• Capital gains on unregistered property

My friend sold a property last month.But the property was not registered in his name. He plans to invest it in another property immediately. Is capital gain from the transaction taxable? Or can he use it for his purchase? 
There has been multiple views on this. Pl answer specifically on the registration part. Is registration imperative or not?
Asked 3 years ago in Capital Gains Tax from Delhi, Delhi
Yes there can be multiple views on this issue. 

As regards the registration part, registration completes the transaction. However, if the entire consideration has been paid and the possession is complete, thus for all practical purposes, it is considered as "transfer" u/s 2(47)(iv) of the Income Tax Act. Thus even if registration is not done, there is transfer and capital gains will be attracted. 

B Vijaya Kumar
CA, Hyderabad
833 Answers
46 Consultations

5.0 on 5.0

In case the intended buyer transfer his rights in the property and he has not obtained possession of the property, the right of the buyer would be in the nature of capital assets and accordingly, gain arising on such transfer would be in the nature of long term or short terms gain depending upon the period of holding. 

In case where he received possession then also it will be considered as transfer as will be a capital gain and all the provisions relating to capital gains is applicable.

In your case if your friend has acquired rights over the property/possession then it will be a transfer and all the capital gains provisions are applicable.
Shyam Sunder Modani
CA, Hyderabad
1408 Answers
95 Consultations

5.0 on 5.0

What is the basis of ownership of property, whether power of attorney or otherwise. Unless we examine the basis of his ownership, how do we determine the ownership of Income and consequent capital gains. To answer the question kindly furnish more information about the basis of ownership.
Vijay N. Kale
CA, Hyderabad
248 Answers
12 Consultations

4.9 on 5.0

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