Capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 December 2014 A, B, C are owners of a land measuring 1 acre. They enter into a Joint Development agreement with XYZ Co. XYZ Co. agrees to give 30% of the super built up area as the consideration. Later on they come to a mutual agreement wherein instead of giving the flats, XYZ will sell the flats and pay 30% of the money to the owners as their consideration.
The cost of improvement is incurred by XYZ. Will A B C be able to consider the COI in computation?
The flats are short term capital asset, but the land is a long term capital asset.
So how to compute the long term/ short term Capital Gain?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 December 2014 As XYZ incurred cost of improvement ABC will not be able to consider it in computation of COI. Instead of giving flats it was mutually agreed to to sell the flats
and pay 30% of money, so no short term capital gain arise as no flat was handed over. The sale consideration of 30% has to be considered as consideration of land for long term capital gain.

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