Property Redevelopment

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bhavin (Querist)
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15 May 2011 In a project of redevelopment of property in Mumbai Maharashtra:

A builder offers

i. a corpus fund (capital receipt) to the original property owner.
ii. Rent for the period during which the property is being developed.
iii. Brokerage to the owners.
iv. Shifting allowance for changing the residence temporarily.

What is the taxability of : and under what head of the income

A corpus fund if
• The owner has taken the money outrightly.
• The owner has invested the amount in buying the additional property from the builder
• The owner has invested in Capital Gain Bonds u/s 54E

Rent received

• Whether gross amount is taxable?
• The recipient has paid the rent. In that case, whether net amount is taxable?

Brokerage received from the builders:

Shifting allowance received from the builders on:

• Lumpsum amount received from the builders for the project
• Year wise amount received

U S Sharma

U S Sharma (Expert)
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15 May 2011 for builder the whole fund is paid towards the cost of property, though he has paid it in break ups.

the main object is property, the owners are neither paying any service to the builder nor they are employed with them, so the question of such perks are not to paid except the objective of development of propety.

in my view all such sums are to be accumulated and invested in .......Capital gain account, as the property development may take some time, and on completion of development, they can re-calculate taxability and then proceed further.

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