribunal set aside the officer's findings and restored the matter "for de novo adjudication" (para 5.1). The officer must examine the new documents and decide (para 5): - the nature and character of the land at the time of transfer - whether farming was carried on during the relevant period - what the revenue and land records show - the date and legal effect of any conversion to non-agricultural use - whether the land meets the conditions for exclusion from "capital asset" under section 2(14) - if it is a capital asset after all, her alternative claim on the cost or fair market value as on 1 April 2001, under the rules for inherited property The officer may call for original records from the revenue and land authorities. She must produce what he asks for, and he must hear her and decide "uninfluenced by the observations contained in the earlier assessment order or the directions of the DRP" (para 5.1). The appeal was "allowed for statistical purposes" (para 5.1), which is how the Tribunal records a remand. ## Why it matters if you sell inherited land from abroad The bill went to nil cost because the file was thin, not because the department disputed a figure. Both lower authorities said the same thing: not enough documents on what the land was, how it came down the family, and what it was worth in 2001. That is the gap this order points to. Her claim reached a hearing on the evidence only at the second appeal stage, after the officer and the Panel had both ruled. Read this as a report of one order, not tax advice. The order cites "the Act" without naming it, and the outcome of the remand is not known. How the 2001 value and the cost of inherited property work is in our guide to [capital gains on inherited property for NRIs](/guides/capital-gains-on-inherited-property-nri). The wider sale picture is in [capital gains tax for NRIs selling property](/guides/capital-gains-tax-nri-property), and the steps of taking over a family property are in [inheriting property in India as an NRI](/guides/inheriting-property-india-nri). On 7 October 2026 ITAT Chennai ruled on a related 2001 valuation fight in [a ₹35 crore inherited land sale](/guides/nri-inherited-land-2001-valuation-dvo-rejected-itat-chennai-oct-2026). ## FAQ **Did the NRI win her case?** Not yet. The Tribunal set aside the nil-cost assessment and sent it back to the officer for a fresh decision. No tax was deleted. The appeal was "allowed for statistical purposes", the Tribunal's form of words for a remand. **Why was the cost of the inherited land taken as nil?** The officer found that she had not filed adequate evidence on the nature of the land, its inheritance and its value as on 1 April 2001. He treated the cost as nil and taxed the full ₹5,17,15,000 as long-term capital gain. The Dispute Resolution Panel agreed. **Why does it matter whether the land was agricultural?** The new ground is that the land was agricultural land outside the definition of "capital asset" in section 2(14). If the officer accepts that, the question of capital gains on the sale changes at the root. If he does not, he must decide her 1 April 2001 cost instead. **What decides whether land is agricultural, according to the Tribunal?** Not the label alone. The order lists the actual use of the land, revenue records, farming and crops, the date and effect of any conversion order, the location of the land, and the conditions in section 2(14)(iii) where they apply. **Where is the land?** The order does not say. It records only that the property was sold in the year covered by assessment year 2023-24, in 2022, and that it was inherited. *66 MG Road newsdesk* ## Sources - Income Tax Appellate Tribunal, Mumbai Benches, Bench I, *Ms. Divya Choudhary v. ITO (Int. Tax) Ward 2(1)(1), Mumbai*, ITA 8696/MUM/2025, AY 2023-24, hearing concluded 21 July 2026, pronounced 12 October 2026, full text read end to end on 14 October 2026: [https://indiankanoon.org/doc/132091242/](https://indiankanoon.org/doc/132091242/) . The Tribunal's own site, itat.gov.in, puts its order search behind a captcha, and Indian Kanoon's court-copy download needs a login, so we read the full text as published there. About the author: [Saurabh Garg](/about) Saurabh Garg has run the venture studio C4E for twenty years. He founded 66 MG Road in 2026, reads every proposal request, and replies within one business day. [saurabhgarg.com](https://saurabhgarg.com) · [@saurabh](https://x.com/saurabh) · [LinkedIn](https://www.linkedin.com/in/saurabhgarg) Information on this page is as on 2026-10-14. Rules, rates, deadlines and government portals change without notice, so verify against the official source before you act. This page is for information only. It is not tax or legal advice, and it is not a substitute for a qualified adviser who knows your position. ## Related guides - [Capital Gains Tax on Inherited Property in India for NRIs](/guides/capital-gains-on-inherited-property-nri) - [Capital Gains Tax for NRIs on Property: The Post-2024 Regime](/guides/capital-gains-tax-nri-property) - [Inheriting Property in India as an NRI: From Death Certificate to Money in Your Account](/guides/inheriting-property-india-nri) - [An NRI Sold Inherited Land for ₹35 Crore. ITAT Chennai Kept Her Valuer's 2001 Figure Over the Department's](/guides/nri-inherited-land-2001-valuation-dvo-rejected-itat-chennai-oct-2026) ## Compare and cost - [The NRI Property Management Companies in India: A Comparison You Can Check](/guides/best-nri-property-management-companies-india) - [What NRI Property Management Costs in India: The Four Models and What Hides in Each](/guides/nri-property-management-cost-india) - [NoBroker NRI Services Review: What the Pages Promise and What They Leave Out](/guides/nobroker-nri-services-review) --- Source: [https://66mgroad.com/guides/nri-inherited-land-nil-cost-agricultural-remand-itat-mumbai-oct-2026](https://66mgroad.com/guides/nri-inherited-land-nil-cost-agricultural-remand-itat-mumbai-oct-2026) · 66 MG Road. Full LLM brief: https://66mgroad.com/llms.txt