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.

[CASusheel Gupta]

Since both are co-owner, it can be treated as family arrangement

CA Susheel Gupta

9811004443

AI Summary

Family arrangement may avoid characterization as transfer, preventing capital gains tax liability on reciprocal release of co-owned property. Whether reciprocal releases of rights in two jointly owned properties between two sisters constitute a transfer attracting capital gain or fall within a family arrangement excluded from the definition of transfer; the reply states that, since both are co-owners, the transaction can be treated as a family arrangement.