Section 45(5A) TRANSFER OF CAPITAL ASSET UNDER JOINT DEVELOPMENT AGREEMENT
Section 45(5A) TRANSFER OF CAPITAL ASSET UNDER JOINT DEVELOPMENT AGREEMENT
Applicability of Sec 45(5A)
• Section 45(5A) applies whereon individual/HUF owning land/building/both enters into a registered agreement with a developer allowing the developer to develop a real estate project on such land/building/both.
• As a consideration for receiving the right to develop the real estate project, the developer shares a portion of land/building/both in the project with the individual/HUF. In some cases, the developer might also pay some additional consideration in cash over and above the share in project.
Year of Taxability of Capital Gains
• Capital gains shall be computed in the hands of individual/HUF in the year in which the possession of immovable property is handed over to the developer for development of a project.
• Capital gains so computed shall be considered as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority.
Full Value of Consideration
SDV of land/building/both in the project
handed over by the developer to individual/HUF as his share
as on the date of issue of the
aforementioned completion certificate
(+)
Cash received by the individual/HUF from the
developer, if any
Note: The full value of consideration adopted for calculating capital gains u/s 45(5A) shall be deemed as the cost of acquisition of the share in the hands of individual/HUF.
IMPORTANT NOTE:
The beneficial provisions stated u/s 45(5A) shall
not apply where
transfers his share
in the project to any other parson on or before
the date of issue c= aforementioned completion certificate. In such
cases, capital gains would
be taxable in -re scar in which possession of immovable property
is herded over
to the developer for development of project.
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