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Flat under construction sold - stcg implication

502 views 2 replies

CA Mitesh Shah

Chartered Accountant

68 Points Posted on 14 March 2013

Hi All,

Certain issue I came across, hope will get resolved here !!

My freind had just registere himself to buy a flat from Unitech, the construction had just started, possession of which expected to be delivered after 3 years. Meanwhile he got a new buyer to whom he sold that right over the flat.

Now My question here is that 'shall it attract capital gain' ? As the section 45 says only about the capital asset, given here is that the possession was not given, property was not in existence.

Please come up with case laws, if any.

Replies (2)

Mihir

Wealth Manager

5293 Points Posted on 14 March 2013

This transaction will attract capital gain. Even if the property was under construction, you purchased the rights and title of the said property via an agreement. And if you can sell the said right and title of this under-construction property via an agreement, it will amount to capital gain.

Nakul Sharma

CA FINAL

35 Points Posted on 14 March 2013

Agree with Mr. Mihir ,it qualifies definition of transfer under phrase

"Relinquishment of a capital asset arises when the owner surrenders his rights in property in favour of another person. For example, the transfer of rights to subscribe the shares in a company under a ‘Rights Issue’ to a third person."
Hence Liable to Capital Gains .