A. I the Landowner purchased a property being Land & Building vide Registered Deed of Conveyance in the year 1987.
B. In the year April 2021 I entered into a JDA with a Developer for construction of a Commercial Building on the above mentioned Property.
C. It is agreed that the Developer shall construct and handover to me 50% of the Constructed Premises to be constructed on the said Property..
D. I handed over possession of the said Property to the Developer in the month August 2021.
E. The Certificate of completion of the said project is expected in or around February 2024.
Queries:
1.Cost of Acquisition: In view of the Amendment made to Section 55 applicable from April 2021 whether I shall be eligible for stamp duty value or fair market value of my property as on 01.04.2001?
2. Indexation: Whether Indexation is to be calculated as on the Year in which the Joint Development Agreement was executed i.e. April 2021 or till the year of the project receiving the Completion Certificate i.e. February 2024?
3. Full value consideration of Landowner: Whether Stamp duty value of my share in the constructed premises will exclude or include the cost of Land? Kindly quote any case laws of ITAT or High Court regards to Query No. 3.
06 July 2024
Based on the facts provided, here are the responses to your queries:
### Query 1: Cost of Acquisition
The cost of acquisition for capital gains calculation under Section 55 of the Income Tax Act has been amended effective from April 1, 2021. According to the amendment:
- **Option Available:** You have the option to consider either the stamp duty value of the property as on April 1, 2021, or the fair market value (FMV) of the property as on April 1, 2001. - **Your Situation:** Since you acquired the property in 1987, the relevant date for you would be April 1, 2001. Therefore, you have the option to choose the FMV of the property as on April 1, 2001, adjusted for indexation, as your cost of acquisition for computing capital gains.
### Query 2: Indexation
- **Applicability:** Indexation for cost inflation adjustment is typically applicable from the year in which the asset was first held by you, i.e., from the year of acquisition. - **Joint Development Agreement (JDA):** In your case, indexation for the property's cost would start from the year of acquisition (1987) up to the year in which the capital gains are being calculated. This includes the period up to the year in which the completion certificate is expected (February 2024).
### Query 3: Full Value Consideration of Landowner
- **Stamp Duty Value Consideration:** The stamp duty value of your share in the constructed premises will typically include the value of the land and the constructed building. - **Exclusion or Inclusion:** Generally, for taxation purposes, the consideration received by you, which is the stamp duty value of your share, would include both the value of the land and the constructed premises. This is unless there is specific segregation or allocation in the Joint Development Agreement (JDA) indicating otherwise.
### Case Laws Reference:
Unfortunately, specific case laws from ITAT or High Court directly addressing Query No. 3 (regarding the treatment of stamp duty value and inclusion of land cost) weren't provided. It's advisable to consult with a tax advisor or legal expert who can provide guidance tailored to your specific circumstances and locality, considering any recent judicial interpretations or specific rulings that may apply.
These responses provide a general framework based on the facts presented. For precise tax planning and compliance, especially considering the complex nature of Joint Development Agreements, professional advice is recommended to ensure accurate application of tax laws and provisions.
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