Family Setllement - Tax Implications

This query is : Resolved

CA Shailesh +91 9393926464 (Querist)
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22 August 2008 Hello Friends,

Please let me know what will be the status for the following transaction under Income Tax Act?

There are two properties "A" & "B" inherited by the two brothers from their father.

Brother 1 gets Property "A" & Brother 2 gets Property "B". Apart from this, Brother 1 also pays Rs 10,00,000/- to Brother 2.

My Query is What is the nature of the amount paid by way of family settlement and its tax consequences?

Yatesh Prakash Renuke

Yatesh Prakash Renuke (Expert)
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22 August 2008 Property received form inheritance is not taxable.
When these brothers sale the property it will be taxable as capital gain. The cost of acquisition for the same is same as to their father.
When brother 1 pays rs. 10 lacs then it is the cost of acquisition to him. at the time of sale he can claim it.

Regards'

Yatesh Renuke.

CA Shailesh +91 9393926464

CA Shailesh +91 9393926464 (Querist)
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23 August 2008 Thanks for the reply Yatesh,

But my query is whether any capital gain will arise in the hands of brother 2 at the time of receiving Rs 10 lacs since this amount is not received by him by way of inheritance

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