09 September 2014
CASE Mr.A B& C booked an Apartment for Rs.35 lacs in 3 names A,B &C in Sept.’2005. Initially they paid booking amount of Rs. 5 lacs . Then they took a bank home loan and paid Rs.20 lacs to the builder in Sept.’2009. On completion of the apartment, in June’14 , they paid balance Rs.10 lacs to the builder . In the complete transaction, they paid a total of Rs.35 lacs to the builder plus interest of Rs.8 lacs to the bank. But they did not take possession instead they sold the apartment to another customer for Rs.48 lacs. The customer paid transfer fees directly to the builder and got the apartment transferred in his name.
In the above case I assume that 1. they will be liable to capital gain on account of transfer of rights.
I want to know: 1. whether it’s a short term capital gain or long term capital gain? (can we consider the date of booking as date of acquisition of rights?) 2. how to calculate the indexation of interest on loan considering it as the cost of acquisition (hope we can do that….) 3. and how shall be the tax liability be distributed among a,b,c Please advice……..
09 September 2014
sir they have not become owners. let me be more precise. they made an agreement entitling them to the purchase of building once construction was over. however after paying the entire sum they sold their right to purchase to another person.
09 September 2014
then there is no question of transfer and subsequently there is no q of capital gain as for that u need to be owner & then u sell fr capital gain
09 September 2014
but sir ,as per section 2(47) extinguishment of any rights amount to the transfer of capital asset. doesn't this come under that classifiation?
09 September 2014
cant we consider the right to purchase the building as a capital asset? isn't it similiar to the right to purchase shares?(i think sale of right to purchase the shares amount to transfer of capital asset) please advise......
CAclubindia
