Corpus received under a redevelopment agreement by a Company for flat held as Stock in trade
This query is : Resolved
Quick Summary
04 November 2022
The assessee is a Company engaged in real estate business. It holds a few apartments purchased as its stock in trade. One such apartment has gone in for redevelopment. The assessee (company and not an individual or HUF) has received an amount as corpus as part of the redevelopment process.
Questions:
1) is the amount received a capital receipt or revenue in nature?
2) can this amount received be adjusted against the cost of the flat (held as stock in trade)
3) from a tax perspective - is this a taxable receipt or tax free receipt?
4) if it is a taxable receipt under which income head should this be reported?
5) can the usual treatment of reducing the cost of acquisition by this amount for computing capital gains (in a typical redevelopment case where assessee is individual and asset is a capital asset) be applied (i.e. reduce cost of stock in trade) even in case where assessee is a company and asset is classified as stock in trade.
Opinions welcome
Questions:
1) is the amount received a capital receipt or revenue in nature?
2) can this amount received be adjusted against the cost of the flat (held as stock in trade)
3) from a tax perspective - is this a taxable receipt or tax free receipt?
4) if it is a taxable receipt under which income head should this be reported?
5) can the usual treatment of reducing the cost of acquisition by this amount for computing capital gains (in a typical redevelopment case where assessee is individual and asset is a capital asset) be applied (i.e. reduce cost of stock in trade) even in case where assessee is a company and asset is classified as stock in trade.
Opinions welcome
04 November 2022
From whom the amount is received whether it's from the government.
From whom the amount is received whether it's from the government.
04 November 2022
It is received from a private builder. Not government.
04 November 2022
Tax authorities have held that corpus received under a redevelopment is a capital receipt as it is for "hardship" caused to the assessee due to redevelopment. How does classification of the underlying asset (apartment) as to whether it is capital asset or stock in trade change the nature of the receipt?
04 November 2022
Treat it as capital receipt not taxable.
Adjust it against the asset held in stock.
Nature of receipt will not change it, it can be continued as stock in trade.
Adjust it against the asset held in stock.
Nature of receipt will not change it, it can be continued as stock in trade.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CAPITAL GAIN BASE ON NOTIFICATION
- Form 140 tds
- Taxable or Tax exempt
- NRI starting business in India
- TDS Deducted AY-2013-14 Not Reflected in 26as
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- ADVANCE PAYMENT OF ADVOCATE
- Demand Outstanding AY 2013-14 TDS Deducted not shown in 26as
- FORM 141 SDV query
- Eway bill not cancelled within 24 hous what can be due
- Query – TDS on purchase of land from NRI under Income-tax Act, 2025
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
