Capital gain
This query is : Resolved
17 April 2012
Mr. A, an builder owner of plot, which was purchase before 12 months, enter into a development agreement of residential row house project of 11 row houses with Mr. B. as per agreement Mr. A, giving his plot to Mr. B, for development and in consideration Mr. A takes 5 row houses.
my query........
1) under which head this transaction is consider. (business income o capital gain)
2) what will be tax treatment.
my query........
1) under which head this transaction is consider. (business income o capital gain)
2) what will be tax treatment.
18 April 2012
In my view, in case of the builder the plot of land may be treated as a stock in trade or
a revenue expenditure. While entering into an agreement with the Developer, the land gets transferred. The FMV of 5 row houses is sales
consideration for the said land and can be taxed under the head IFBP as Business Income.
.
Tax liability will be the same even if you consider the plot of land as short term Capital Asset.
.
Seek opinion of other experts also.
.
a revenue expenditure. While entering into an agreement with the Developer, the land gets transferred. The FMV of 5 row houses is sales
consideration for the said land and can be taxed under the head IFBP as Business Income.
.
Tax liability will be the same even if you consider the plot of land as short term Capital Asset.
.
Seek opinion of other experts also.
.
18 April 2012
thx a lot Bafna sir for your valueable opinion.
18 April 2012
one more thing i want to point out. Mr.A not transfaring title in the name of Mr. B as there is a mutual agreement between them. is it make any change in tax treatment
18 April 2012
one important point i missed to pointed out. that Mr. A was not transfer title of land in the name of Mr. B, as they r mutually agreed on the terms of development. is it make any change in tax treatment.
19 April 2012
To give the land for development is tantamount to transfer as per the views of experts because without providing effective possession of the land, development activities can't be performed.
.
.
19 April 2012
In your case it is important to note when Mr. A purchased the land. If the land was purchased more than 3 years then Long Term Capital Gain will come and if it is less than
3 years then it is Short term capital gain will applicable as soon as you enter into a development agreement. This is first phase. In the second phase you can show investment and claim deduction under Section 54 or 54F as the case may be by taking the value of the row houses as investments but still there is also very much controversies
3 years then it is Short term capital gain will applicable as soon as you enter into a development agreement. This is first phase. In the second phase you can show investment and claim deduction under Section 54 or 54F as the case may be by taking the value of the row houses as investments but still there is also very much controversies
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Fixe term employment
- Is any professional CA is here please reply
- GST ITC REVERSE
- Gift Received from nonblood relative
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- Tax Audit u/s 44AB for Transport Business A proprietorship is engaged in transportation business and
- RCM ISSUE ON RENT AND TRANSPORTATION CHARGES
- Putting a heading on received mail
- Reprocessing of rectification order AY 2025-26
- Foreign lottery ticket bought online from India: legality, tax and consequences
- Consolidated financials
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
