Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Capital gain in case of property sold

Dnyanesh M. Patade (Article) (61 Points)

01 August 2016

Capital Gain will be Long Term of Short Term in case of property sold received after redevelopment??

Reply
Follow
Share

7 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (174095 Points)
Replied 03 August 2016

More data required to evaluate.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Dnyanesh M. Patade (Article) (61 Points)
Replied 03 August 2016

For instance, a property purchased on 2002, due to redevelopment project the assesse has has received new property in 2015. the assesse sold the new property in 2016,

Will Capital Gain be Taxable as Long term or Short Term??

If Long Term , does is meet the crieteria of Capital Asstes as the assets is not the same..

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (174095 Points)
Replied 03 August 2016

It will be long term capital gain. it will be Capital asset only, by way of trasfer of old capital asset taken place by way of redevelopment.

Dnyanesh M. Patade (Article) (61 Points)
Replied 03 August 2016

Originally posted by : Dhirajlal Rambhia
	It will be long term capital gain. it will be Capital asset only, by way of trasfer of old capital asset taken place by way of redevelopment.

Sir any related decision to it.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (174095 Points)
Replied 03 August 2016

1. Recent decision has been delivered by the Mumbai Tribunal in the case of Kushal K Bangia (the taxpayer) (ITA/No. 630/Mum/2006) wherein it has held that the cash compensation received by a member of the housing society under a redevelopment scheme from a developer is to be treated as a “capital receipt” and hence not taxable as “revenue receipt” in the hands of the member. Consequently, the said compensation would reduce the cost of acquisition of the new flat at the time of computing the capital gains in respect of the said new flat.

2. The Mumbai Tribunal in the case of ITO Vs. Ashok Hindu Co-operative Housing Society Limited (ITA/No. 630/Mum/2006) .......................Based on the foregoing facts, the Tribunal held that upon considering the definition of the term ‘society’ as defined in the Maharashtra Co-operative Societies Act and also the fact that the Bombay Stamp Act provides for payment of stamp duty by each member at the time of purchase of individual flat and that such registered agreements are deemed to be conveyance, the capital gains have to be taxed in the hands of the members of the society, who have accounted for the same in their individual returns of income. The Tribunal further held that the beneficial ownership was that of the members of the society. It was the members who transferred the rights and received consideration for such transfer.

Upgrade to CAclubindia Pro. Subscribe Now!

Dnyanesh M. Patade (Article) (61 Points)
Replied 04 August 2016

Originally posted by : Dhirajlal Rambhia
	1. Recent decision has been delivered by the Mumbai Tribunal in the case of Kushal K Bangia (the taxpayer) (ITA/No. 630/Mum/2006) wherein it has held that the cash compensation received by a member of the housing society under a redevelopment scheme from a developer is to be treated as a “capital receipt” and hence not taxable as “revenue receipt” in the hands of the member. Consequently, the said compensation would reduce the cost of acquisition of the new flat at the time of computing the capital gains in respect of the said new flat. 2. The Mumbai Tribunal in the case of ITO Vs. Ashok Hindu Co-operative Housing Society Limited (ITA/No. 630/Mum/2006) .......................Based on the foregoing facts, the Tribunal held that upon considering the definition of the term ‘society’ as defined in the Maharashtra Co-operative Societies Act and also the fact that the Bombay Stamp Act provides for payment of stamp duty by each member at the time of purchase of individual flat and that such registered agreements are deemed to be conveyance, the capital gains have to be taxed in the hands of the members of the society, who have accounted for the same in their individual returns of income. The Tribunal further held that the beneficial ownership was that of the members of the society. It was the members who transferred the rights and received consideration for such transfer.

(14) 5["capital asset"means—

(a) property of any kind held by an assessee, whether or not connected with his business or profession;

(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992),

but does not include—

(i) any stock-in-trade [other than the securities referred to in sub-clause (b)]], consumable stores or raw materials held for the purposes of his business or profession ;

(ii) personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes—

(a) jewellery;

(b) archaeological collections;

(d) paintings;

(e) sculptures; or

(f) any work of art.

Sir, the defination says, property held by assesse, but the old property is not held by the assesse as it demolished!