2 brothers, M&K, own a property (land+building) in Mumbai. K has 40% share and M has 60% share in the property. Now the property is being redeveloped and both brothers are getting 2 flat areas in the new building from the developer. Both the brothers shall keep equal i.e. 50% of the areas thus having equal flat areas. M has 60% share and still keeping only 50% of the proceeds in form of area, while brother K shall get 10% additional area from share of brother M.
In such case, will the Tax Law allow such unequal distribution of the proceeds? Will there be any tax liabilities on any of the brothers since the distribution of the area are not in proportion of the property share? Will this difference in sharing of the proceeds in form of flat area be considered as a sale + income from one brother to other brother thus attracting Income Tax?
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