01 August 2011
There is a land on the name of 4 people.
Now they want to gift the land to people who are their relatives u/s 56(2)(vii). So no tax will be levied on the same. A proper registry of the gift will also be done by paying stamp duty.
Now the people who have got the gift want to construct flats on the same and then sell them.
They are receiving the gift as a capital asset.
So implications if:
1. They show the same as capital assets and flats constructed as cost of improvement.?
2. They convert the same into stock for business and claim construction expenses.?
01 August 2011
3. Any other way you may suggest? In case the land is a long-long term capital asset, to get the full benefit of indexation, the Capital Asset should be converted in stock in trade by the 4 persons who are the original holder.
CAclubindia
