Section 54F evidence

I sold some shares that I held resulting in a capital gain. I invested part of the capital gains in buying an apartment. This was to claim exemption from capital gains tax as part of section 54F.  I bought this apartment in a 2nd sale from an NRI seller. The seller had not registered the unit. 

The builder has given 2 tripartite agreements (between builder, seller. and myself) in which there was an assignment agreement to sell (that has undivided share of land value) and an assignment agreement for construction as part of transfer of rights from original buyer to myself.

The assignment agreement to sell contains particulars of the sale consideration of the unit. This is towards the ownership of the undivided share of land (UDS). 

The construction agreement contains the construction cost and few other items (GST, VAT etc).

The sum total of the values across both these documents comes to the amount that I paid to the seller. 

Now, I am in the process of registration of this unit, I was informed by the builder that the sale deed will mention the value corresponding to just the undivided share of land value, and that this was their standard practice.

In order to provide evidence to the IT department for extent of total deduction allowed as per section 54f, these appear to be the following options:

1. Convince the builder to prepare a registration sale deed for the entire amount (builder is currently not agreeing to this) 

2. Register the apartment at the UDS value, and provide the supporting construction agreement that mentions the rest of the amount. 

I also have the following documents available: 

1. Agreement executed (on stamp paper) between seller and myself 

2. Bank transfers made to the seller

3. The combination of the assignment agreements and construction agreements made with the builder

Has anyone had a similar experience in which they have had to provide the relevant evidence to claim the exemption?

Replies (1)

Hi Shreyansh,

It is very common practice implemented by builders. Generally, developers are made agreement with land owners to develop his land. Sale deed is executed by land owner to proposed owner ( home buyer). Regarding calculating capital gain, you have to consider  sale deed value ( on which stamp duty is paid as per state act).

Developer executed construction agreement. For calculation, you can add it as cost of construction.

The treatment is same as as if you were purchase a plot and construct your house on said plot.

Regards,

Hardik Joshi

 

 

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