Family settlement

Tax queries 596 views 3 replies

KARANDEEP,CA,B.Com,CS FNL

JOB

457 Points Joined March 2010

Case:

there are two property i.e X & Y.
Of property X, there are 3 co-owner.(A,B & C) having equal share.
Of property Y, There are also 3 co-owner.(A,Wife of B & wife of C).having equal share
Now as per there mutual understanding –A will transfer her share in property X in the favour of B&C,
for which A will get rs.30 lakhs from B & C.
Futher A will get the Property Y share from the wife of B & C in her favour.

Now the following query asire.

a).Is this family settlement is exempted from the tax.(any reference if any)

b).If not ,then what will be the tax implication.

For your help, take the value of X-Rs.90 lakhs & Y-Rs.30 Lakhs.

Replies (3)

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

Hi,

I hav got a few queries.

Are the individuals family members (it seems so!)?

Are the 2 properties family properties?

If the above answers are yes, then this is a family arrangement (settlement of family dispute kind of case), hence, it is only a re-alignment of rights in a family property. Thus, not taxable.

If it is no, then, they will be treated as transfer and individual transfers shall be computed for tax accordingly.

no,there is no specific exemption is given to such transaction. mr.A would be liable to capital gain. for computing capital gain cost of acquisition would be equal to his holding in assets, and gain would calculated accordingly.from above example (i)cost of acquisition is 3000000/- to A. there is no capital gain..as there is no gain arise there is no need to claim relief u/s 54..