Yogesh Kini (Tax Consultant) (39 Points)
07 October 2019Hello Members,
One of My Client is having Private Trust which is unregistered and formed in 1984-85. Trustees are no more and settlor wants to sale the property through its legal heirs. So, My query is
1. Taxation on sale of Trust Property in name of Trust.
2. Can we do direct sale in name of Legal Heir.
3. Long Term Capital gains Tax arises will be in whose name i.e Private Trust or Legal Heir.
Kindly Guide me for the same.
Kapadia Pravin
(17259 Points)
Replied 07 October 2019
Suresh Thiyagarajan
(Student)
(3986 Points)
Replied 08 October 2019
1. First, there is a distinction between a trust and a trustee. A trustee is a person who manages the affairs and assets of the trust. He cannot claim ownership on the asset of the trust's properties.
2. Trustees are appointed according to the terms and conditions as specified in the trust deed. It is a normal practice to appoint a nominee in case of death of the trustee. That nominee will form the panel of the trustee from thereafter on the satisfaction of conditions and through proper execution of trust deed.
3. Trust property can be sold only in the name of trust and it cannot be sold in legal heir's name. Trust properties are only managed by the trustee and they cannot claim ownership for the property.
4. So, any gain or loss will only be in the hands of trust and it does not matter whether it is registered trust or not for the purpose of charging income tax on the sale of property which belongs to the trust.
5. Long term capital gains will be charged to tax in the hands of trust.
Please correct me if the above solution has an alternative view.
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