Ownership date of capital asset

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Kamaldeep Singh (Querist)
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31 October 2013 Hi,
First of all I wish a very Happy Deepawali to all the members out there.
Now my issue: One person was allotted a piece of land in 2002-03 by municipal corporation. The payment of which was to be made in installments in 5 years. The registration could be done anytime even after 5 years, however the possession of Land was handed over to the person on the date of allotment.There was no default made in payment of installments and the sum was paid in full. The registration however was done in 2012-13.
Now the question arises is what would be the date of acquisition of land in this case,the date of allotment or the date of actual registration?
Kindly quote section or case law if possible.
Thanks.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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31 October 2013 If the asset was handover in 2002-03 then for income tax purpose you might be able to consider the same as date of purchase. Actual registraton of deed is not required under income tax act. Effective ownership is more relevant

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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31 October 2013 Agree with Expert,

Under your case you got the possession,
Hence you may treat cost of Aquitaine from the date of possession...

However, In case the possession is on later date but the registration was done earlier then it will be treated as purchase of right...

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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01 November 2013 Dear Kamaldeep,
Clause 47 of Section 2 of the Income-tac Act itself provide for definition of transfer of property which also includes:".....(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882)....."

There are several laws to this effect. But you need to study them in detail to see the right effect.

For simplified reply, you may please refer to

https://www.indiantaxupdates.com/2013/05/21/capital-gain-on-sale-of-under-construction-property-before-possession/

regards

Kamaldeep Singh

Kamaldeep Singh (Querist)
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01 November 2013 Hey thanks guys. Actually Nikhil I read the clause you have quoted here but was a bit confused so wanted to double check the same as this was not an ordinary case of registration before possession. Anyways, thanks to both of you for your prompt reply. I have just one more query, since this will now be a long term capital gain how is the indexation to be done, as the payment has been made yearly in 5 installments and in 2012-13 registration expenses have been made. In my opinion indexation has to be done year wise including registration expenses in 2012-13. Again I am just double checking it. It would be very kind of u guys if you could help me out.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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01 November 2013 payment is not relevant...the indexation shall start from the year in which the asset came in your possession.

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