Real estate
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 June 2012
A and B have equal lands adjoining each other. They wish to develop a part of both the lands together and form a building/complex. They both shall invest money in the development equally after forming a joint venture. When shall be the incidence of tax.?
CA PARAS BAFNA
(Expert)
30 June 2012
One of the ways to do such things-
.
The land may be converted as Stock in Trade, on the date when the plan is passed by the local authorities.
.
For arriving the profit in the construction business , market value as on the date of conversion may be taken as part of Cost of Sale of the property constructed.
.
When the documents of constructed property will be executed two fold tax incidence will arise.
.
The difference of Market Value and indexed cost of acquisition of the land would give rise to Capital gains.
.
The Difference in Sales consideration and Cost of Sale (includes FMV of land) would give rise to the Business Income.
.
.
The land may be converted as Stock in Trade, on the date when the plan is passed by the local authorities.
.
For arriving the profit in the construction business , market value as on the date of conversion may be taken as part of Cost of Sale of the property constructed.
.
When the documents of constructed property will be executed two fold tax incidence will arise.
.
The difference of Market Value and indexed cost of acquisition of the land would give rise to Capital gains.
.
The Difference in Sales consideration and Cost of Sale (includes FMV of land) would give rise to the Business Income.
.
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