25 July 2016
one assessee has transfered his plot of land to developer to construct, develop, sale of Flats in 2011-12. In consideration for transfer of land , he has received 4 flats and remaining in cash during 2013-14. Again he has received 2 flats in 2015-16. Developer has constructed total 15 flats out of which 6 flats has been given to land owner(assessee). Land owner has sold 2 flats to outsiders in 2015-16 out of 4 flats initially received in 2013-14. My question is ( on the view point of land owner) 1. how to calculate Capital gain tax for Transfer of land to Developer ? Wether by taking FMV of land related to 2011-12( at the time of Transfer of Land) or by taking FMV of flats ( at the time receipts of Flats in 2013-14)
2. Capital Gain is applicable for additional 2 flats received in 2015-16? What is the cost of acquisition in this case?( this flats was not agreed to be received at the time of Transfer of land, amende later)
3 Wether Sale of 2 flats in 2015-16 which was received from developer by the land owner is Taxable as business income or as capital Gain tax in the hands of land owner as the 6 flats was not used by the Land owner for his residential purpose and he is planing to sell other flats also
26 July 2016
In the F.Y. 2011-12 We have calculated the Capital gain tax for Transfer of land by taking the FMV of land as per Valuer and Total undevided rights over the land as on the date of acquisition that is 100% and Sacrificed portion of rights over the land on transfer is 77.79% as Sale Consideration. ( FMV of land 49,91250*77.79/100) . We have deducted all the cost incurred for Purchase of land and Improvement cost by giving Indexation benefit as it was a Long term asset. At time of Land Transfer it was agreed to give 4 flats to land owner but after the payment of capital gain tax , because of issue developer agreed to give additional 2 flats . At time of Calculation of Capital gain in 2011-12 we have not considered the Undevided rights of theese 2 flats.
26 July 2016
As per section 50C : value as per ready recknor value with the Sub Registrar..(stamp valuation authority) shall be taken as full value of consideration. You have taken FMV of land as on the date of transfer as full value of consideration...in 2011-12...let us continue with the same. And you can assume the same has been accepted by Income Tax Dept as well, in the absence of any scrutiny or like notice...right? As per the said transfer deed of land......49,91,250 is the full value of consideration..(FMV of land in 2011-12) which comprises of some CASH received + 4 flats...... The cost of acquisition of these 4 flats is, therefore = 49,91,250 - cash received. Now between these 4 flats, you can divide the sum in proportion to square feet area with due consideration to specification inequality, if any
26 July 2016
We have considered the Full Value of Consideration as FMV of Land Rs. 4991250 + Cash Received Rs. 2187500 for the remaining 625Sq.ft which is not Included in the 4 flats. In this Case what is Cost of Acquisition of 4 Flats ? out of 4 flats received in 2013-14 from the developer , 2 flats has been sold in July 2015 . Wether Capital gain tax is applicable Or Bussiness Income ? if capital gain is applicable , then what is the cost for this 2 flats ? Kindly advice me sir,
26 July 2016
your original query write up suggests that cash is received for 4 flats......anyway the point is simple.... cost of FLATs would be = full value of consideration as per section 50C i.e. stamp duty valuation - cash received You are replacing FMV of the plot in place of stamp duty value..(Assuming it to be more or less same) cost of flats = 49,91,250 - 21,87,500 = 28,03,750 (Since your wording of the query is little confusing..... you yourself, PLEASE, try to sort out...if this cost is of 4 flats OR 6 flats.) As said earlier, the value of individual flat may be ascertained pro rata based on square feet, with fine tuning for the value of specification differences in the said flats.
30 July 2016
what is the Treatment for sale of two flats in 2015-16? this 2 flats was received in 2013-14. and no capital gain was paid for receipt of this flats .
01 August 2016
The flats were received by you for CONSIDERATION of the plot. The cost of flat is to be worked out as said in my earlier reply....viz. Stamp duty value of plot - cash received by you. Now subsequent to this, you claim that you have calculated capital gain on transfer of plot.....Calculated or Paid? Another important point is whether you claimed EXEMPTION for the said 4 / 6 flats while considering the the capital gain on the transfer of said PLOT or not? If you have NOT claimed exemption on the said flats, then the cost of acquisition of the said flats to be worked out as said above. If you have claimed exemption, then since you are selling the flat within 3 years of its acquisition, the cost shall be treated differently....
03 August 2016
Yes . we have paid the Capital gain tax for Transfer of Plot in the A.Y. 2012-13 And we have not Claimed exemption in that year.
For your Reference I wish to Give the Calculation of Capital gain done in 2011-12 for Transfer of Plot.
FMV as per valuer as on the date of trasfer of 18.15 cents 4991250 Total Undevided rights over the land as on the date of acquisition 100% Sacrificed portion of rights over the land on transfer 77.79% ( 100%- 22.21% undevided rights on the land of Flats to be received)
FMV for the portion of transfer of rights 38,82,693 (49,91,250*77.79/100) Less: cost of acquisition: Purchase Consideration of land 7,65,000 Stamp duty 68,545 Reg. fees 7950 Legal fees 10,000 Interest on Housing loan 46,792 Betterment fees 2,18,537 Compound wall Construction 1,50,000 Total : 12,66,824 Indexed Cost of Acquisition 12,66,824*785/480 20,71,785.08
cost of acquisition for Proportionate rifght over the land transfered to builder 16,11,641.61 ( 20,71,785.08*77.79/100)
Amount to be Received in cash ( consideration) 21,87,500
Total sale consideration 60,70,193 Less: Indexed cost of acquisition of portion of land transfer 16,11,641.61 Long Term Capital Gain 44,58,551.30
We have paid 20% Tax on Capital Gain in 2011-12
Please advice based on that calculation for Capiatl gain tax for Receipts of 4 flats in 2013-14 & 2 flats in 2015-16 . But Confirmation deed for Transfer of thees 6 flats was Executed in 2015-16 only in the Sub- Registrar office.
03 August 2016
My contention is : You had a piece of land(plot).....which you transferred. And in consideration of the transfer of said land(plot) you got 4 flats....(4 or 6 as the case may be) When you are selling these FLATs...the cost of acquisition of the same will be worked out as explained in my earlier reply.... For the transfer of land(plot) 100%, you received some cash + 4 flats...( now these flats come along with some undivided share, that is ok.....) but you transferred 100% of land... (How can you transfer only 77.79 % of land? Please clarify)
03 August 2016
Even if the Total Land was Transferred to him is 18.15 cents, in return i have received the Ownership of 22.21% of 18.15 cents in the form of Undevided Right over land on Flats received From developer .. So we Considered net of 77.79% which contains only of the Land given to the developer. But we might have wrong also.
04 August 2016
Whatever has been done, we can leave aside for the time being. The current issue is to find out the cost of acquisition of 4 (or6) flats. I think we can adopt the method as above. Cost of 4 flats = stamp duty valuation of the land/plot at the time of transfer - cash received. What do you say?
04 August 2016
ok sir, Even I think so. shall I Take This Stamp duty value of land - Cash received for all the 6 flats. Because We are not paid the Capital gain tax for Flat Received so far. In 2015-16 Confirmation deed was executed for all 6 flats.
04 August 2016
Capital Gain tax is to be paid for sale of land/plot......which you have paid...... now you need to decide why additional 2 flats were given by the developer?
04 August 2016
I have doubt about whether we need to Pay Capital gain tax on Flats at the time of Receipts of such Flats( 4 flats) ? or Only at the time of sale of this Flats? We have paid tax at time of Transfer of land . My paint is for Extra Gain what we have received in terms of Flats. In 2015-16 we have Executed the Confirmation Deed of Receipts of all Flats. Now again shall i pay capital Gain Tax?
04 August 2016
extra space? what is that?...is it additional piece of land OR Additional FSI ? if it is additional land.....capital gain on transfer of land can be worked out as before. if it is additional FSI..... right in the land is also regarded as immovable property. The day on which this agreement for additional space(FSI) is executed, is the date of transfer of this additional space.....the capital gain on the same can be worked out accordingly.....(And this stamp duty valuation for the agreement of additional space itself would be the cost of acquisition of these 2 flats)
04 August 2016
receipt of flat is not attracting any capital gain because it a MODE of accepting the consideration of transfer of land/plot. The sale of flat will attract capital gain. The crucial point is what is the cost of acquisition of those flats?
04 August 2016
for sale of land, you need to pay the capital gain tax, if any..... for sale of flat/s...you need to pay the capital gain tax...(Not at the receipt of the flat)
04 August 2016
OK sir , You are telling that no need to pay tax now for receipt of Flats. Only we have to pay at the time of Sale such flats? Is this required to pay tax for Such additional Receipt of Flats?
05 August 2016
not sure.....stamp duty valuation is the key.....In all along our discussion, you have NOT disclosed the stamp duty valuation. According to me, it is the key factor. (And another practical aspect is....4 years are elapsed for the case of 2011-12...so nothing to worry much)
05 August 2016
Ok sir, I have one more doubt about the Point that you have told , you should we deduct the Cash received as consideration from the FMV of Land on transfer to Calculate the Cost of Acquisition of Flats ? What is the Reason?
05 August 2016
Sorry , why should we deduct the the Cash Received from the FMV of land to get cost of Acquisition ? My point is we have received this cash and we consider this cash received as Sale consideration of Land Transfer and we paid the Capital Gain also. Now To Calculate The Capital Gain on Sale of Theese Flats Whether we can take Only the FMV land based on their respective Sq. ft as Cost of Acquisition?
05 August 2016
ok...let me try to explain.... what you transferred is the land/plot. for the said transfer what you got is 4 flats + cash received So to say, the consideration for land/plot = 4 flats +cash........equation no.1
Now as per section 50C, the consideration for land/plot = stamp duty value as on the date of transfer.... equation no 2
combining the above two equations, we get stamp duty value as on the date of transfer = 4 flats + cash received changing the side....we get ..... stamp duty value as on the date of transfer - cash received = 4 flats
05 August 2016
Cash Rs. 2187500 was given to Land owner for Compensate the Less super Built area allotted by Developer . Total Super Built Area Agreed to be given is 5600 Sq.ft, later Developer Allotted 4 flats Total Super built area of 4975, for remaining area , he has given cash . And This cash Received was Included in Sale Consideration along with Stamp duty value of Land in calculation of Capital gain On land Transfer
In our case, 4 flats was received in the F.Y. 2013-14 Property Tax on Flats was Paid From the F.Y. 2014-15 onwards That 4 flats Along With 2 other Flats Received was registered in 2015-16 ( Confirmation Deed For Transfer of Flats b/w Developer and Land owner) Sale Was Made on july 2015. We are Taking the Stamp duty Value of Land as COA for flats . Land Was Transferred in 2011-12 In the above Case . what is the Date Of Acquisition for Determining the Long Term or Short Term Capital gain? whether 2011-12 or Date of Receipt or Date of Execution of Deed?
07 August 2016
mostly the date of 'completion' of the flats. Normally the concerned corporation/municipality issues the completion certificate. This date may be taken as the date of acquisition, in most of the cases
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