Search Results For: capital gains


QUERY: ‘A’ has purchased a plot in March, 2010 for Rs. 10/- lakh and spent Rs. 5/- lakh for construction during F.Y. 2011-12, and Rs. 5/- lakh during the F. Y. 2012-13. He sold the entire house in December, 2014 for Rs. 50 /- lakh Whether it is long-term or short-term gain?
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Section 2(29A) defines “Long term capital asset” which means a capital asset which is not a short term capital asset. Section 2 (42A) defines “Short term capital asset” which means a capital asset held by an assessee for not more than thirty six months, other than listed shares. In that case, a period of not more than the twelve months to be considered for short term capital asset.

QUERY: An individual booked a flat in a building in April 2012, allotted flat no. A-1. Building is completed in March 2015 and possession given. The flat is resold in May 2016 whether it will be long term capital gain or short term capital gain
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It is a long term capital gain as per Punjab and Haryana High Court in Mrs. Madhu Kaul v. CIT [363 ITR 54]. In that case, the assessee was allotted a flat on June 07, 1986 conveyed on June 30, 1986. The assessee paid the first installment on July 04, 1986. The flat was later identified and delivery of possession was given on November 30, 1988.

QUERY: In case of a Partnership firm, the assets revalued and the amount was credited to the capital account of the partners. After few months, one of the partners retired and the firm paid the amount which was standing to the Capital Account (after revaluation) of the retiring partner. Mumbai ITAT in the case of Sudhaker M. Shetty has taken the view that amount received on retirement is taxable in the hands of partner. What is your view in this matter? There are various judgments wherein it is held that, amount received by partner on retirement is not liable to tax.

(i) Addl. CIT v. Mohanbhai Panabhai [165 ITR 166 (Guj.)(HC)]

(ii) Tribhovandas G. Patel v. CIT [236 ITR 515 (SC)]

(iii) Prasant S. Joshi v. ITO [324 ITR 154 (Bom)(HC)
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The manner of settlement of account may decide liability. In Sudhakar M. Shetty v. ACIT [130 ITD 197 (Mum)], the retirement deed conveyed interest in immovable property and after retirement he had no interest over the assets of the firm.

QUERY: Mr. Landlord gives its premise to tenant for first time charging premium of Rs. 50/- lakh and monthly rent of Rs. 10,000/- per month. Assessee’s contention is that since it continued to be owner premise, whether tax is payable on premium charged?
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The Supreme Court in A. R. Krishnamurthy & Another v. CIT [176 ITR 417] has held that “the grant of mining lease was transfer of ‘capital asset’ within the meaning of section 45 of the Income-tax Act, 1961. The cost of acquisition of the land would include

QUERY: Mr. T existing tenant wants to surrender his tenancy right in favour of Mr. N as Landlord’s permission is to be taken for transfer they enter into tripartite agreement. Mr. N has to pay Rs. 1 crore and out this Rs. 70 lakhs is paid to Mr. T an existing tenant and Rs. 30 lakhs is to be paid to landlord. Please explain about the taxability of the amount. Whether in the hands of both amount will be charged as capital gain? Who is transferring tenancy rights in favour of N.
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As per section 55(2) of the Act, tenancy right is a capital asset, hence on transfer of it is liable to tax under the

QUERY: Which of the following is the date of transfer of tenancy rights –

(a) date of agreement entered into by the assessee with landlord whereby he agrees to surrender tenancy in lieu of new flat to be allotted to him on ownership (for which tenant will pay construction cost to landlord @ Rs. 1,500 per sq. ft);

(b) date on which the tenant moves into an alternative accommodation so as to enable the landlord to demolish the building and construct new building;

(c) date on which the new building is constructed and occupancy certificate obtained;

(d) date on which the tenant pays the construction cost to the landlord. The agreement provides that if the tenant does not pay construction cost to the landlord within 30 days of being called upon to pay so, he shall continue to be the tenant in the new premises and shall pay rent at a certain agreed rate which is nominally more than the rent which was being paid by the tenant. Also, what is full consideration due to the assessee on transfer of tenancy. The tenant is not eligible to claim exemption u/s. 54F since he already owns 2 houses.
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As tenancy rights are surrendered only when tenant pays for construction cost to landlord. For the reason that the agreement provides that if the tenant does not pay construction cost to the landlord within 30 days of

QUERY: Assessee is a developer of housing complex. He intends to sell all the flats in a building constructed. However later on instead of selling flats assessee gave them on the rent. Under which head of income such rental income would be taxable? Further it sells such flats after 7/8 years to same tenants. Whether sale proceeds be taxed as business income or capital gains?
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Under the Income-tax Act 1961, the income of an assessee is one and various sections direct the modes in which the income is to be charged. No one of those sections can be treated as general or specific for the purpose of any one particular source of income; they all are specific and deal with various heads in which an item of income of an assessee falls. These sections are mutually exclusive and where an item of income falls specifically under one head, it has to be charged under that head and no other.

QUERY: A chemical company by installing sophisticated equipment for pollution control generates carbon credit. Carbon credit which is sold for Rs. 20/- crores. The Income tax Department is of the view that the proceeds are liable to tax under business income. The auditor is of the view that the income is taxable under capital gains.
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In My Home Power Ltd. v. DCIT [IT Appeal No. 1114 (Hyd.) of 2009 dt. Nov. 02, 2012] the Hyderabad Tribunal has held as under:

“Carbon credit is in the nature of an entitlement received to improve world atmosphere reducing carbon, heat and gas emissions.

QUERY: In case of redevelopment of property the consideration takes in the form of corpus, which is a real cash inflow and fair market value of the property to be developed, which is a deemed consideration for the purpose of exchange. Thus, there is exchange of property. Now, the question is in which year capital gain arises and when can exemption be claimed either under Section 54 or under section 54F?
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n case of development of property the capital gain arises as per terms of the agreement. Generally, the agreement provides that the developer has right to enter and construct on the land of owner and owner parts with land only on receipt of certain portion of building to be constructed. Till then possession of land is not parted with. In such case, the amount received is to be treated as advance.

QUERY: Y wishes to sell his vacant land. The real estate agent is offering him another piece of land in exchange. Y want to retain the land as an investment and not construct any building. Will the exchange be subject to capital gains even though Y had not received any monetary consideration.
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The definition of transfer under section 2(47) of the Act is an inclusive definition and includes an “exchange”. So, here Y is exchanging his land with another land.