CAPITAL GAIN peculiar case

Tax queries 470 views 3 replies

S S Reddy

29 Points Joined November 2010

I have a peculiar case for Capital Gain.

Mr.Client has purchased 1 Acre of land by way of Agreeement of Sale in the year 1982-83 from Mr.Vendor, who had purchased it in the year 1965. Ever since the land is in the possession and enjoyment of Mr.Client. Now Mr.Cleint wants to get it registered from Mr.Vendor.

Mr.Vendor's apprehensions are that he would be served an IT notice to cough up the Capital Gain if he registers the land now in the year 2010.

Whereas the fact is Mr.Vendor transferred possession along with the AOS in the year 1982-83, and in that year he did not have capital gain ( according to CG computation considering his purchase price and selling price ).

How to proceed with the transaction ?

Replies (3)

Rahul Agarwal

Future CA

217 Points Joined December 2007

Mr. Reddy,

Your Client can go forward and get the land registered in his name as there is no relation between the registration and taxation .

Tax has to be paid in the year in which capitla gain arises and registration can be done at any possible time.

Mr. Vendor's apprehension s are totally incorrect.

The above is only Personal opinion please consult experts.

S S Reddy

29 Points Joined November 2010

Yes that is my impression as well. But the fears of Mr.Vendor are not without any basis. The registration authorities submit the details of high value transactions to the IT department. It is a tricky situation for Mr.Vendor as he cannot prove that he paid/or was not chargeable to tax in 1982-83.

Can I obtain an Advance Ruling in this case ? From what I read about Advance rulings, one of the parties need to be a Non-Resident Indian. Can someone clarify if an Advance Ruling can be obtained for a domestic transaction involving resident Indian parties.