Receipt from builder for giving new house-capital gain ?

This query is : Resolved

CA Abhishek Singh (Querist)
Follow

03 June 2012 Hello everyone,

one of my client had a room in a chawl (cost 50000). a builder has approached him and told him that he want to make residential complexes here. It will take 1.5 to 2 yrs of time.

Builder has promised him a 2 bhk flat in the building (market value now 40 lacs) and has given to my client rs.10 lacs maintenace cost since he the construction will complete after 2 years.

How should i compute the capital gain ?

Ca Anand Dubey

Ca Anand Dubey (Expert)
Follow

03 June 2012 40 lacs +10lacs will be sales consideration in the year of sales

or

Rs. 10 lacs as sales consideration and rs. 0 as cost cost of acquisition of the new flat as future is uncertain

Soumitra Basu

Soumitra Basu (Expert)
Follow

03 June 2012 Rs. 10 lacs is for comepensation for not doing business in that particular area and therefore it should be treated as income from business. No capital gain should arise for the flat.

CA Abhishek Singh

CA Abhishek Singh (Querist)
Follow

04 June 2012 @soumitra basu. just to correct u compensation in not for not doing business in the area it is given because builder will demolish the chawl and assessee has to shift to other place and he will have to pay rent for two years. for this purpose rs.10 lacs in given by the builder.

but my client has his own flat in other area and he is not paying any rent since he is using his flat for residence.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now