Please advice me, that an agreement made between land lord and developer, when capital gain arise, when at the time agreement or at the time of sale of plots (share of land lord). my client was purchase a land of cost of Rs 95000-00 in the F.Y 1995-96, and he has given to develop his land to developer against 55:45 ratio,there is no value mentioned in the agreement, construction is not complete until today, and the land lord and developer not sold single plot. But land lord received a notice u/s 148. how to respond, please advice me
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Capital gain on land development
Replies (4)
Notice US 148 is issued when the AO has "Reason to Believe" that income chargable to tax has escaped assessment.
If the AO has issued such a notice it means he has a concrete evidence of your clients having taxable income which has escaped assessment.
Any idea on what basis the Notice has been issued can be understood only after understanding the facts pertaining to the case.
OK thank you for your reply, please advice me capital gain on land development.
Capital Gain would arise at the time of sale of land by your client to the builder. The sale price would be the price adopted for the purpose of stamp duty.
Purchase price as you mentioned would be Rs. 95,000/-.
The gain arising would be long term if land was held for more than 3 years from the date of purchase. Otherwise the gain would be short term.
thank you very much sir,
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