14 March 2009
A residential house property consisting of 4 floors is to be transferred. The building is to demolished and reconstructed consisting of 5 floors. the basement,ground and1st floor(60%) will remain with the transferror and 2nd and 3rd floor(40%) will be with the transferree. The construction is being done by the transferree on the behalf of transferror. Out of the total consideration, 85 lacs has been given as advance in the asstt. year 2009-10 and balance 17 lacs will be received in asstt. year 2010-11 and the value of 60% of the property being constructed is estimated to be 45 lacs which will be spent by transferree in asstt. year 2010-11. The property has not yet been tranferred in the name of transferree. In which asstt. year is the capital gain taxable?
14 March 2009
Capital Gain shall be taxable in the year in which transfer takes place.
Transfer shall have the meaning assigned to it u/s 2(47) of Income Tax Act, 1961 which shall include: Sale, exchange or reliniquishment of rights.
Sale means transfer of risks & rewards to the purchaser.
In your case, since the transfer hasn't taken place, Capital gain can't be computed. And as far as Advance is concerned, it shall have no tax implication till the time actual transfer takes place or the same is refunded.
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