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Capital Gain

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(Querist)
26 June 2009 In a case,
1)a landlord gives a property on rent to a trust.
2)Property is rented for last 10 years without any agreement.
3) Now landlord wants to sale the property and trust is asking for compensation for renouncing rights.
4) out of sale consideration of 30 lakhs lanlord is paying 10 lakhs to trust as compesation.
5)what is the treatment of Compesation and what will be capital gain?
please suggest your answers???
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Ratan Sharma

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Ratan Sharma (Expert)
26 June 2009 Hi Rajesh,
It is the sale of rights by the trust. Rs. 10 lacs will be taxable in the hands of trust as long term capital gain. So far the land lord is concerned, capital gain will be as under;

Sale consideration Rs. 30 lacs
Less : paid to tenant Rs. 10 lacs
( Expenses on transfer )
-----------
Balance Rs. 20 lacs
Less : Indexed cost xxxxx
-----------
Long Term Capital Gain/loss xxxx
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