Director of a private company gives his freehold land to company on lease for 15 years for one time payment of Rs. 15 lacs.
His cost of accquisition was 1 lac Rs.
My question is whether it is taxable in the hands of director u/h capital gains ?
if yes, then what will be the tax treatment in the hand of company and the director after 15 years, on completion of lease period.
and if no, why ?
I think No.
Does LEASE is regarded as transfer under the income tax Act?
Lease is not Transfer.
Its just my view, but correct me if am wrong..
Extinguishment of any rights in a capital asset
This covers every possible transaction which results in destruction, annihilation, extinction, termination, cessation or cancellation of all or any bundle of rights in a capital asset.
For example, termination of a lease or of a mortgagee interest in a property.
You have to read the fine print. What are the terms of the lease? Is there an option for the buyer to take possession of the land at a nominal rate at the end of the lease period? Depending on the facts of the case, if the transaction is found to be a sham transaction in the eyes of the Assessing Officer, then the sum of Rs.15 lakhs may be treated as consideration for transfer.
O P Bagla & Co LLP
New Delhi
CA Inter
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Triveni Turbine Limited
Bengaluru
CA
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