Capital Gain (unresolved)

1) get indexed value of land as on the date of transfer of flats in hands.

2) 5654923  minus his indexed cost is LTCG and tax is payable on it.

3) 100000 minus 5654923/9  is his stcg and to be added to his regular income.

transfer of land entitles himself for LTCG but construction on self land flats does not give him relief for 54F, hence long term capital gain tax is applicable. here he have to buy "new property" to avail the exemption. 

in development agreements the land owner get automated posession of flats without registration, or we can say that his proportionate land is sold only. he is owner of proportionate land in his hands since inception. so he did not purchased the flats but he GOT it in lieu of his share vested in other flats of the property. 

As per me I agree with Mr Sharma regarding the LTCG treatment but I would like to add 1 thing that 54F benefit can be claimed for 1 flat out of the nine flats since it is just like construction only.

Regards,

Rahul

Originally posted by : Rahul Agarwal
	As per me I agree with Mr Sharma regarding the LTCG treatment but I would like to add 1 thing that 54F benefit can be claimed for 1 flat out of the nine flats since it is just like construction only.   Regards,   Rahul

if the registration deed is initiated for 9 flats, and the property comes in hands by registration only, ( not by virtue of development deed) then he can avail all benefits, otherwise there is no diff in 9 and 1 flat. 

The relevant section stipulates that only benefit can be availed only for 1 residential property. IT implies that since he is going to use only flat for use the rest can only be let out ou remain unused. Section 54F only says that the whole or part of construction should be made only for personal residential use and the person can claim the benefit as per his eligibility.

I might be wrong, Please rectify.

Originally posted by : Rahul Agarwal
	The relevant section stipulates that only benefit can be availed only for 1 residential property. IT implies that since he is going to use only flat for use the rest can only be let out ou remain unused. Section 54F only says that the whole or part of construction should be made only for personal residential use and the person can claim the benefit as per his eligibility. I might be wrong, Please rectify.

9 units in same building are  not diff properties.

if the landowner sells the plot and buy back again the flats in same plot at later date then its 54/54F where he can claim the capital gain invested in buying residential property, 

here the joint development program makes the landlord developer and the 2nsd developer + landlord builds the property from where the landlord gets his share and for balance units "the 2nd develper makes sales agreement between the 3rd party buyer and landlord direct"

so these 9 units does not comes in hand by way of buy, but develpment of self property, here no such benefit available.

Ok  Mr Sharma,

I got your point in this case we are only saying that he is developing his earlier property and treating it as construction.

Thank you Mr Sharma and U to John for for asking such a qood query.

Regards

Rahul

Event 1

Sale Consideration =  Value of flats received 

Less: Cost of acquisition= indexed cost of land portion forgone (please note that portion of land comprising 9 flats not to be considered) 

Result-= Long term capital gain

Event 2

Sale of flat= 10,00,0000

Less:Cost of acquisition- (value of 9 flats/9 + indexed value of land portion comprising one flat)

Result-= capital gain

Note: Exemption u/s 54F not available, as above transactions are separate events altogether. 

Also note that in case of JD agreements, owner of land gives right to developer to enter his land and construct, the owner of land in receipt of agreed upon flats, forgoes right on agreed upon portion of land.

another shadow in this case .................

32-9 = 23 flats will get sold by developer and registration instrument will be done in name of buyer by the land owner only, developer will show in their records as investor to the property and they will take money direct from buyer, whole the development would be accounted to land owner with the amount " invested" by joint developer.

imagine the situation of land owner when he would have to get taxed for consideration of 23 flats sale proceeds. 

I would had loved it if some case law would had been provided regarding it.

Yet I am satisfied with the answers

https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/%5B2007%5D164TAXMAN0108(AAR-NEWDELHI).htm