Capital gain on property which not yet registered

Tax queries 617 views 2 replies

Sunita

Property Owner

30 Points Joined June 2012

I had purchased 3 plots in Bhiwadi city in the year 25th Dec 2008. and at that time just 1.50 lacs were paid as consideration to the seller and remaining instalments out of the total cost of plot of Rs 9 Lacs each were required to be paid directly to the builder., These plots were originally booked by someone else and in 2008 I purchsed them got it transferred in my name. These plots were transferred in my name in the Company's record, but Registry work is yet to be done,as the development work is still going on. I paid the installments as & when demanded by the bilder and the last installment was paid on 20th sept 2011. Now the company has offered me the possession. and very soon it will be registered in my name. If I sell one of these plots now at a market price of 13 lacs, will it attract the the Capital Gain? short term or long term? Basically my query is wether Capital Gain is calculated on the basis of Registeration date of property or from the date when it got transferred in my name and do this have any concern if payments were made in installments?

Replies (2)

Devendra

Chartered Accountant

4780 Points Joined March 2009

Capital Gain is to be calculated from the Date of Transfer. Hence Capital Gains Tax shall be attracted in our case.

Regards,

Devendra Kulkarni

Sagar Tilak

PROPRIETOR

396 Points Joined April 2011

Hello Sunita,

Date of registration is not relevant.

As per section 53A of Transfer or Properties Act, if follwing three conditions are satisfied then transfer of property has taken place:

1. There is an agreement in writing

2. Consideration is paid

3. Possession is handed over.

Apply these conditions to your situation and check the date when all these conditions were satisfied. Intially when you booked the plot, you might have entered in to an agreement to sale. so 1st condition is satisfied. You were paying the instalments as and when required and hence if substantial amount was paid then 2nd condition is also satisfied. The most important is when possession is handed over. You need to have a documentation for handing over of possession. Thus if condition 1 and 2 are already satisfied then date of possession is the date of acquisition of property though registration of purchase deed is not done. To judge whether the asset is long term or short term, check whether you have completed 3 years from the date of possession or not.

I hope it resolves the query.