Sale of Tenented (Redeveloped) Property

Dear Ayushraj,

A similar question was raised here -

/forum/capital-gain-62791.asp

Dear Amir,

I referred to the aforesaid link, but there the assessee is Sole owner of a Land.

and here this assessee had a tenented property (residential Chawl) (Where Govt. was the landlord). In total there were 85 such tenents. The Govt being landlord under the SRA Scheme offered the tenents to get the said property redeveloped, which the tenents agreed & they are now alloted a Flat in the New building on ownership basis.

As the property was tenented thus the cost of acquisition to be considered here, i guess shall be Zero.?

But will the gains from said sale treated as Capital Gains?

OR Was the assessess liable to tax, at the time of allotment of the said flat?

Will provisions of Section 54EC & Section 54F apply?

Thanks

Section 55 states as under:

“cost of acquisition”¹⁰,—

        ¹¹[(a)   in relation to a capital asset, being goodwill of a business ¹²[or a trade mark or brand name associated with a business] ¹³[or a right to manufacture, produce or process any article or thing] ¹⁴[or right to carry on any business], tenancy rights, stage carriage permits or loom hours,—

         (i)   in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price ;

So whatever amount was paid to purchase the tenancy rights will be allowable as a deduction.

The sale will be fully taxable under the head capital gains.

Dear Ayushraj,

Sincere apologies I misread the question and dint pay attention to the word "tenanted"....

Ya,  Aditya Sir has specified the rite treatment & the FMV of the new House will be treated as Sale Consideration for those "Tenancy Rights"

I think Sec 54EC & Sec 54F can be applied to exempt this  gain.