Capital gain

This query is : Resolved

G S Pradeep (Querist)
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29 December 2012 Dear Friends,

I have small doubt in calculating capital gain:
If a person pay amount to his sisters to get rights of property (House) will it be considered as expense.

Please clarify. Urgent

Thanks in advance.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 December 2012 It may form part of cost of acquisition paid by that person in respect of his sister's share and its holding period will be calculated from the date of acquisition of the right from her.
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G S Pradeep

G S Pradeep (Querist)
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30 December 2012 Dear Sir,

I will give one example:
Assessee have one land he entered in JDA with developer. His sisters also have ownership on land. Since land value was less sisters waited till construction gets over. They will come to settlement for some amount. They paid to sisters once construction gets over. But in JDA sisters name not mentioned. Can assessee claim it as expenditure (ie., cost of acquisition).

Thank you in advance.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 December 2012 It seems to be a complicated issue as the party to the agreement is assessee brother only.
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To my view, brother and sister can enter into an agreement for settlement of the ownership issue of the land (which was the subject matter of the JDA between brother and developer) by drafting the facts appropriately mentioning the disputed situation clearly. The amount being received by the sister from brother under this new agreement will decide the tax incidence in the case of the siblings.
The brother may be in receipt of STCG/STCL
or LTCG/LTCL depending upon the holding period of his share of property and Holding period of sister's share of property.
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G S Pradeep

G S Pradeep (Querist)
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30 December 2012 Dear Sir,

Few things bothering me.

1)How to arrive at construction cost in JDA
2)Since sale is done in the same year in which possession of the property received by landlord it amount to STCG. Investment option against STCG is verless. In mean time he paid amount to sisters to get rights on land. My worry is can we adjust this with building cost. If yes how?

Thanks in advance.