Capital Gain

This query is : Resolved

Nisanth C S (Querist)
Follow

22 September 2009 'X' sells a land to 'Y' on 2007.Y has no right on land at all.He has to find a buyer, who is ready to buy a house property on the same place.Then X will ready to construct a building on that area and Y will sell it.25% profiy belongs to the seller means 'X'.I want to know that the initail transaction ( X to Y) attracted by Capital Gain Tax.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

23 September 2009 X' sells a land to 'Y' on 2007.Y has no right on land at all.

If X sells the land to Y then Y is the owner of land having every right attached with the transaction of sale of the land.

The answer is based upon the assumption that X has agreed to sale the land to Y on the condition that construction will be done by X only on such land and what ever profit Y would earn, 25% of it will be given to X. Suppose X sold the land to Y in Rs 100000/ and construction done by x on the land is of 200000/-.
The property is sold for Rs 350000/-.Profit is Rs 50000/.
Y is retaining 37500/ and x is receiving Rs 12500/-. The transaction between x and y is in the nature of a business activity.
It will be business income of both X & Y.
However, in initial transaction, profit earned on sale of land by x will attract capital gains tax and that would arise in the year 2007.

The answer may differ if the facts are different.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

avulaandcopdrl 2023

SIVALINGAM

office docs

Joyashish Maitra

Aayushi Chauhan

Subscribe Now

Capital Gain

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA