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INCOME UNDER HEAD CAPITAL GAINS

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This query is : Resolved

jitender kumar chauhan (Querist)
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08 March 2011 Suppose, a person under a contract with a Builder purchased a flat. But the flat is still under Construction. The person paid few instalments with interest to the builder ,but after 2 years the person sold that flat to somebody. Thus, whether the treatment should be done under Capital gains head or under head other sources for the profit on sale made? Whether it is necessary to be the owner of asset for treatment under head capital gains?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 March 2011 For capital gains the assessee must have
right in the capital asset.
In this case, I assume that agreement to sale has been entered into between the builder and the contractor.
Further , as you have mentioned that the contractor had purchased the under construction property from the builder and sold the same in halfway to third party, it is a case of transfer of property,(it is not transfer of Residential House).

Short Term Capital Gains will arise to the contractor.

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