Allotment of land by HUDCO

This query is : Resolved

BIJAY MITTAL (Querist)
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18 March 2008 The assessee advanced money for the purchased of land from HUDCo.The land was allotment by the harayana govt.on lottery system.The assessee was allotted the land.The assessee transfer the allotment to some other party thereby earning some profit.The query is whether the profit earned on the transfer of the land without purchasing the same shall constitute capital gain or shall it be considered as income from other sources.The advance for the land was given some 3 years back.

R.V.RAO

R.V.RAO (Expert)
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18 March 2008 THE MONEY PAID AS ADVANCE BY ASSESSEE TO HUDCO IS A PART PAYMENT OF COST OF LAND ,WHICH WAS ALLOTTED LATER.SO THE QUESTION OF NOT PURCHASING LAND DOES NOT ARISE.
THE DIFFERENCE BETWEEN LAND PRICE ON ALLOTMENT DATE AND SUBSEQUENT TRANSFER DATE ( BY ASSESSEE TO SOMEBODY)CONSTITUTES A CAPITAL GAIN.THERE IS DOCUMENTATION IN THE FORM OF ADVANCE PAYMENT BY ASSESSEE ,LETTER OF ALLOTEMENT BY HUDCO ETC...TO PROVE HIS OWNERSHIP .THE SALE BY HIM SUBSEQUENTLY IS ALSO RECEIVED PRESUMABLY BY CHEQUE PAYMENT.ALL THESE SUPPORT THAT IT IS A PROPERTY TRANSACTION BOUGHT AND SOLD LIABLE TO CAPITAL GAINS TAX.AS PER ALLOTMNT LETTER WHETHER HE IS ELIGIBLE TO SELL ETC.. NEEDS VERIFICATION.
R.V.RAO