Capital gain

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mohit singh (Querist)

15 March 2014 Hello Experts,

I am doing CA Articleship.
I have one query and i had also posted this on CAclub page but no one has given me the answer till now.
Actually,sir/Madam i want to know that how will we compute capital gain in those cases where the house property is taken over by contractors for the construction of 5 floors and they incur/bear the complete cost of construction & they also give some amount to the owner of that house property and in return they normally take 2 Floors out of 5 Floors which they have constructed.

So,how will we compute capital gain on the transfer of those 2 floors and how will we treat that amount which they give to the owner of that house property?

So,can u please explain me the different aspects of this case!

I will be very very thankful to you.

Nikhil Kaushik

Nikhil Kaushik (Expert)

15 March 2014 well, with regards to the seller of the house property. the cost of construction of the 2 floors received is considered as the selling price of the original house property.

the capital gains arise in the year in which the original house property is transferred over to the developer.

as long as the transaction is at Fair Market Value, there is no capital gains tax as the new house is being constructed!

Nikhil Kaushik

Nikhil Kaushik (Expert)

15 March 2014 you may refer to this link for a detailed analysis of redevelopment transaction by Saurabh Soparkar

https://www.caclubindia.com/forum/taxation-of-real-estate-transactions-a-treatise-285290.asp#.UyRDs863vh4

mohit singh

mohit singh (Querist)

15 March 2014 Thanku soo much sir for the reply and for giving me the desired link as well..!!
Thanx alott..!!

Nikhil Kaushik

Nikhil Kaushik (Expert)

15 March 2014 you are welcome Mohit...

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