Release of joint ownership attracts capital gain
This query is : Resolved
Ramalinga H.B
(Querist)
15 November 2012
Hi Experts,
if the joint owner release his rights to the other party by executing a deed for without consideration, will it be amount to sale as per IT Act. If yes, then what is the sale consideration to be taken to compute the CG in the hands of transferor.
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if the joint owner release his rights to the other party by executing a deed for without consideration, will it be amount to sale as per IT Act. If yes, then what is the sale consideration to be taken to compute the CG in the hands of transferor.
Read more at: https://www.caclubindia.com/experts/ask_query.asp
CA VISHNU GAVKARE
(Expert)
15 November 2012
If it is immovable property it may be taken as per stamp duty valuation. In case of movable property it shall be market value.
but since it is without consideration it shall be taken as gift.
but since it is without consideration it shall be taken as gift.
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Ramalinga H.B
(Querist)
15 November 2012
Dear CA.Vishnu, Tks for ur quick reply. If he take the relinquishment of right as gift, then it is exempt in the hands of receiver! but is it not CG taxable in the hands transferor as this transaction fulfill the "transfer" definition?
CA VISHNU GAVKARE
(Expert)
16 November 2012
generally same income is not taxed twice. if it is established that it is taxable in the hands of receiver under IFOS then it should not be taxed in the hands of transfer for the same amount. Gifting involves transfer always but since receiver is taxed giver is not taxed for the same amount.
Ramalinga H.B
(Querist)
16 November 2012
Sir,
if this transaction is happened b/w father and a son, then the gift will be exempt in the hands of transferee. so i have the following queries;
a) Should the transferor pay capital gain?
b) if the transferee sells the same property (earlier he was a 50% co-owner and post release deed (<1 year) he becomes sole owner), then on 50% value he will have to pay LTCG and on balance to pay STCG or the previous ownership will be considered for CG working?
if this transaction is happened b/w father and a son, then the gift will be exempt in the hands of transferee. so i have the following queries;
a) Should the transferor pay capital gain?
b) if the transferee sells the same property (earlier he was a 50% co-owner and post release deed (<1 year) he becomes sole owner), then on 50% value he will have to pay LTCG and on balance to pay STCG or the previous ownership will be considered for CG working?
CA VISHNU GAVKARE
(Expert)
16 November 2012
No in both the cases it will be LTCG but indexation benefit will be available from the year of gift and for balance from original date.
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