Capital gai tax
This query is : Resolved
04 September 2016
I have a unique complex issue involving my land and need your guidance. I became a member of a Housing Society in 1989 and paid Rs 45,000 in installment over next 4 years for 250 sq m plot. Last instalment was made in Oct 1993.Later the Society Land came under Greater Noida Master Plan and the land was accordingly acquired by them. GNOIDA authorities finally entered into an MOU with the Society in Dec 1993 and offered smaller plot due to some techno- legal issues. My plot size was reduced to 162 sq M and I was asked to pay additional Development Charges to Greater Noida. I paid additional Rs 1,03,680 to GNOIDA as development charges ( under instalment scheme) with last instalment being paid on 13 Jun 2005. GNOIDA authorities allotted me a 162 sq m plot on 17 Jan 1995 in sector 36. Due to a dispute concerning Land Ceiling Act, the Society took the matter to Allahabad High Court. Later in Aug 2002, GNOIDA again wrote to me stating that my allotment is in RHO - 1. In April 2012, Allahabad High Court ruled in Society favor and asked GNOIDA to give possession of plots after obtaining necessary affidavit from individual members. I submitted the affidavit on 25 Apr 2012. My plot was further reduced to 110 sqm and the draw for plot was done by GNOIDA on 10 Oct 2013 in presence of Society members. In this draw, I was finally allotted plot 230 in Omicron 3 sector. Eventually Plot Allocation letter confirming this plot number was made to me by GNOIDA vide letter dated 09 Sep 2015. I have since taken possession of 110 sqm plot in Nov 2015.
My query is that if I sell the plot by Dec 16, will it be considered as Long Term or Short Term gain? As per some judgements, quote “allotment is a sufficient compliance for getting the benefits, even if the taxpayer has not paid all installments due under the said scheme" unquote. Also quote "allottee gets title to the property with the issuance of allotment letter and payment of instalments is only a follow up action and taking of the delivery of possession is only a formality and no right as such accrues" unquote. In another judgement, I recall that it was held that mere allotment letter is good enough and the specific sector/ plot number is not necessary. I have in my possession GNOIDA website screen shots of July 2014 wherein the allotment date is shown as 14 Aug 2002 and plot 230 in Sector Omicorn 3. Even present Greater Noida Authority website shows my Allotment date as 14 Aug 2002.
Since I had made all necessary payments to GNOIDA by Jun 2005, should this be not considered as the date of investment for the purpose of indexation? Why should original allotment made by GNOIDA in 1995 not accepted as the year of my having acquired the plot, even if the plot number was changed at a later date? If GNOIDA delayed handing over a plot to me for their administrative reasons, should it be used against me and Short Term gain applied. Allahabad High Court ruled in Apr 2012 and GNOIDA authorities still took over 3 years to send the specific Plot Number to me though draw was made in Oct 2013. Incidentally, the original Allotment Number assigned to me in 1995 i.e. C-16191 continues to remain unchanged and, the 110 mtr plot which I have received now, is under the same allotment number. I feel that inefficiency of GNOIDA should not deprive me of my rights of claiming Long Term Capital Gain. Further, the spirit behind indexation is to give the benefit of the growth of original investment over a period of time. In my case, the entire cost of plot was paid by me to Society in Oct 93 and development charges paid to Greater NOIDA authorities in full by Jun 2005. Technically, my value of property has appreciated from 1989 when 1st instalment was made. Any gain I make is for the money which was held by my society/ GNOIDA. In a worst case scenario, atleast Jun 2005 (when I paid full development charges to GNOIDA Authorities) should be used as the base year for indexation.
Grateful for your considered advice.
My query is that if I sell the plot by Dec 16, will it be considered as Long Term or Short Term gain? As per some judgements, quote “allotment is a sufficient compliance for getting the benefits, even if the taxpayer has not paid all installments due under the said scheme" unquote. Also quote "allottee gets title to the property with the issuance of allotment letter and payment of instalments is only a follow up action and taking of the delivery of possession is only a formality and no right as such accrues" unquote. In another judgement, I recall that it was held that mere allotment letter is good enough and the specific sector/ plot number is not necessary. I have in my possession GNOIDA website screen shots of July 2014 wherein the allotment date is shown as 14 Aug 2002 and plot 230 in Sector Omicorn 3. Even present Greater Noida Authority website shows my Allotment date as 14 Aug 2002.
Since I had made all necessary payments to GNOIDA by Jun 2005, should this be not considered as the date of investment for the purpose of indexation? Why should original allotment made by GNOIDA in 1995 not accepted as the year of my having acquired the plot, even if the plot number was changed at a later date? If GNOIDA delayed handing over a plot to me for their administrative reasons, should it be used against me and Short Term gain applied. Allahabad High Court ruled in Apr 2012 and GNOIDA authorities still took over 3 years to send the specific Plot Number to me though draw was made in Oct 2013. Incidentally, the original Allotment Number assigned to me in 1995 i.e. C-16191 continues to remain unchanged and, the 110 mtr plot which I have received now, is under the same allotment number. I feel that inefficiency of GNOIDA should not deprive me of my rights of claiming Long Term Capital Gain. Further, the spirit behind indexation is to give the benefit of the growth of original investment over a period of time. In my case, the entire cost of plot was paid by me to Society in Oct 93 and development charges paid to Greater NOIDA authorities in full by Jun 2005. Technically, my value of property has appreciated from 1989 when 1st instalment was made. Any gain I make is for the money which was held by my society/ GNOIDA. In a worst case scenario, atleast Jun 2005 (when I paid full development charges to GNOIDA Authorities) should be used as the base year for indexation.
Grateful for your considered advice.
05 September 2016
try to take a note......if you sell the letter of allotment.......then the date of acquisition will be considered as letter of allotment.....ok?
Now please tell me, whether you are selling plot OR letter of allottment?
Now please tell me, whether you are selling plot OR letter of allottment?
05 September 2016
Sir. I am planning to sell the plot in the next 2 months. Will I fall under Long Term or Short Term gain bracket.
05 September 2016
See the adverse pint is the SIZE of plot...... the square meterage......it got changed 3 times.... 250 to 162 to 110... right?
a good point in your favour is the plot number......it is 230 omicorn.... which has remained same .... right?)
The argument could be......250 sq mtr plot got exchanged for 162 sq mtr.....in first place......you could have offerred capital gain for the same
then 162 sq mtr plot got exchanged for 110 sq mtr.....this was yet another instance of Capital gain.....(which again I think you missed.... may be because you did NOT earn any money out of that)
please share your views.
a good point in your favour is the plot number......it is 230 omicorn.... which has remained same .... right?)
The argument could be......250 sq mtr plot got exchanged for 162 sq mtr.....in first place......you could have offerred capital gain for the same
then 162 sq mtr plot got exchanged for 110 sq mtr.....this was yet another instance of Capital gain.....(which again I think you missed.... may be because you did NOT earn any money out of that)
please share your views.
05 September 2016
Dear Amol Ji,
Thank you for the time. The place where GNOIDA proposed to allot plot to me got changed all the 3 times along with the size of the plot. However, from 1995, the initial Allotment number i.e. C-16191 has remained unchanged. For administrative reasons, GNOIDA had to continue changing the Sector and the Plot Size.
The point is that I completed Full and Final Payment for the plot to my Housing Society in Oct 1993 and paid full Development charges to Greater Noida by Jun 2005 and no one should deny me the Indexation for the amount paid by me. The delays thereafter are solely due to failure of GNOIDA Authority. I must be permitted to earn the benefit of my investment. The present plot i.e. C 230, Omicron Sector was given to me in a draw held by GNOIDA Authorities on 10 Oct 2013. However, even after the draw it took GNOIDA 2 more years to issue the allocation letter.
It is all very complicated and I do appreciate that you have given me your time.
Thank you for the time. The place where GNOIDA proposed to allot plot to me got changed all the 3 times along with the size of the plot. However, from 1995, the initial Allotment number i.e. C-16191 has remained unchanged. For administrative reasons, GNOIDA had to continue changing the Sector and the Plot Size.
The point is that I completed Full and Final Payment for the plot to my Housing Society in Oct 1993 and paid full Development charges to Greater Noida by Jun 2005 and no one should deny me the Indexation for the amount paid by me. The delays thereafter are solely due to failure of GNOIDA Authority. I must be permitted to earn the benefit of my investment. The present plot i.e. C 230, Omicron Sector was given to me in a draw held by GNOIDA Authorities on 10 Oct 2013. However, even after the draw it took GNOIDA 2 more years to issue the allocation letter.
It is all very complicated and I do appreciate that you have given me your time.
05 September 2016
That is why I asked you whether you are selling the allotment letter Or Plot?
If you are selling allotment letter then, no doubt yours would be LONG term capital gain.....
(The number of allotment letter being same per se can NOT be considered to be a conclusive evidence to prove the ownership of investment.)
But you are selling PLOT.......see in the case of plot what has happened is......Your society was having plot of land... this land was acquired by GNOIDA... right? According to Income tax....the capital gain had arisen at that point of time.
At the instance of Allahabad High Court order, again the size of plot got changed....this could have been yet another instance of capital gain...
this is a TYPICAL case of EXTINGUISHMENT.......the definition of transfer includes the word extinguishment
If you are selling allotment letter then, no doubt yours would be LONG term capital gain.....
(The number of allotment letter being same per se can NOT be considered to be a conclusive evidence to prove the ownership of investment.)
But you are selling PLOT.......see in the case of plot what has happened is......Your society was having plot of land... this land was acquired by GNOIDA... right? According to Income tax....the capital gain had arisen at that point of time.
At the instance of Allahabad High Court order, again the size of plot got changed....this could have been yet another instance of capital gain...
this is a TYPICAL case of EXTINGUISHMENT.......the definition of transfer includes the word extinguishment
05 September 2016
Dear Sir,
Thanx a million for such prompt response. I am unfortunately not adequatelyconversant with the Technical terminology. Am I to understand that I will fall into STG category and my money lying with Authorities/ Society for over 20 years will not receive the benefit of reasonable appreciation?
Thanking you once again for sparing your valuable time.
Thanx a million for such prompt response. I am unfortunately not adequatelyconversant with the Technical terminology. Am I to understand that I will fall into STG category and my money lying with Authorities/ Society for over 20 years will not receive the benefit of reasonable appreciation?
Thanking you once again for sparing your valuable time.
05 September 2016
taking into account the stake involved in the deal, please be in touch with a tax planner...CA or otherwise who can guide you better
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