Capital gain under development agreement

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Jivan (Querist)
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22 March 2016 Dear Expert,
Assessee executed Development agreement with the builder in Jun-2014 through which he has given his residential house and land for development to the builder. As per Development Agreement entire possession and rights are been handed over to the Builder for carrying out construction. Builder will demolish the existing house and will construct apartment on the said land. As per Development agreement, builder has given Rs.20.00 lakhs as a part consideration by cheque and will give two flats of 1100 Sq. Ft each in the proposed new building. The building will complete in Dec-2016 and Assessee will get the physical possession of the flat in Dec-2016. Assessee will use the flats for his own residence.
My questions:

1. Under which section the said transaction will be taxable i.e.?
2. Can assessee get the exemption for proposed flats in the new apartment.?
3. If the transaction is taxable in the year of Development agreement i.e. AY 15-16, can he still get the exemption for future flats which he will receive from the builder?

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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23 March 2016 Residential house is a capital asset u/s 2(14). Execution of a development agreement with general powers to transfer a particular share of land and with handing over of possession amounts to transfer u/s 2(47)(v).

1. The transaction is taxable u/s 45;
2. Yes, assessee can claim deduction u/s 54 at least for one flat but may not be for all;
3. Yes, he has to claim exemption while filing the ROI for AY2015-16.