23 November 2013
My client (a Company) had purchased a land in year 2001-2002. He had incurred brokerage on such land in the same year. In year 2009-2010, he incurred some other expenses also. Now, in year 2011-12, he made an agreement with a developer to construct a multi-storey building on such land. The developer constructed 4 floors on the building. Instead of giving cash/cheque to the developer for such construction, the client gave him possesion to the 3rd & 4th floor. The land is still in the name of the client. Will it be considered as transfer of capital asset and come under the purview on long term capital gain???? In year 2012-2013, the client (having right on land, 1st & 2nd floor) gave 2nd floor on rent and exchanged the 1st floor with X person for his ( X ) property at another place. What will be its tax treatment??? Will it be considered as STCG or LTCG???? !!!!!!! URGENT !!!!!!
23 November 2013
in your case.. there will be no capital gain on builder collaboration transaction (if the property is residential building).
in case of exchange of property: 2nd floor is long term capital asset you can avail exemption u/s 54 from indexed value on exchange of property if it is residential house
Your first point was correct till 31 March 2013. After introduction of Section 50D with effect from 1 April 2013, such transactions shall also get hit by capital gains as in this case giving possession of 2 floors to the builder would amount to transfer of TDR.
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