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Querist : Anonymous

Querist : Anonymous (Querist)

25 March 2014 The following is the agreement entered into between the assesse and a contractor in Apr-2010: "The contractor will takeover the existing flat and after rebuilding it, he will give a flat bigger than the old one and compensate for the rent in the period of construction. How should this case be treated for Capital Gain. Is it consider as transfer? What is gross consideration? Sec-54 applies or not?

Thanks in advance

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)

25 March 2014 it will be considered as transfer only as per sec 2(47) as it includes relinquishment of tenancy or onwership rights.

Nikhil Kaushik

Nikhil Kaushik (Expert)

25 March 2014 yes it is considered as transfer of capital asset. the exemption under section 54 is automatic as the consideration received in form of bigger house is also automatically reinvested.

however, the rent received can be a contentious issue. make sure it is worded properly to reflect as part of consideration itself. However, this would be taxable and you shall have to offer tax on the same or invest it under 54/54EC to claim exemption

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