Capital gain u/s54
This query is : Resolved
gunaseelan
(Querist)
01 July 2015
X sold a residential house property and invested 50percent in purchase of land and enters into joint venture agreementg for construction of 8 flats with builder and gets 4flats for him and in the subsequent year sold 2flats what will be the LTCG and exemption u/s 54
CA. Sunil Gokhale
(Expert)
01 July 2015
There are 3 transactions involved here:
(1) Sale of original house. No exemption u/s 54 as land is bought.
(2) Use of land for joint venture. If it is indeed a joint venture then the 4 flats received will be share of profit taxable as business income. If only development rights were transferred to builder without any share in the overall profit then it not really a joint venture but another 'transfer' and rules of capital gain will apply.
(3) Sale of 2 flats will be STCG hence no exemption will be available. This is irrespective of whether point (2) is business income or capital gain.
My opinion is that the person concerned should hire a CA and get this done professionally.
(1) Sale of original house. No exemption u/s 54 as land is bought.
(2) Use of land for joint venture. If it is indeed a joint venture then the 4 flats received will be share of profit taxable as business income. If only development rights were transferred to builder without any share in the overall profit then it not really a joint venture but another 'transfer' and rules of capital gain will apply.
(3) Sale of 2 flats will be STCG hence no exemption will be available. This is irrespective of whether point (2) is business income or capital gain.
My opinion is that the person concerned should hire a CA and get this done professionally.
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