Long term capital gain on sale of flats

Tax queries 969 views 2 replies

Lakshmi Devanand, FCA

Proprietor -Lakshmi Devananda & Associat

106 Points Joined April 2011

Hi,

One of my Client has purchased the site in 2004-05. As per the Joint Venture agreement, he had given the site to some builder to construct the flat on his site. In return, my client got 4 flats.

Now for the current year, he sold 3 flats.

My question is,

1) At what point do the long term capital gain will arise, is it when he gave the site in return of flat or when he actually sold his flats in 2010-11.

2) What should be the cost that should be taken for indexation. (Is that site cost+construction cost)

3) What should the sale consideration comprise of?

Regards

Lakshmi Devanand

Replies (2)

Sunshine

Helping All

10575 Points Joined March 2010

capital gain will arise at the time of sale of flats only coz the ownership was not transferred at time he gave the site to the builder..that cannot be considered as a tranfer..Sale consideration will be the amt realised on the sale of the flat..

Vijay

Adamo Studio

2112 Points Joined March 2011

Capital gain will arise out of transfer of capital asset.

So if at first instance when site given to builder the capital gain arises only if transfer of ownership takes place.(Deduction u/s 54 can be availed by pur cost of 4 flats subject to flat is not sold within 3 years from the date of purchase)

And at second instance capital gain arises.