Sale of land to bulider

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omnath (Querist)
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10 March 2022 DEAR SIR
MR A OWN LAND 6000 SEQ.FT AGREEMENT TO MR B (BUILDER) ON 5.4.2019 THE MR .B 10 FLAT CONSTRUCTION COMPLETED AND HAND OVER 4 FLAT TO MR A AS ON 10.2.2022 ( PERCENTAGE OF 60 : 40). MR A CAPITAL GAIN TAX APPLICABLE ON 4 FLAT.

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 March 2022 In such a case, execution of Joint Development Agreement between the owner of immovable property and the developer triggers the capital gain tax liability in the hands of the owner in the year in which the possession of immovable property is handed over to the developer for development of a project.
With the view to minimize the genuine hardship which the owner of land may face in paying capital gains, a new sub section (5A) inserted in section 45.
2. Section 45(5A) – Taxability of Capital gain:-
Where the capital gain arises to the assesse, being an individual of HUF, from the transfer of capital asset, being land or building or both, under a specified agreement, the capital gain shall be chargeable to income tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority.
Where the assesse transfers his share in the project on or before the date of issue of said certificate, the capital gains shall be deemed to be the income of the previous year in which such transfer takes place.
For the purpose of section 48, the Stamp Duty Value(SDV) of his share, on the date of issue of said certificate, as increased by the consideration received in cash, if any, shall be deemed to be the full value of consideration.