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Capital gain

KRISHNARAJ P.R. (SR.MANAGER-ACCTS) (29 Points)

27 April 2012

need clarification on capital gain on land given for joint venture development. A person holds one acre and gave it for joint development with the builder. with ration of 40:60. out of 30 llats land owner gets 12 flats. All 12 flats he holds for himself. At this juncture shoudl he have to pay capital gain tax? since he is not going to sell any of his property he will now have any physical momey flow for him. I require clarfication regarding this. How the land owner will pay tax when there is no money inflow? is there any way to get exemption from tax. pls advise

KRISHNARAJ P.R.

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2 Replies

CA Sripal Jain (Associate Finance) (709 Points)
Replied 27 April 2012

The point where the capital gains are deemed to accrue will purely depend on the terms of Joint Development Agreement. Where the agreement is of such nature that possession is given in part performance of a contract, the liability of capital gains tax will arise on the handling over of such possession to the builder.

„« If the possession is not transferred but deferred until the construction is completed, the liability to capital gains tax will arise in the year in which the developer completes the construction.

therefor in your case,the owner wil be taxable on 12 lands ,as ocnsideration can be in cash or in kind,therefore one needs to pay tax as per section 2(47)

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Sumit Mahajan (manager) (26 Points)
Replied 01 May 2012

My father Mr. Sanjay, a Delhi govt serviceman became a member of delhi govt. society and subsequently purchased a plot of 250 yards in a society alloted by DDA. he constructed a house in the year 1981-82 at a cost of Rs 1.2 lakh.
In his will in which he divided the property in the names of his wife (my mother), his son Mr. Ashok (my elder brother) and me Ms. Sunita , (his daughter) equally.
He expired in 1991.

My mother in her will gave her share to both of us (my brother and me equally).
My mother expired in 2010.

Now,my brother and myself are the equal benefiataires of the same.

We do not wish to sell the property and at the same time I wish that my brother becomes the total owner of the property and I am ready to relinquish my share to him.

My brother wants to give me in compensation a sum of Rs 50 Lakhs in cheques, in White form.

Kindly let me know if this sum is taxable to me or not, and if yes then how to save this tax ??