Capital gain on joint development agreement

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vinay f kothari (Querist)
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20 January 2015 Land owner has entered into an agreement with the builder/developer in the ratio of 60:40 ,what will be time of incidence of capital gain tax and what would be methodology to calculate the tax?

Amol S Joglekar

Amol S Joglekar (Expert)
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20 January 2015 Assuming 60 for land owner and 40 to builder.

Capital gain occurs for 40% because that is the portion of land which is going to be transferred to builder in the instant case.

The gain shall be deemed to occur when the vacant and peaceful possession of land is given to builder....

vinay f kothari

vinay f kothari (Querist)
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20 January 2015 is below mention calculation correct?

Constructed area on the plot of 145665 sq fit to be devided between

> land owner 60% = 145665*60%= 87399*Rs. 6000
=5243.94 lacs (Sales Value)

Cost of Construction/Improvement
of 87399*Rs.1500 = 1310.98 lacs

Capital Gains = 3932.96 lacs(5243.94-1310.98)

(Cost of purchase is immaterial)

Set off : 1942.20 lacs

long term Capital gains = 1990.76 lacs (3932.96-1942.20 )

Tax @ 21.63% = 430.60 lacs

Net Inflow = 1560.16 lacs (1990.76-430.60)

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Amol S Joglekar

Amol S Joglekar (Expert)
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21 January 2015 capital gain will arise on 40% of land. (60% of the land, landlord is not transferring.)

The sale consideration for 40% of land would be the cost of construction of 60% of construction which landlord is receiving from builder/developer.