Capital gain on sale of property purchased on installments

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Ankur Maheshwari (Querist)
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25 February 2014 Hello All,

One of my client has recently sold his flat in Gurgaon(purchased in 2006)through transferring Power of Attorney , Since no allotment was made till date.

In this case when the property is sold he has got the amount of sale consideration as equal to the amount paid to the builder (in installments) till date.

Now my questions are as follows :

1- Is this transaction will be covered as a tax incidence for the purpose of computing Capital Gain on sale of property (since no allotment was made till date)?

2- If yes, than how to route the tax calculations and take benefits of indexation in case of purchase on installments?

3- Lastly, please provide any reference to Case Laws in this regard (if any)

Nikhil Kaushik online

Nikhil Kaushik online

(Expert)
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26 February 2014 1. yes it is covered under capital gains as what you have sold is the Right in the property.

2. yes benefit of indexation shall be available. each installment needs to be indexed separately.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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26 February 2014 3. Allowing to possess and enjoy immovable property through power of attorney is transfer u/s 2(47) of the Income tax Act,1961.

Courtesy :- Tax payers Information series-3 (page 7), a publication of Income tax Department , Directorate of Income tax, New Delhi.

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