Capital gain

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Hardik Patel

B.Com CA Final

137 Points Posted on 10 May 2018

Dear Sir/Mam,

I have query regarding taxability of residential Property. I am explaining my qurey through example.

Mr. A's and Mr B's father are brother and they are jointly residing. Property - 1 is registered in the name of Mr. A but that property has been used by Mr. B

Property - 2 is registered in the name of Mr. B but has been used by Mr.A. Both the property were purchase in 1987-88.

Now recently they make family arrangement in writing clarifying that Property - 1 belongs to Mr. B eventhogh registered in name of Mr.A and Property - 2 belongs to Mr. A eventhough registered in name of Mr.B

Now Mr. A want to sale Property - 2.

So my question is whether Mr. A can take cost of Property - 2 for capital gain purpose? Whether Mr. A is eligible for FMV as on 01/04/2001 and period of holding of previous owner? This family arrangement is genuine and not made for any tax evasion.

I am requesting to all of you to Please answer it with any case low.

Thanks.

Replies (7)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121521 Points Posted on 10 May 2018

The family agreement has no legal authenticity unless DEED of EXCHAGE of properties is registered with Sub-registrar.

Till then the legal owner of the property 2 is Mr B; and Mr. A has no rights to sell it.

Hardik Patel

B.Com CA Final

137 Points Posted on 10 May 2018

But sir they made such deed on stamp of Rs 100. So still its not valid?

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121521 Points Posted on 10 May 2018

Any transfer of property mandatorily required registration....... Untill then it is not valid....

Hardik Patel

B.Com CA Final

137 Points Posted on 10 May 2018

Thanks Sir. is there any option to transfer property - 2 to Mr. A ? So that Mr. A can sell it.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121521 Points Posted on 10 May 2018

On paper, B is the owner of property 2............ Let B sell it and in exchage Pay Mr. A for purchase of property1. (B will not be liable for LTCG)......

Mr A if purchases new house property, he can also save LTCG over sell of property1 !!!

Hardik Patel

B.Com CA Final

137 Points Posted on 10 May 2018

But Sir suppose Mr A purchase in May - 18 from Mr. B. and sale it to third person in June -18. So whether it is short term or long term? Can we consider period of holding of Mr. B? Futher transaction between Mr. A and B will attract stamp duty also. So it might cost to both of them.