A person has unathorised possession over a valuable plot for the last 10 years. When owner sell the plot he gets considerable amount to leave the possession. Whether this is a capital receipt not taxable ? Or it will be treated as tranfer of property liable for payment of capital gain ? Some expert say this is capital receipt as there is no transfer of any property. This is very important for discussions.
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Capital receipt
Replies (8)
There is no transfer.
But the amount received cannot be a capital receipt. In such a situation a person might take unauthorised possesion over many properties and receive substantial sum for vacating each one of them. Such sum would not be tax free. Ideally it should be taken to IFOS.
| Originally posted by : Dhawal Mohnot | ||
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There is no transfer. But the amount received cannot be a capital receipt. In such a situation a person might take unauthorised possesion over many properties and receive substantial sum for vacating each one of them. Such sum would not be tax free. Ideally it should be taken to IFOS. |
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Dear Dhawal,
Thanx for taking interest. Law does not go ideally. Pl read the ammended definitions of the "Property" u/s 2(14) and of "Transfer" u/s 2(47). Explanation 2 of sec 2(47) includes For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily. Thus there should be Capital Gain and not IFOS.
Further discussions are awaited.
Anything unauthorised is not legal and you cannot apply legal/statute laws to illegal activities.
Hence the word used by you "UNAUTHORISED POSSESSION" is sufficient to confirm the illegality.
If there would have been legal possession, he would have been owner. The question is for taxing the amount he received. Such amount is received within sale deed with purchaser and seller. The amount receiving person for unathorised possession is made as confirming party. And this has validity in law. This is very much in practise for old occupied land/ houses at Mumbai, Delhi etc.
If it is very much in practise, might as well disclose the same as IFBP.There is no question of Capital Gains then.
Sorry! This is incorrect. Let expert advise come.
In any case do let me know the final conclusion.
O.K. I will let you know. The matter is among experts.
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