Capital gain

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Ajay (Querist)
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12 February 2013 sir plz guide me..

2 brothers and 3 friend (total five) purchase a land jointly without defining their individual share in registry papers.(but on IT return they have defined there individual share)

now after two years if they sell the land defining their share and all 5 receives their share amt in cheque from purchased.. (5 cheque)..

i consider the owner as co-owner
but AO is of view dat its an AOP and will be taxed flat at max.rate of 30%
is there any justification to AO remark.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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12 February 2013 Dear Ajay,

The basis requirement for treating a group of persons (tax definition), are as under:

(i) Two or more persons;

(ii) Voluntary combinations;

(iii) A common purpose or common action with object to produce profit or gains.

However, the object to produce profit or gains is no longer a requirement due to the explanation inserted in clause (31) to section 2 of the Act with effect from April 1, 2002, provides that an association of persons will be deemed to be a person whether or not it is formed with the object of deriving income.

So, can the AO treat you as an AOP? Possibly yes.

The best way out should be to contest all the notices sent by AO, file separate returns offering individual's share of capital gains to tax/ claim exemption provided under the act.

Ajay

Ajay (Querist)
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12 February 2013 thanks for ur kind response

one more question.. sale consideration is received in 5 different cheque.. it means share is defined.. y cant v treat it as co-owner and pay tax in individual case claming deduction U/s 54

but AO is forcing to considering it as AOP

Ajay

Ajay (Querist)
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