| Question And Answer | |
|---|---|
| Subject: | Tax notice after re-development of Flat |
| Category: | Income-Tax |
| Querist: | Anshi |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Notice, Re development, redevelopment |
| Date: | August 19, 2022 |
Dear Team,
My building went in re-development in 2013 and the flat was given back to us in 2016 within 3 years.
I received a letter from income tax under sec 148 that i need to pay tax on the construction cost which is around 35 lacs as per the stamp duty document. How would this be taxed as there is no real transaction ,it is just that i got my redeveloped flat back from the builder.
Please guide on what should i reply to the department.
Regards.
The transaction is an exchange and hence a “transfer” as per section 2(47) of the Income-tax Act, 1961 (Act). The assessee gets deduction under section 54 of the Act and thus there is no tax liability. If the assessee has transferred tenancy rights or a commercial property, he may not get deduction under section 54 of the Act, thus attracting Capital Gains. Hope the same clarifies.