Question And Answer
Subject: Redevelopment of society – Old Flat in the bldg demolished and new one constructed
Querist: CA Rajesh Sanghvi
Answered by:
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Date: August 3, 2023
Query asked by CA Rajesh Sanghvi

When a Society building containing various is demolished due to a Development Agreement ( typical in Mumbai ), does it not amount to “Relinquishment of asset” u/s 2(47)(i) – The asset is physically not there now and a new asset (new house may be bigger) will be given.

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The Hon’ble Bombay High Court in the case of CIT v. Chhaya Parekh ITXA(L)1583 of 2012 dated January 24, 2013 (Bom)(HC) held that demolishing of a structure is not a transfer. Without prejudice, assuming there is a transfer, there is an immediate application of deduction under section 54 of the Act. Therefore, there will be no tax incidence

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