Long Term Capital Gains in case of Development agreements

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LAXMIKANTH GONDIKAR (Querist)
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09 January 2010 dear all,
land owner gives his land, a long term capital asset for development to a developer. they have agreed to raise 25 structures with 11 in landowners share and 14 in developers share. the taxation is as follows -

i) long term capital gains on difference of cost of construction of 11 units of land owners share given by the developer and indexed cost of land
covering 14 plots of builders share.

ii) long term capital gains on difference of sale of 11 plots and indexed cost of land covered by 11 plots.

iii) short term capital gains on difference of sale value of 11 structures and cost of 11 structures given by the developer.

correct me if iam wrong

thanks

laxmikanth

M Prabhakar Menon

M Prabhakar Menon (Expert)
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10 January 2010 LTCG is attracted when the holding period is crossed for that asset,in this case there are 2 assets the land and the building so u have to calculate CG seperately for land and building/constructed area. Here the Sale Deed will have to specify the quantum of land area which is sold as sale of cntructed area does not automatically include proportionate sale of land area the ownership of land is not transfered unless the sale deed specifies it.