Capital gains - tenancy rights & tax incidence.
This query is : Resolved
23 August 2011
Hi All,
This is a practical case that I have at hand. The Facts are as under:
A property was given to a person as tenancy in early 1940s by an educational foundation where he used to teach. This was not related to his employement . Later this was passed on to his daughter-in-law , who herself teaches at a school affiliated to this foundation.Somewhere around 1990s , DDA acquired this whole land from the educational foundation after a long litigation and since then the rent was also not requested from the tenants by the landlord foundation. There is no paperwork except old rent receipts with any of the tenants in this location. It is said that DDA will offer these to existing tenants on "As is where is" basis to buy after paying development charges. This has not happened as yet and tenants are selling and buyers buying these houses due to their capital appreciation value on a regular basis during last few years.
Now Question 1 is - Will this be termed as a tenancy right?
Question 2 is - Will the income attract Capital gains tax , if sold? and can it in any way come under the head "other sources" as the tenant is not an owner of this immovable property ?
Question 3 is - In case it comes under Capital gains head , how will the computation be shown? specifically the Sale consideration and the proof that it is a tenancy right?
Request your all support . Can any of you also provide some insight on the "Tenancy right" aspect as per the Properties Acts prevalent in Delhi as well.
Looking forward to responses on this topic.Thanks
This is a practical case that I have at hand. The Facts are as under:
A property was given to a person as tenancy in early 1940s by an educational foundation where he used to teach. This was not related to his employement . Later this was passed on to his daughter-in-law , who herself teaches at a school affiliated to this foundation.Somewhere around 1990s , DDA acquired this whole land from the educational foundation after a long litigation and since then the rent was also not requested from the tenants by the landlord foundation. There is no paperwork except old rent receipts with any of the tenants in this location. It is said that DDA will offer these to existing tenants on "As is where is" basis to buy after paying development charges. This has not happened as yet and tenants are selling and buyers buying these houses due to their capital appreciation value on a regular basis during last few years.
Now Question 1 is - Will this be termed as a tenancy right?
Question 2 is - Will the income attract Capital gains tax , if sold? and can it in any way come under the head "other sources" as the tenant is not an owner of this immovable property ?
Question 3 is - In case it comes under Capital gains head , how will the computation be shown? specifically the Sale consideration and the proof that it is a tenancy right?
Request your all support . Can any of you also provide some insight on the "Tenancy right" aspect as per the Properties Acts prevalent in Delhi as well.
Looking forward to responses on this topic.Thanks
24 August 2011
For knowing more about the Tenancy you may refer the following link.
https://www.vakilno1.com/landlord_qns.html
Now Question 1 is - Will this be termed as a tenancy right?
Reply-
In case the rent receipts had been found to be issued by the landlord, it indicates existence of tenancy rights.
https://www.vakilno1.com/landlord_qns.html
Now Question 1 is - Will this be termed as a tenancy right?
Reply-
In case the rent receipts had been found to be issued by the landlord, it indicates existence of tenancy rights.
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24 August 2011
Question 2 is - Will the income attract Capital gains tax , if sold? and can it in any way come under the head "other sources" as the tenant is not an owner of this immovable property ?
Reply-
Here The cost of acquisition may be taken as NIL also. Refer Section 55(2).
The amount will attract Capital Gains Tax and exemption can be claimed from capital gains by investing in Residential House or in Capital Gain Bonds.
If it is a income, it will be taxed under Capital gains only.
The Tenant is owner of tenancy right to which he is selling.
Reply-
Here The cost of acquisition may be taken as NIL also. Refer Section 55(2).
The amount will attract Capital Gains Tax and exemption can be claimed from capital gains by investing in Residential House or in Capital Gain Bonds.
If it is a income, it will be taxed under Capital gains only.
The Tenant is owner of tenancy right to which he is selling.
24 August 2011
Question 3 is - In case it comes under Capital gains head , how will the computation be shown? specifically the Sale consideration and the proof that it is a tenancy right?
Reply-
Sales consideration will be capital gain.
And as I mentioned exemption can be claimed from capital gains by investing in Residential House or in Capital Gain Bonds.
Reply-
Sales consideration will be capital gain.
And as I mentioned exemption can be claimed from capital gains by investing in Residential House or in Capital Gain Bonds.
24 August 2011
Sir,
Thanks you very much for the information.It really helped.I will get back in case I have any further queries.
Thanks again.
Thanks you very much for the information.It really helped.I will get back in case I have any further queries.
Thanks again.
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