Taxation issue on sale of leased out property

This query is : Resolved

CA Mohit Aggarwal (Querist)
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16 January 2017 Hello,

Let me brief about the case.

There is a developer who constructs a office building and after leasing out for 1 year he decides to sell the building with all the tenants.
What will be tax treatment of the lease income received and the sale of leased out property.

My view point:
1) For the rental income: tax Income under PGBP and claim the full depreciation on building.
2) For the sale purpose: Segregation of stamp duty value of Land & Building and charge capital gains (capital gain u/s 50 in case of building and long term capital gain in case of land to be charged) and for the amount which is received over and above the stamp duty value of land & building as Tenancy Rights (capital gain by taking COA = 0) would be charged.

Regards
Mohit Aggarwal.

Soumitra Basu

Soumitra Basu (Expert)
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18 January 2017 The Rental Income will be treated as Income from House Properrty.
The Sales Proceeds of Land and Building can be segregated between Long term and Short term depending date of acquisition. Capital Gain tax has to be paid if there is no specified investment.