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Sale of Tenented (Redeveloped) Property

Ayushraj (Professional) (125 Points)

17 April 2010

An Assesse had a tenented property alloted by Mahada in Mumbai, since past 10 years.

The said property was Redeveloped by a Builder under the Govt.'s SRA Scheme & the assessee was alloted a 2 BHK Flat in the new Redeveloped Building.

Now the Assessee has sold that Flat on January 2010 at a price of Rs.84,00,000/-

What will be the tax aspect?

and this Income has to be shown under which heading?

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4 Replies

Amir (Learner) (4016 Points)
Replied 17 April 2010

Dear Ayushraj,

A similar question was raised here -

/forum/capital-gain-62791.asp

Ayushraj (Professional) (125 Points)
Replied 19 April 2010

Dear Amir,

I referred to the aforesaid link, but there the assessee is Sole owner of a Land.

and here this assessee had a tenented property (residential Chawl) (Where Govt. was the landlord). In total there were 85 such tenents. The Govt being landlord under the SRA Scheme offered the tenents to get the said property redeveloped, which the tenents agreed & they are now alloted a Flat in the New building on ownership basis.

As the property was tenented thus the cost of acquisition to be considered here, i guess shall be Zero.?

But will the gains from said sale treated as Capital Gains?

OR Was the assessess liable to tax, at the time of allotment of the said flat?

Will provisions of Section 54EC & Section 54F apply?

Thanks

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 19 April 2010

Section 55 states as under:

“cost of acquisition”¹⁰,—

¹¹[(a) in relation to a capital asset, being goodwill of a business ¹²[or a trade mark or brand name associated with a business] ¹³[or a right to manufacture, produce or process any article or thing] ¹⁴[or right to carry on any business], tenancy rights, stage carriage permits or loom hours,—