FACTS
THE DEVELOPMENT AGREEMENT PROVIDES THAT THE LAND OWNER WILL PROVIDE THE LAND & ENTIRE CONSTRUCTION EXPENSES WILL BE BORNE BY THE DEVELOPER. THE LAND OWNER WILL GET A RATE OF SAY RS. 5.00 LACS PER KATHA FOR THE LAND & A 50% SHARE IN THE PROFITS. THE LAND COST WILL BE PAID TO THE LAND OWNER ONLY AFTER DEVELOPMENT COST HAVE BEEN MET.
ISSUES
WHETHER CAPITAL GAINS WILL ARISE ON THE DAY OF DEVELOPMENT AGREEMENT OR WHEN THE PROCEEDS ARE RECEIVED.
WHETHER SHARE IN PROFITS WILL BE TREATED AS BUSINESS INCOME OR CAPITAL GAINS.
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