Will income generated will be a STCG / LTCG/ Business Income

Tax planning 243 views 3 replies

S S Dahale

Agri and business

442 Points Posted on 02 December 2017

A non agri land asset ( held more than 10 years) within munc.limits of several individuals from a family , was transferred by POA holder ( being family member and one of the adjacent land owner) in cosnensus ( with NOC of all family members being owners) in 2016-17 to 2 sons of their POA holder-. Therafter revenue records got mutated in the name of those 2 sons , where POA holder and other family members give consent to it. one of taht benificiary is now engaging a land developer to develope / JV for construction of Row Houses , out of part of the same property in 2017-18, How the advance as Dev.agrrement / JV and proceeds of sale of those Row houses after sale (to extent of 50%as land owner's share)will be taxed to that son either STCG / LTCG/ buisness income .

Replies (3)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211643 Points Posted on 02 December 2017

If the transfer of the land was through registered document......... capital gain liability over the original land owners arises in the year of the transfer, which would be long term.

Otherwise mutation in favour of any POA holder/ his sons requires some authentic deal/reason.

Once the deal of 2016-17 is established, the gain in 2017-18 can be capital gain (ST) or business income depending upon the treatment of land in books of accounts.

S S Dahale

Agri and business

442 Points Posted on 02 December 2017

Mutation of land by family members in favour of POA holder ( also a family member & land holder of the same property) was on the basis of registered POA deed , further transfer to his sons was a non regsietred one , (as in Maharshtra , transfer of land property within family members is exempt from doing a regiseration , mere notarsied document is OK)

in that case what will be csot of acquistion and cost of transfer for the transferee- son of POA holder to transferor -developer , for which POA will be consenting (if required)