Capital gain
This query is : Resolved
17 April 2012
Mr. A, an builder owner of plot, which was purchase before 12 months, enter into a development agreement of residential row house project of 11 row houses with Mr. B. as per agreement Mr. A, giving his plot to Mr. B, for development and in consideration Mr. A takes 5 row houses.
my query........
1) under which head this transaction is consider. (business income o capital gain)
2) what will be tax treatment.
my query........
1) under which head this transaction is consider. (business income o capital gain)
2) what will be tax treatment.
18 April 2012
In my view, in case of the builder the plot of land may be treated as a stock in trade or
a revenue expenditure. While entering into an agreement with the Developer, the land gets transferred. The FMV of 5 row houses is sales
consideration for the said land and can be taxed under the head IFBP as Business Income.
.
Tax liability will be the same even if you consider the plot of land as short term Capital Asset.
.
Seek opinion of other experts also.
.
a revenue expenditure. While entering into an agreement with the Developer, the land gets transferred. The FMV of 5 row houses is sales
consideration for the said land and can be taxed under the head IFBP as Business Income.
.
Tax liability will be the same even if you consider the plot of land as short term Capital Asset.
.
Seek opinion of other experts also.
.
18 April 2012
thx a lot Bafna sir for your valueable opinion.
18 April 2012
one more thing i want to point out. Mr.A not transfaring title in the name of Mr. B as there is a mutual agreement between them. is it make any change in tax treatment
18 April 2012
one important point i missed to pointed out. that Mr. A was not transfer title of land in the name of Mr. B, as they r mutually agreed on the terms of development. is it make any change in tax treatment.
19 April 2012
To give the land for development is tantamount to transfer as per the views of experts because without providing effective possession of the land, development activities can't be performed.
.
.
19 April 2012
In your case it is important to note when Mr. A purchased the land. If the land was purchased more than 3 years then Long Term Capital Gain will come and if it is less than
3 years then it is Short term capital gain will applicable as soon as you enter into a development agreement. This is first phase. In the second phase you can show investment and claim deduction under Section 54 or 54F as the case may be by taking the value of the row houses as investments but still there is also very much controversies
3 years then it is Short term capital gain will applicable as soon as you enter into a development agreement. This is first phase. In the second phase you can show investment and claim deduction under Section 54 or 54F as the case may be by taking the value of the row houses as investments but still there is also very much controversies
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability
- Is Aadhar PAN linking required for opening bank account?
- Where to show the RCM on Rent paid to unregistered landlord
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Gst Sales of FY 2023-24
- RCM - commercial rent paid to URP under GST
- Whether still royalty
- TDS NUMBER SURRENDER
- Legal heir raised refund , but refund issued to the closed account of deceased.
- Offsetting interest income against derivative trading losses
- My Last working day in current org is in novemebr 2024 but they are asking me to submit IT proof
- Indexation benefit applicability
- SEC 54 OF IT ACT
- Passed group 2 exams under wrong gender
- REQUIREMENT OF 15CB
- QUERY FOR RCM ON RENT
- APPEAL-CIT
- Payable outstanding for years disallowance
- Issue of gst e invoice
- Interchangeable words in accounts
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
