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Capital gains

15850 views 1 replies

Lavina Bajaj

CA Final Article Assistant

42 Points Posted on 21 November 2013

My client (a Company) had purchased a land in year 2001-2002. He had incurred brokerage on such land in the same year. In year 2009-2010, he incurred some other expenses also. Now, in year 2011-12, he made an agreement with a developer to construct a multi-storey building on such land. The developer constructed 4 floors on the building. Instead of giving cash/cheque to the developer for such construction, the client gave him possesion to the 3rd & 4th floor. The land is still in the name of the client. Will it be considered as transfer of capital asset and come under the purview on long term capital gain????

In year 2012-2013, the client (having right on land, 1st & 2nd floor) gave 2nd floor on rent and exchanged the 1st floor with X person for his ( X ) property at another place. What will be its tax treatment??? Will it be considered as STCG or LTCG????

!!!!!!! URGENT !!!!!!

Replies (1)

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

1372 Points Posted on 22 November 2013

In your given case,imagine if constructor accept your third and fourth floor,in this purview, service tax is to be levied by constructor and for the purpose of consideration, the Fair value of property is to be considered and in sync with that it is business income for the constructor and liable to pay income tax.So again if you pay capital gain tax.IT department collecting tax twice.so it is likely to be income but not cost to him.So it may not be a transfer in view of the above.So no case of long term capital gain in transfer of giving possession to constructor. Please note it is my assertion but may not absolutely correct, please intimate me solution after you got clarity