18 December 2012
I have a 500 yard plot. There is another person having a 500 yard plot right next to me.
Now we both want to construct a property in it. It is just a single project and we dont want to do it after that.
Should it be converted into a partnership and land be transferred to it or can we do the same as co ownership by spending equal amount and sharing the sale proceeds.
18 December 2012
Both ways have its own merits and demerits. Income tax may NOT be the sole consideration. The cohesive bond which exist amongst both may play a vital role in this.
18 December 2012
Well, all other things are in place. The other person has no problem in any option. This is our responsibility and our main consideration is Income Tax.
18 December 2012
Keeping land rights intact, you can think of selling the constructed super structure on perpetual lease basis. This will not involve any capital gain as land is not being transferred. Construction sale shall be taxed as business income. Your views please CA Ashwani.
18 December 2012
We dont want to keep the land rights intact, we want to sell it outright. There is no problem in giving capital gains (but will those be long term or short term?
should we show the cost of construction as Improvement cost
or should we bifurcate the same into long term of land and short term for property?
CAclubindia
