This query is on account of Capital Gains for a person named ‘A’ and relates to AY 2018-19
‘A’ owned a 2nd floor apartment +terrace and his brother owned GF flat in a 3 storey building which is a long term capital Asset. The 1st Floor flat belongs to another person (let’s call him 3P) who is not a relative.
The Brother was interested in selling his GF flat, ‘A’ agrees to buy the flat from his brother & alongside enters into an understanding with a Builder along with 3P to reconstruct the entire building.
From the advance given by the builder and selling his & his wife’s jewellery pays off his brother.
Immediately thereafter, ‘A’ who now owns 2 flats & 3P enters into an agreement with the builder to reconstruct the property and hand over the possession to him.
According to the Agreement, Builder pays cash + reconstruct GF flat for ‘A’s living & keeps II floor flat + terrace. So technically he has bought 2nd Floor flat from ‘A’. The agreement says the property will be developed in 15 months from the date of agreement + another 3 months as grace period.
Following Section 45(5A):
The queries are following:
1. Will the Capital Gain on jewellery sold qualify for deduction under section 54F for GF purchased from his brother, which was handed over to the builder immediately thereafter..
2. Will there be a short term capital gain on GF house purchased from his brother if the Completion Certificate is obtained in 18 months i.e. less than 24 months.
3. Since the II floor house is technically sold to the builder, will the capital gains be calculated for current financial year or will be done in the year CC is obtained?
Asked 7 months ago in Capital Gains Tax from New Delhi, Delhi
Section 45(5A) says on the date of getting CC, the stamp duty value of the flat + any cash received for the arrangement will be treated as full value of consideration. From this, cost of purchase on the date of the agreement or the stamp duty whichever is more will be deducted to arrive at the capital gain. Am I correct?
Also Transfer of property never happened. Every thing like getting permissions for plan sanctions etc. is being done through GPA. In this case, II floor flat was a LT capital Asset, whereas GF flat is just been bought. So, I will calculate LTCG for II floor flat ( cash paid by the builder is stamp duty value of II floor) and STCG for GF flat (time being less than 24 months).
Asked 7 months ago