Documentation for funding construction

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This query is : Resolved

Laxman (Querist)

01 January 2021 N purchased the property consisting of land and residential house in South Chennai measuring about 2600 sft in 1974 and 50 % share of the property was settled in favour of his wife L in 2015. N expired in 2019 leaving behind his wife L (77) and two sons K & P as legal heirs.
As the building is very old, L, K & P want to demolish the building and construct an apartment building with 3-4 flats. But they are not in a position to construct with own funds and are also not interested in a Joint Venture scheme of any builder due to variety of reasons.

R (73) – Brother of N has a vacant plot in West Chennai purchased in 1975. L and her two sons have approached R for funding the construction of the flats in their land with an offer to allot one flat with uds of land in return proportionate to the amount to be invested by R for the development & construction of flats.
It is assumed that - Since R will be utilizing the sale proceeds of the vacant land against the value of the flat to be allotted to him, there will be no capital gain tax for him. Similarly, since L and sons will be utilizing the sale proceeds of uds of land to R, by constructing flats for them, they also will be exempted from capital gain tax.
Now, with regard to execution of documents to complete the transactions one option is - L and sons have to execute a sale deed for the sale of uds of land to R and subsequently all the four have to enter into construction agreement with the builder for development & construction of flats to them.
Supposing if L and sons request for the money (sale value of R’s land)) to be paid directly to them in advance without involving the builder on the understanding that they will transfer one flat with uds for the value of investment after completion of the flats - will it be risky or alright to concede to the request.
What will be the implications of capital gain tax and the consequences if the flat is not completed by the builder as per the requirements?
Any other alternate and viable documentation to take care of Capital Gain Tax, Stamp Duty and other statutory requirement.