Suppose Mr. A has entered into purchase agreement of Flat with the builder on 10/05/2010. He has made full payment. However as on date he has not received the possession of flat.
He has now sold the flat on 20/08/2013 to Mr. B. Kindly guide me on following points:
1) Whether will Mr. A be considered as rightful owner of the flat though he has not got possession?
2) Whether can Mr. A sell such flat before the possession? legally vaild?
3) If Yes, he can sell, then what will be the treatment of Capital gain? Whether its Long term since the date of purchase agreement or it will be treated as Short term adn added to his other income.
24 August 2013
1. yes 2. yes 3. In your case, the assets is long term capital assets as you have not sold the flat but you have sold the right to use the flat. date of agreement should be considered for calculating the CG.
In case of right to use assets, it is considered as long term if you holds for more than 1 year
CAclubindia
