Capital Gain for Joint Venture & Sale of Property after Development

Tax queries 587 views 2 replies

hdhitesh

account assistant

33 Points Joined May 2012

A partnership firm (titled as owners) gave 4 of their different lands to a developer by entering into a Joint Venture agreement in year 2007. In the agreement the developer promised to the owners that on completion of the said project they (the owners) will receive around 40% area of the land as in form of Flats in the said project. In year 2021 a part of the project got completed (CC received) and the developer gave the owners 4 flats.

In the agreement of those flats between the developer & owner, it has no stamp-duty paid because the developer already collected stamp-duty from owners at the time entering into joint venture. Furthermore in the agreement of those flats, there no amount of sale consideration has mentioned due the reason above.Now out of 4 flats the owner sold a flat @ 87 lacs in yeay 2021.

My question is that, the owners received flats against their land, then how to calculate the capital gain?

Replies (2)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

198123 Points Joined July 2016

1. The registered sale agreement from developers to owners for the 4 flats received is mandatory.

2. LTCG tax liability arises over the owners for transfer of land to receipt of flats.

3. STCG tax liability over single flat when sold for 87 lakhs.

hdhitesh

account assistant

33 Points Joined May 2012

Sir, first of all thanks for your reply. I understood that there will be LTCG & STCG on both of the transactions. But I am confused about the cost of acquisition of both land and the flats. As the land was purchased by owners and was given to developers then what amount should be considered as cost of acquisition? Only the purchase cost of the land or it should be costed along with cost of construction. If it is along with cost of construction then what is the formula to compute it?.
Secondly as I mentioned in my query that the flats received by the owners were already registered but in those agreements the amount of sales consideration is "0". Then how to compute STCG on sale of those flat/s?