Income Tax Query Very Urgent.......

1355 views 6 replies

Riyaz Khan

CA CS (Exec) MBA (Fin) Asst. General

1315 Points Joined December 2008

One of my Client received Rs. 800000/- as Compensation to Waive the right on Agriculture Land which is owned by a Trust. GARDAURI was in the name of my client. However, the registered owner of the land is the Trust.

Now the Trust is paying Rs. 800000/- to my client to waive the Tenancy Rights over that Agriculture Land. And the Trust is paying that amount BY CHEQUE to my client.

Further, the Trust is also selling the that Agriculture Land to any other person.

So the questions are:

1. What wud be the Tax Treatment in the hands of the Trust and My Client (i.e an Individual)

2. Is there any way out to save the Tax on this amount of Rs. 800000/-. Please note that the amount is being paid by the Trust is Through CHEQUE...

Replies (6)

Piyush Jain

283 Points Joined July 2008

Rajan, it will cap gain in the hand of the individual and the COA will be nil.

Simultaneouly, as the tittle of the trust was improved, this amount will be considered as cost of improvement for the trust.

i hope this will help.

Regards

Piyush

Ashish Ashra

Chartered Accountant

61 Points Joined September 2007

Hi Rajan/Piyush

What is the location of agricultural land. If it is in rural area as per the definition in Income Tax Act, then it is not chargeable to tax under the head "Capital Gain" or any other head as Rural agricultural land is not a capital asset.

Kindly Check. Hope this will help.

Regards

CA Ashish

Gomathy Srinivasan

Practising

220 Points Joined April 2009

coa means what

Aakhri Pasta

Hell Froze Over

171 Points Joined April 2008

Piyush & Aashish are rite. And for S.Anu "COA means Cost of Aquisition."

Riyaz Khan

CA CS (Exec) MBA (Fin) Asst. General

1315 Points Joined December 2008

My major query is the Tax Treatment in the hands of my Client and any way out to save the tax. So plz reply for my Client only....

Suraj Choudhary

Senior Associate

65 Points Joined October 2009

Query related with HUF

Shri Ghasitamal Ramu Halwai arrived in Mumbai from Karachi in 1929 as a young boy of 19 years of age. He started a Sweets & Halwai shop on a small scale and got married in 1932 to Lajjo Rani. He got his first son “Haweli Ram” in 1935 followed by two daughters “Gouri” & “Sita” & another two sons namely “Ramdas” & “Shivakumar”.

As his family grew, his business grew as well and by mid 1960 he was a owner of a Sweets Shop chain in Mumbai & other metros titled GR Halwai & Sons. Mean while “Haweli Ram” got married to “Bindu Devi” in 1955 and was blessed by three sons (viz. Mohan, Manish & Marut ) & two daughters (Hema & Sima). “Gouri” was suitably married to a suitable boy in 1954. “Ramdas” & “Sita” however were not interested in marriage & accordingly joined & remained in the family business. “Shivkumar “ got married and was blessed by two sons ( Lav & Kush) & two (Khyati & Khushi) daughters.

The third generation of Ghasatimal also progressed & ventured in to a chain of fast food joints in metros & mini-metros. Haweli Rams’ two sons Mohan had two daughters and one son. Manish had two sons & a daughter. The third Son “Marut” is still on the lookout for a suitable match. “Hema” was suitably married & “Sima” is pursuing her Phd.

In “Shivkumar’s “ branch, “Kush” has one Son & one daughter while “Lav” is blessed with one daughter. “Lajo Rani” unfortunately passed away last year in September-06 & upon completion of the year, “Khyati” recently married to a Doctor while “Khushi” is pursuing her MSC-IT.

I am not understanding the relations & off-springs of Ghasitamal Ramu Halwai from HUF point of view and work out the potential tax benefits as would be available to Members including that of the collective income level of the family without any tax out-go.