Capital gain- transfer definition when possession not taken

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CA Atihash Agarwal (Querist)
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06 April 2015 Mr X purchased an under construction flat from a builder at Rs 4000 per sq metre. The builder gave him ALLOTMENT LETTER.
Now after 8 months, Mr X sold the flat to Mr Y for Rs 4200 per sq metre and asked the builder to get the registry done in the name of Mr Y.

Now the question is, whether this transaction would come under the definition of Transfer as per Capital Gain or not.

Pls note that Mr X only has the allotment letter and NOT THE POSSESSION LETTER.

Also, if it is a transfer, which date to be taken as the date of sale??

Pls advice.

VISHNU PRASAD GHUWALEWALA

VISHNU PRASAD GHUWALEWALA (Expert)
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06 April 2015 Since X had an salable interest in the property,Transaction will be considered as transfer for the purpose of Capital Gain.Date of transfer will be the date of agreement among Builder,saler and buyer, without which builder will not transfer the property in the name of new buyer.

CA Atihash Agarwal

CA Atihash Agarwal (Querist)
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06 April 2015 Thank you for your reply Sir. But my question is that in the definition of Transfer as per The Act, it says when the possession is there. In this case, there is no possession, and neither in the registry, the name of Mr X will be opened.
Registry will be done thru The builder and Mr Y.

CA Kanj Goel

CA Kanj Goel (Expert)
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06 April 2015 Dear, if you go through the definition of transfer as per section 2 clause 47 of the income tax act then you will find that relinquishment of right also amounts to the transfer and the aforesaid transaction would attract capital gain.

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VISHNU PRASAD GHUWALEWALA

VISHNU PRASAD GHUWALEWALA (Expert)
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07 April 2015 Sir, Before registry, an agreement will have to be entered between yourself,buyer and builder. That will relinquishment of right by yourself and on that date capital gain will arise to you.CA K.Goel is very much correct.
Thank you sir.

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