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IMP. nd Urgent Question

Rakesh Pandya (consultancy) (211 Points)

26 December 2009

Dear All Member I want to Clear the Aspect of Long term Gain in case of property as Mr. A. book a flate in a tower and its possetion comes to him after 4 years but after 3 and half years he want to sell the flat so we can consider it as a long term or what and what is the treatment for interest he paid for 3 and half year.
Thank you in Advance Please reply as early as possible

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7 Replies

@ CA. $ahar$h @ (Student) (338 Points)
Replied 26 December 2009

Dear Rakesh,

The owner ship comes on payment of the amount.as the person has just booked the flat so we cant say that he would have made the payment. Any interest paid during the period is to be included in the cost of acquisition. As per me this income will be taxable under the head income from other source. Well try to confirm the same from others.

Bye

Rakesh Pandya (consultancy) (211 Points)
Replied 27 December 2009

Sir as I said after 3 and half years he want to sell his flat as he is going to sell his flat means he paid the amount and interest is what he is paying on home loan. he still not got the flat to stay so we can treat it as capital gain in which long term or what

Amir (Learner) (4016 Points)
Replied 27 December 2009

According to my understanding, In case of a property acquisition comes with the POSESSION of property...And in your case Assesse has not got the posession...He is only having a RIGHT to acquire flat..and if he wants to sells this RIGHT then there is no provision under Capital Gain to tax the sale of a RIGHT (except in case of Renouncement of Right Shares in a Company for which there is a specific provision)..Any transanction (even if it is ocassional) settles without a DELIVERY then it comes under Speculation Business..Interest on Loan will be allowed as deduction in computing under Speculation Business..

Saurabh Sharma (Taxation) (226 Points)
Replied 27 December 2009

Hi Rakesh, It seems that Mr.A has not acquired the flat he has just booked it and i also think allottment of property is still pending till posession and as per the analysis the question of L.T.C.G AND S.T.C.G does not arise.

Thanks

Saurabh Sharma

@ CA. $ahar$h @ (Student) (338 Points)
Replied 28 December 2009

Yes Rakesh it will be taxable under the head capital gain. As according to section 2(47), Defination of transfer includes relinquishment of right. and as u have explained that he has also paid the money so he will have to pay long term capital gain.