Calculation of tax, on sale of building constructed by a leasee

- You need to pay tax on Rs.2.20 cr as your father is the legal owner of the land and building. You should have transferred Rs.1.80 cr after deducting the value of tax taxable in your hands for Rs.1.80 cr consideration.

Did you make proper agreement showing the value of building or any agreement.

If yes you can claim it as expense against sale value and if the building was owned by ravi you should have made agreement for building separately.

If no then there can be an issue with claiming such expense and they might ask tax on entire amount.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

- If you have separate agreement for payment of construction amount then you can claim it as an expense and get it indexed.

- Also if the land was purchased before 01.04.2001, get the valuation of the land as on 01.04.2001 and apply indexation.

Hello,

For a complete resolution, we need to check the agreement lease agreement and the sale deed.

Your father was the owner of the property at the time of sale after the cancellation of the lease, therefore he would be liable for tax on the whole of the capital gain.

As mentioned, a separate agreement to pay construction amount to the lessee (Ravi) could be allowed as a deduction after indexation.

I hope this answer satisfies your requirements.

Regards,

CA Hunny Badlani

If the land was purchased before 1st April 2001, the value of the land as on 1st April 2001 would be considered as the cost of acquisition and after indexation till the year of sale would be deducted from the sale consideration received for capital gain calculation.

Dear Sir,

Hope you are doing well !!

If you have proper agreement for the same then you can claim it as an expenses.

Otherwise, you will have to pay the taxes on entire amount.

It is advisable to take a phone consultation for detailed discussion.

Firstly the facts of the case referred by you are totally different from your case.

As in the above case assessee had sold his rights in the leased property and a incomplete building and hence both were separated.

Also, both can be bifurcated if same was factory building or something where it would be depreciable asset and then same would be liable for short term capital gain.

Also in your case since you were not owner of the building how did you get the right to prepare sale deed for same.

You could have treated it separately if same would have been mentioned in the deed and you haven't mentioned the same anywhere in your question.

Hi

The taxation in this case would depend on how the sale agreement is executed.

It is advisable to clearly bifurcate land and building consideration in the sale agreement so as to reflect respective shares of your father and Mr. Ravi. In such cases, capital gains for consideration in respect of the land portion only shall be taxable to your father.

We may discuss the issues further after detailed understanding of all facts of the case.

- You both are liable to pay tax. Buyer should have deducted TDS in the hands of both of you.

- You can not save tax by giving gift. 

Hello,

Tax on capital gain would be applicable to both the owners.

Exemption won't be available for gifting the amount to relatives.

Both are responsible for capital gain tax.

No, exemption is not available on gifts.

Hi

You need prepare separate agreement for indexation & other benefits.or it will be  on total amount i.e.2.2 cr.

For details decision please share your agreement with us.

If the property was partitioned and post-partition, both the co-owners have entered into separate sale agreements, capital gains shall be taxable to both the co-owners proportionately.

By gifting the consideration, no exemption shall be available.

In order to claim exemption from capital gains, investment has to be made wither in a residential house property or section 54 EC eligible bonds.

Feel free to reach out in case of further clarifications.

Hi

Both are responsible for taxability. No gift will not reduce taxability.

Since you both are the owner even though entire amount was received in your account you need to pay tax on your respective shares.

You cannot save tax by gifting the amount.