Capital gains on redevelopment

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Mr.X is owner of property. Property has 4 tenants. He enters into Joint Development Agreement

with Developer in FY 2013-14.He is paid 500 lacs on signing DA. Balance 500 lacs he will be given

when he settles with all tenants and gives vacant possession / or the tenants consent to Redevelopment.

The time limit for same is set at 24 months.

Along with DA he gives an licence to developer to enter upon prooperty for sole purpose of redevelopment

and an Irrevocable Power of Attorney to complete all legal formalities / obtain permissions. What view should 

the assessee take on Capital Gains ?

Replies (2)

One needs to look at the DA more closely. It appears that the tenants are residing there for very many years which is why developer has agreed to pay 5cr to settle with the tenant to vacate the premises for redevelopment. Some compensation might have to be paid to the tenant which can be adjusted in the computation of capital gain. Check all the documents with the developer thoroughly by consulting 2-3 advocates. Can't afford to trust these developers, ever.

Wait for more replies.

Wish to see the documents

Whatever compensation you'll pay will be Cost of improvement.

Need more details


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