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tax treatment

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(Querist)
07 March 2011 if company a leases a land (book value 2 crores)to company b and receives a lump sum amount of 18.00 crores and also 10.00 crores as development fees and after the development hands the land to b and start receiving lease rent, how shall the gains will be taxed and at what rate
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CA Shailesh Kumar Bhagat

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CA Shailesh Kumar Bhagat (Expert)
08 March 2011 If the nature of lease is perpectual,transaction may be treated as sale, and tax is to be levied under capital gain , based on the valuation of land, otherwise the laese amount is business income.

In both the cases the development fees is business income.
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ATUL RATHI

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ATUL RATHI (Querist)
10 March 2011 In connection with the previous query if the company receives lease rent in advance for the complete period of lease (say 30 years) , how it will be treated.pl guide
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Dhirajlal Rambhia

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Dhirajlal Rambhia (Expert)
06 November 2021 It has to be amortize for the lease period.
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