The assessee is the owner of a piece of land. He enters into a Joint Development Agreement with a Builder to construct a residential apartment with 10 flats. The agreed ratio is 50:50. Hence, the land owner will be getting 50% of the flats i.e. 5 flats. The owner bought the land 6 years ago. There is no cash element in the whole of the transaction. The land owner has not sold any of the flats in his share. Let us assume the cost of land is Rs.20 lakhs and the market value of the flats is Rs.15 lakhs per flat.
Questions:
1) Is there any capital gain arising out of this transaction?
2) Is there specific rules to be applied here as the assessee is not in receipt of any money and it will be unfair to ask him to pay taxes. However, assessee agrees to pay taxes at the time of selling the flats.
Please give your inputs with reference to the relevant sections, provisions to make it clear.
Thanks!
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