Capital Gain

[Ethirajan Parthasarathy]

Property “A” and “B” are jointly owned by two sisters.

It is mutually agreed that sister 1 will release her right in property “A” in favor of sister 2 and vice versa.

Will this transaction amount to “exchange” resulting in Capital Gain or whether it can be treated as family arrangement which is out of preview of definition of “transfer” and hence no Capital Gain is attracted.

AI Summary

Sisters' Property Swap Deemed Family Arrangement, Avoids Capital Gains Tax Under Tax Definitions Two sisters jointly own properties 'A' and 'B' and have agreed to release their respective rights in each other's favor. The query is whether this transaction constitutes an 'exchange' leading to capital gains or if it can be considered a family arrangement, thus not qualifying as a 'transfer' under tax definitions, thereby avoiding capital gains tax. The response suggests that since both are co-owners, the transaction can be treated as a family arrangement, implying no capital gains tax would be applicable.