INCOMETAX LIABILITY ON TDR PROPERTY

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This query is : Resolved

V Ishu Hegde (Querist)

04 October 2007 In a development agreement between builder & co-op housing society

Where the builder for developing of the building shall use the extra FSI and sell the same after giving each member of the society a flat who carpet area shall be 24% more than the present carpet area.

A sum of Rs. 500,000/- towards enhanced property and municipal taxes for their respective flats and inconvenience and hardship caused

A sum Rs 500,000/- to each member as rent for accommodation during the period of construction of the flat.

What is the liability to Income Tax
1) In case of extra carpet area received .
2) Amount received for future enhanced property ,municipal taxes and inconvenience caused.
3) Amount received as rent for accommodation during the period of construction of the new flat.

R.V.RAO

R.V.RAO (Expert)

05 October 2007 the dev. agreement is between the builder and society.
so the members of the society are not a party to the agreement.
the extra carper area share coming to each member is a capital receipt.the cost of flat surrendered will be deducted from out of total market value of the new total carpet area and rest taxable as capital gain.option either at indexation rate or flat rate is available.
amount received as appreciated value of enhanced property / taxes etc..is also taxable as capital
gain.when we surrender flat we dont pay muncipal tax on the same.
amount received as rent accommodation minus actual rent paid for accommodation during construction ( subject to proof)
is taxable as other income though it is a lumpsum amount.
R.V.RAO

Mallidi Ramabrahmananda Reddy

Mallidi Ramabrahmananda Reddy (Expert)

06 October 2007 In the case of co-operative housing society, memebr is absolute owner of the plot/flat alloted to him.Value the consideration by whatevername called received by the member in compensation of the flat already in existence & the rights in the property of the society. The value so arrived is the consideration fpr transfer or extinguishment of the existing rights of the member in the Society or its property. Now proceed to work out the gain liable for tax under the head capital gains.