{"id":54994,"date":"2025-06-18T12:51:03","date_gmt":"2025-06-18T07:21:03","guid":{"rendered":"https:\/\/itatonline.org\/digest\/?post_type=qa&#038;p=54994"},"modified":"2025-06-21T22:40:56","modified_gmt":"2025-06-21T17:10:56","slug":"capital-gain-on-sale-of-flat-alloted-under-redevelopment-income-tax","status":"publish","type":"qa","link":"https:\/\/itatonline.org\/digest\/qa\/capital-gain-on-sale-of-flat-alloted-under-redevelopment-income-tax\/","title":{"rendered":"Capital gain on Sale of flat alloted under redevelopment (Income Tax)"},"content":{"rendered":"<p><strong>Property Background<\/strong><\/p>\n<ul>\n<li data-start=\"146\" data-end=\"244\">\n<p data-start=\"148\" data-end=\"244\">Original MHADA property was exchanged for alternate accommodation in Ghatkopar (East), Mumbai. (before 2000)<\/p>\n<\/li>\n<li data-start=\"245\" data-end=\"321\">\n<p data-start=\"247\" data-end=\"321\">Property was later transferred to the current owner through inheritance.(in 2008)<\/p>\n<\/li>\n<li data-start=\"322\" data-end=\"402\">\n<p data-start=\"324\" data-end=\"402\">The property underwent redevelopment through a formal development agreement. (in 2014, further with Supplementary deed 2020)<\/p>\n<\/li>\n<li data-start=\"403\" data-end=\"501\">\n<p data-start=\"405\" data-end=\"501\">The owner received a new flat in the redeveloped project as permanent alternate accommodation.(in Mar 2022)<\/p>\n<\/li>\n<li data-start=\"502\" data-end=\"560\">\n<p data-start=\"504\" data-end=\"560\">The redeveloped flat was subsequently sold in June 2024.<\/p>\n<\/li>\n<\/ul>\n<p><strong>Now we are now having\u00a0two CG scenario :-<\/strong><\/p>\n<p data-start=\"122\" data-end=\"443\"><span style=\"text-decoration: underline;\"><strong data-start=\"122\" data-end=\"151\">Scenario A :<\/strong><\/span><\/p>\n<p data-start=\"122\" data-end=\"443\"><strong data-start=\"863\" data-end=\"925\">Capital Gain on Sale of redeveloped Flat<\/strong><\/p>\n<p data-start=\"157\" data-end=\"234\"><strong data-start=\"157\" data-end=\"167\">Event:<\/strong> Sale of property (redeveloped flat) in <strong data-start=\"207\" data-end=\"234\">June 2024 (AY 2025-26).<\/strong><\/p>\n<p data-start=\"236\" data-end=\"311\"><strong data-start=\"236\" data-end=\"268\">Full Value of Consideration:<\/strong> Actual <strong data-start=\"276\" data-end=\"299\">sale price received<\/strong> from buyer.<\/p>\n<p data-start=\"313\" data-end=\"434\"><strong data-start=\"313\" data-end=\"337\">Cost of Acquisition:<\/strong> Fair Market Value (FMV) as on 01\/04\/2001 (indexed) \u2192 as per Sec 55(2)(b) and Sec 48. <strong>(Query)<\/strong><\/p>\n<p data-start=\"436\" data-end=\"506\"><strong data-start=\"436\" data-end=\"451\">Indexation:<\/strong> \u2705 <strong data-start=\"454\" data-end=\"467\">Available<\/strong> \u2192 Using <strong data-start=\"476\" data-end=\"505\">CII of 363 for FY 2024-25<\/strong>.<\/p>\n<p data-start=\"508\" data-end=\"588\"><strong data-start=\"508\" data-end=\"527\">Nature of Gain:<\/strong> <strong data-start=\"528\" data-end=\"561\">Long-Term Capital Gain (LTCG)<\/strong> \u2192 <strong data-start=\"564\" data-end=\"588\">Tax @ 20% (Sec 112).<\/strong><\/p>\n<p data-start=\"590\" data-end=\"746\"><strong data-start=\"590\" data-end=\"605\">Exemptions:<\/strong> Can claim <strong data-start=\"616\" data-end=\"626\">Sec 54<\/strong> (new residential property) or <strong data-start=\"657\" data-end=\"669\">Sec 54EC<\/strong> (investment in eligible bonds up to \u20b950L), <strong data-start=\"713\" data-end=\"746\">if eligible investments made.<\/strong><\/p>\n<p data-start=\"445\" data-end=\"776\"><span style=\"text-decoration: underline;\"><strong data-start=\"445\" data-end=\"474\">Scenario B :<\/strong><\/span><\/p>\n<p data-start=\"445\" data-end=\"776\"><strong data-start=\"310\" data-end=\"378\">Capital Gain on Transfer to Developer (Sec 45(5A))<\/strong><\/p>\n<ul data-start=\"381\" data-end=\"856\">\n<li data-start=\"381\" data-end=\"438\">\n<p data-start=\"383\" data-end=\"438\"><strong data-start=\"383\" data-end=\"393\">Event:<\/strong> Transfer of development rights to builder.<\/p>\n<\/li>\n<li data-start=\"439\" data-end=\"512\">\n<p data-start=\"441\" data-end=\"512\"><strong data-start=\"441\" data-end=\"457\">Tax Trigger:<\/strong> <strong data-start=\"458\" data-end=\"509\">Completion Certificate date (likely AY 2023-24)<\/strong>.<\/p>\n<\/li>\n<li data-start=\"513\" data-end=\"609\">\n<p data-start=\"515\" data-end=\"609\"><strong data-start=\"515\" data-end=\"547\">Full Value of Consideration:<\/strong> <strong data-start=\"548\" data-end=\"574\">Stamp Duty Value (SDV)<\/strong> of the new flat as on that date alongwith Monetary consideration.<\/p>\n<\/li>\n<li data-start=\"610\" data-end=\"674\">\n<p data-start=\"612\" data-end=\"674\"><strong data-start=\"612\" data-end=\"636\">Cost of Acquisition:<\/strong> <strong data-start=\"637\" data-end=\"671\">FMV as on 01\/04\/2001 (indexed)<\/strong>.<\/p>\n<\/li>\n<li data-start=\"675\" data-end=\"749\">\n<p data-start=\"677\" data-end=\"749\"><strong data-start=\"677\" data-end=\"696\">Nature of Gain:<\/strong> <strong data-start=\"697\" data-end=\"730\">Long-Term Capital Gain (LTCG)<\/strong> \u2192 <strong data-start=\"733\" data-end=\"746\">Tax @ 20%<\/strong>.<\/p>\n<\/li>\n<li data-start=\"750\" data-end=\"856\">\n<p data-start=\"752\" data-end=\"856\"><strong data-start=\"752\" data-end=\"767\">Exemptions:<\/strong> Can claim under <strong data-start=\"784\" data-end=\"794\">Sec 54<\/strong> or <strong data-start=\"798\" data-end=\"810\">Sec 54EC<\/strong>, if reinvested or invested in eligible bonds.<\/p>\n<\/li>\n<\/ul>\n<hr data-start=\"858\" data-end=\"861\" \/>\n<p data-start=\"863\" data-end=\"927\"><strong data-start=\"863\" data-end=\"925\">Capital Gain on Sale of New Flat (Sec 49(7))<\/strong><\/p>\n<ul data-start=\"928\" data-end=\"1366\">\n<li data-start=\"928\" data-end=\"998\">\n<p data-start=\"930\" data-end=\"998\"><strong data-start=\"930\" data-end=\"940\">Event:<\/strong> Sale of redeveloped flat in <strong data-start=\"969\" data-end=\"995\">June 2024 (AY 2025-26)<\/strong>.<\/p>\n<\/li>\n<li data-start=\"999\" data-end=\"1063\">\n<p data-start=\"1001\" data-end=\"1063\"><strong data-start=\"1001\" data-end=\"1033\">Full Value of Consideration:<\/strong> Actual sale price received.<\/p>\n<\/li>\n<li data-start=\"1064\" data-end=\"1150\">\n<p data-start=\"1066\" data-end=\"1150\"><strong data-start=\"1066\" data-end=\"1090\">Cost of Acquisition:<\/strong> <strong data-start=\"1091\" data-end=\"1147\">Deemed = Capital Gain already taxed under Sec 45(5A)<\/strong>.<\/p>\n<\/li>\n<li data-start=\"1151\" data-end=\"1210\">\n<p data-start=\"1153\" data-end=\"1210\"><strong data-start=\"1153\" data-end=\"1168\">Indexation:<\/strong> \u274c <strong data-start=\"1171\" data-end=\"1188\">NOT available<\/strong> (as per Sec 49(7)).<\/p>\n<\/li>\n<li data-start=\"1211\" data-end=\"1285\">\n<p data-start=\"1213\" data-end=\"1285\"><strong data-start=\"1213\" data-end=\"1232\">Nature of Gain:<\/strong> <strong data-start=\"1233\" data-end=\"1266\">Long-Term Capital Gain (LTCG)<\/strong> \u2192 <strong data-start=\"1269\" data-end=\"1282\">Tax @ 20%<\/strong>.<\/p>\n<\/li>\n<li data-start=\"1286\" data-end=\"1366\">\n<p data-start=\"1288\" data-end=\"1366\"><strong data-start=\"1288\" data-end=\"1303\">Exemptions:<\/strong> Can claim <strong data-start=\"1314\" data-end=\"1335\">Sec 54 \/ Sec 54EC<\/strong>, if eligible investments made.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"445\" data-end=\"776\"><span style=\"text-decoration: underline;\"><strong>My Query :-<\/strong><\/span><\/p>\n<ol>\n<li data-start=\"445\" data-end=\"776\">Can we follow Scenario A?<\/li>\n<li data-start=\"445\" data-end=\"776\">\n<p data-start=\"72\" data-end=\"306\">Can the <strong data-start=\"93\" data-end=\"116\">Cost of Acquisition<\/strong> for computing capital gains on the sale of a <strong data-start=\"162\" data-end=\"188\">newly redeveloped flat<\/strong> be considered as the <strong data-start=\"210\" data-end=\"294\">Fair Market Value (FMV) as on the date of allotment of the new flat (31\/03\/2022)<\/strong>, <strong data-start=\"296\" data-end=\"306\">since:<\/strong><\/p>\n<p data-start=\"308\" data-end=\"626\">1\ufe0f\u20e3 The <strong data-start=\"316\" data-end=\"365\">original cost of acquisition is not available<\/strong>,<br data-start=\"366\" data-end=\"369\" \/>2\ufe0f\u20e3 The property was <strong data-start=\"390\" data-end=\"403\">inherited<\/strong>, and<br data-start=\"408\" data-end=\"411\" \/>3\ufe0f\u20e3 The <strong data-start=\"419\" data-end=\"532\">newly allotted flat is completely different in character, structure, and specifications from the old property<\/strong> handed over for redevelopment, making the <strong data-start=\"575\" data-end=\"625\">old property irrelevant for valuation purposes<\/strong>?<\/p>\n<p data-start=\"628\" data-end=\"747\">We do <strong data-start=\"634\" data-end=\"641\">not<\/strong> wish to consider <strong data-start=\"659\" data-end=\"683\">FMV as on 01\/04\/2001<\/strong>, as the sold property is the <strong data-start=\"713\" data-end=\"725\">new flat<\/strong> obtained in exchange.<\/p>\n<p data-start=\"749\" data-end=\"968\">Is there <strong data-start=\"758\" data-end=\"775\">any provision\/Case laws<\/strong> under the Income-tax Act, 1961, that permits using the <strong data-start=\"831\" data-end=\"894\">FMV as on the date of allotment of the new redeveloped flat<\/strong> as the <strong data-start=\"902\" data-end=\"925\">Cost of Acquisition<\/strong> for capital gain computation in this case?<\/p>\n<\/li>\n<li data-start=\"445\" data-end=\"776\">Now the Sale proceed has been transfer to 5 grandsons and they invested in their individual name, still we can claim section 54 exemption?<\/li>\n<li data-start=\"445\" data-end=\"776\">any separate view of your in above case? Guide with appropriate Computation mechanism<\/li>\n<\/ol>\n","protected":false},"comment_status":"open","ping_status":"closed","template":"","qa_expert":[1275],"qa_category":[23],"qa_tag":[459],"class_list":["post-54994","qa","type-qa","status-publish","hentry","qa_expert-law-intern","qa_category-income-tax","qa_tag-redevelopment"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa\/54994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/qa"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=54994"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=54994"}],"wp:term":[{"taxonomy":"qa_expert","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_expert?post=54994"},{"taxonomy":"qa_category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_category?post=54994"},{"taxonomy":"qa_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_tag?post=54994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}