Short term or long term capital gain on sale of property
This query is : Resolved
Guest
Guest
(Querist)
21 November 2013
Hi, I have purchased a flat in Pune and planning to sale it now in Dec 2013.
I wanted to know if my gain will be Short term or Long term capital gain?
Following are the important dates-
Date of Agreement- 6 Oct 2010
Date of Possession- 27 May 2012
This is very important for me and I am really confused by different answers given by diff people. Please help. Thank you.
I wanted to know if my gain will be Short term or Long term capital gain?
Following are the important dates-
Date of Agreement- 6 Oct 2010
Date of Possession- 27 May 2012
This is very important for me and I am really confused by different answers given by diff people. Please help. Thank you.
CA Mohit Bansal
(Expert)
21 November 2013
Determining the date of purchase of an under-construction property has been a matter of debate, particularly in the light of various real estate arrangements prevalent in the market.
However, there are contrary judicial precedents, which have held that the date of executing the purchase agreement with the builder (in your case, 14 May 2010) could be construed from the date of execution of the said agreement and subsequent date of registration or possession is not relevant.
However, there are contrary judicial precedents, which have held that the date of executing the purchase agreement with the builder (in your case, 14 May 2010) could be construed from the date of execution of the said agreement and subsequent date of registration or possession is not relevant.
CA Mohit Bansal
(Expert)
21 November 2013
in your case its 06/10/2010
CA Pallav Singhania
(Expert)
21 November 2013
Normally, when one books a flat to be constructed, one pays a token amount as booking charges, a letter of allotment is issued when the layout is finalized and, thereafter, an agreement to purchase is executed and registered.
If you have merely booked a flat in the building to be constructed with no particular flat having been allotted to you, you cannot be said to have acquired the right to purchase a specific flat. It is only when the letter of allotment is issued that such a right can be said to have come into existence.
The purchase agreement codifies the rights between the parties, which have already come into existence after the issue of the letter of allotment.
However, a safer view is that the date of signing of the agreement to purchase is the date of acquisition of such right. Subsequent registration of the purchase agreement merely grants better legal protection to such right and, therefore, it is the date of agreement and not the date of registration that would be the date of acquisition of such right.
The dates of payments made for such a purchase are irrelevant for this purpose.
If you have merely booked a flat in the building to be constructed with no particular flat having been allotted to you, you cannot be said to have acquired the right to purchase a specific flat. It is only when the letter of allotment is issued that such a right can be said to have come into existence.
The purchase agreement codifies the rights between the parties, which have already come into existence after the issue of the letter of allotment.
However, a safer view is that the date of signing of the agreement to purchase is the date of acquisition of such right. Subsequent registration of the purchase agreement merely grants better legal protection to such right and, therefore, it is the date of agreement and not the date of registration that would be the date of acquisition of such right.
The dates of payments made for such a purchase are irrelevant for this purpose.
21 November 2013
For calculating LT/ST, the date of the agreement can be considered ,since such agreement itself is the subject matter of the transaction.
Therefore, the answer is LTCG.
Therefore, the answer is LTCG.
30 November 2013
Agreed with chackrapani sir's view.
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