Urgent Answer Required

Others 1304 views 7 replies

Divya

Articled Assistant

29 Points Joined August 2009

Case for opinion:

A Co-iperative Housing Society is going in for redevelopment. Apart from additional area builder has agreed to give us Rs.1400 per sqft of existing carpet area as corpus fund. This amount is being given as a compensation and inconvinience caused to each member for shifting to another place.
This amount will be paid as follows
a. 15% at the time of execution of development agreement.
b. 10% on obtaining IOD from MCGM
C. 25% after 6 months from vacating
d. 25% at the time of giving the possession of new flat to the existing members.

If any member is buying additional area the additional amount will be adjusted from the corpus fund.

Kindly give us your opinion
1) as to whether the amount received will be a capital receipt or revenue receipt.
2) Whether any tax will be payable on the receipts.- Please support with case laws if possible.
3) Whether we need to put any specific wordings in the agreement so that this amount is not subject to tax.
4) Whether there are any judgements against us.

Request you to give an exaustive opinion in writing. We will be circulating it to the members.

Since we are going in for redevelopment will we require to have a PAN card? Should I apply for PAN card?

PLZ REPLY AT THE EARLIEST....ITS VERY URGENT...

Replies (7)

Guest

really difficult question..................only expert can give...................if any1 knows plz answer this...............me is also waiting

CA Dhiraj Ramchandani

CA M. com

10823 Points Joined November 2008

I can give only one answer of above all, that is its capital reciept, as far as my knowledge is concern...

While for rest, u should move this Q to EXPERTS... They are the one who can give u perfect answers..

pradeep

Student

31 Points Joined October 2009

sorry I can't give the answer for this question because i am a cpt student

VIJAY PAL SINGH

PARTNER

22 Points Joined July 2009

Originally posted by :Divya

As the amount is given in excahnge of old space is a part of corpus fund. Option is given for acquiring the additional space is a revenue receipt as the amount received is optional and conditional only on sale by the society. Amount adjusted against payable of corpus fund is only an adjustment and does not alter the nature of receipt or payment as the consideration for additional space at option is always a revenue receipt. If option in the agreement does not exist for additional space and will be given to all of the members compulsorily out of the corpus fund then receipt is a capital receipt i.e. as a condition of shifting. payment of amount in stages 15% 10% 25% and 25% is also is a different aspect and does not matter whenthe amount.

Anup

C.A Final Student

70 Points Joined September 2008

Yes its an Capital Receipts in your hand and taxable under the capital gain as LTG.

Vinod

Consultant

23 Points Joined November 2009

Need information regarding share certificate of society members?
1. I would like to know, who will issue the share certificates for new members of new society? Builder or Society (but society not yet form)?

2. After society form, is it required builder to submit members transfer fees to society?.

Awaitng for reply from this forum.

Thanks,
Vinod

Murthy

70 Points Joined June 2009

Ms Divya,

Reframe the question with full details. It is not clear why developer should pay for you also you are indicating that you are shifting .

My understanding of case already you have flats and developer want to take over the place and in return build new flats at another place for all the member of society and considering the land value of old falt he is compensating for all the members at the at the rate of Rs 1400 per sft.

Am I right in my assumption?

Pl reframe so that you can get clear answer.