Capital gain in a sale of a plot purchased on assignment agreement

[Prasanna]

i have purchased a property(villa plot) on assignment agreement by paying 50% to the assignor and 50% to the developer. The sale deed consideration is for 50% value, all transactions are legal and digital. TDS done for 50% and stamp duty paid is for 50%, can i consider 100% value of the property for capital gain if i sell it?

 

[Hitesh Jain]

In such cases, capital gain is computed on your actual cost of acquisition, not merely the amount mentioned in the registered sale deed. If you have legally paid 50% to the assignor and 50% to the developer, and you hold proper documentation (assignment agreement, payment proofs, bank entries, TDS records), the total amount paid by you can generally be considered as your cost.

However, ensure the assignment agreement clearly transfers rights and is legally valid. Also check whether the stamp duty value or Section 50C implications apply at the time of your sale. Since documentation plays a crucial role here, it would be advisable to review all papers carefully before finalizing capital gains computation.

[Prasanna]

Thanks for the reply,

However, do I have to pay TDS for the Asignor portion of the 50% pay? Or will it be considered as a property ownership transfer fee, so not to pay TDS for this ?

Stamp duty is paid only for the 50% of the total value, hence will it be considered as underpaid stamp duty and and attract any penalty from the Govt?

[shalini taknet]

No, you cannot claim 100% property value as cost base for capital gains. Your actual cost of acquisition is the total amount you paid (50% to assignor + 50% to developer + incidental costs like stamp duty/registration).

Cost of acquisition (Sec 55): Full purchase price/expenses to acquire the asset, regardless of sale deed value (which was only for 50% as assignee).

Deed shows 50% because assignor transferred their rights; you paid remaining directly to developer total outlay = your COA.

TDS/stamp on 50% irrelevant; COA is your expenditure, not deed figure. Courts uphold actual payments.

? Keep bank statements/digital trails for both payments. Indexed COA = total cost x CII ratio. Gain = Sale price - Indexed COA.

Claim full actual cost in ITR. AO may accept with docs; low dispute risk.

Consult CA.

AI Summary

Cost of acquisition governs capital gains on assigned property; documented total outlay, not deed value, determines tax basis. Capital gain on an assigned plot is computed using the purchaser's total documented expenditure as the cost of acquisition, encompassing payments to both assignor and developer plus incidental acquisition costs; the registered deed's stated consideration does not alone determine cost. Indexed cost adjustments apply to this aggregated expenditure. Proper assignment documentation, payment proofs and compliance records are essential to substantiate the aggregated cost for capital gains computation and to address any valuation or duty related queries arising from differences between deed value and actual payments.