Capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2015 Dear friends,
Please help me resolve this

One of my clients have 1 acre of land. He entered in to an agreement with a builder for construction of a flat in the said land and the consideration is 2 crore and 40 % share of that flat(he is not selling the land). When the buyer purchase the flat he will transfer the undivided share to each buyer.
So at what point of time he is taxable under capital gain.
1.When he enters in to the agreement?
2.When he gets 2 cr?
3.Or when the flat is transferred to the buyers?

Or any other point of time

Thank you in advance

Amol S Joglekar

Amol S Joglekar (Expert)

29 May 2015 Be careful, It is tricky situation.

See, in normal course, if a person asks builder to construct a building on his land, the person has to pay the money to builder.

In all such cases under the pretext of "developement", land owner is getting money from the builder. That menas the landowner is shelling out something to builder.

Our question is if " that something" is "capital asset" or "business"?

under such a situations, the date on which possession of the land is handed over to builder is taken as date of transfer.

Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2015 Thank you for your reply

So in that case capital gain arises when the land is transferred to the builder for construction of flat ?

Amol S Joglekar

Amol S Joglekar (Expert)

01 June 2015 The better word would be "handed over the possession" rather than "transferred"

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2015 Thanks for the reply sir.

Amol S Joglekar

Amol S Joglekar (Expert)