Sale of land received under land development agreement

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AAYUSHI MAHESHWARI (Querist)

14 December 2017 There is a person who had given his land under land development agreement and in return he is getting three flats rest all are builder's share (35:65-share of land owner and developer). These flats are the only considerations as no monetary consideration received by land owner to builder.
Now the problem is he had not paid capital gain tax for flats received under land development agreement but now he is selling one of the flat for Rs. 49 lacs. What will be the cost of acquisition of the flat while computing capital gain?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

14 December 2017 Cost of acquisition of one flat will be 1/3rd of cost of acquisition of land.

AAYUSHI MAHESHWARI

AAYUSHI MAHESHWARI (Querist)

14 December 2017 Sir as per your reply - Land was purchased in the year 1993 and the cost was 91427 with indexation today the cost = 248681 and 1/3 rd of it will be 82894 so does capital Gain will be 48.17lacs 🙄🙄 apart from sec 54 exemptions can you please suggest some ways of saving such huge amount of tax..

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

14 December 2017 Yes capital gains working is right. 54EC exemption available.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

14 December 2017 1/3 rd undivided right of land in 35% of total holding and one among the 3 flats
are selling now,

Cost of the above should be arrived as follows:-

cost of land is 1/3rd of 35% of Rs.91427 =Rs. 10,666/-
cost of flat = Cost of construction to be obtained from builder.

AAYUSHI MAHESHWARI

AAYUSHI MAHESHWARI (Querist)

14 December 2017 Sir as per my view cost of construction of flat will be added to cost only if at the time of completion of construction he had shown it as sale consideration and paid capital gain but in this case he had not paid any tax on capital gain at that time.. so now will the income tax authorities allowed him to take benefit of including cost of construction of flat when he is selling one of them ?

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