Regarding Joint Development Agreement

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akshay maloo (Querist)
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19 May 2022 Four Individuals name A, B, C, D are joint owner of some piece of land and out of them two i.e. A and B wanted to make partnership firm in the name of AB Associates and carried plotting business in that land.

1.) Can all four A,B,C,D enter in a joint development agreement with the partnership firm AB Associates and give rights to development of the land and sale plot to probable buyers?

2.) If answer to above questions is affirmative, then when will capital gain be taxable in the hands of A,B,C and D?

3.) Can A,B,C,D take benefit of sections 54, 54F etc to save capital gain tax?

4.) Taxability in the hand of partnership firm AB Associates? What will be the cost for AB Associates?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 May 2022 1 Yes.
2 Capital gains taxable at the time of selling the flats.
3 Yes 54F exemption available.
4 Cost to the firm is total construction cost for all the flats.
Tax on profit earned by the firm sale value of flats related to the firm less cost above stated.

akshay maloo

akshay maloo (Querist)
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19 May 2022 Thank You Sir, but the partnership firm will not sell flats. Firm will carry on business of developing plot and then will sell plots only.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 May 2022 In such a case reply is modified.
1 yes.
2 Taxable on sale of plots.
3 54F exemption available.
4 Cost to the firm is development cost and profit earned by the firm is taxable in the hands of the firm.

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