Capital gains on development agreement

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Guest

Guest (Querist)

19 March 2015 Dear Experts,
An assessee had given his plot (purchased before 1981 Rs 5000/-) to a builder under irrevocable power of attorney under development agreement in 2007.

The builder completed the building in 2014 and the assessee got 3 flats (total value Rs 6000000/-mentioned in agreement).

Now he wants to sell the flats.

He has not shown any transactions in his returns because he did not receive any amount. The whole transaction was in kind.

As per my understanding there are 2 transactions
1) when the plot was given for development and he got 3 flats
2)When he sells the new flats.

My question is that can we show the 1st transaction in AY 2014 15 (we can claim deduction U/s 54F)?

A tax consultant has advised him that The whole transaction will just 1 transaction (From Development agreement to sale of new flats)

Soumitra Basu

Soumitra Basu (Expert)
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20 March 2015 SINCE THE ASSESSEE HAS GIVEN THE IRRECOVERABLE POWER OF ATTORNEY ALONG WITH THE POSSESSION OF LAND, THE CAPITAL GAIN SHALL ARISE IN THE YEAR 2007 AND SINCE THE BUILDER PROMISED TO HANDOVER THE FLAT, IT WILL BE DEEMED TO INVEST THE SAME IN THE YEAR 2007 ITSELF.
NOW, WHEN HE SHALL SELL THE FLATS THAT WILL AMOUNT TO FRESH CAPITAL GAIN.

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