Capital Gain Tax Applicability

[Ethirajan Parthasarathy]

A person got two large sites by way of succession. In his absence in India, someone manipulated and sold both the sites.

In one site, the purchaser has constructed lot of apartments. The purchaser of other site has not developed it. Now the original owner has got the court judgement declaring him as lawful owner.

The purchaser of first site has come forward to give few apartments to the landowner as compensation.

My view the original owner is liable for paying capital gain tax @ 12.5% considering the SR value of super structure he got. Will section 78 (50C - Old Act) will apply to this transfer.

For the other site, the present owner is willing to return only half the site or same amount as compensation. What will be the tax effect and whether section 78 of the new Income Tax Act applies to this transaction also.

AI Summary

Capital gains tax on compensation in disputed land transfers and whether stamp duty valuation provisions apply. Capital gains tax applicability is questioned where two sites inherited by succession were allegedly sold during the owner's absence and a later court judgment declares him the lawful owner. For the first site, the purchaser proposes to give apartments as compensation, raising whether capital gains tax arises on the stamp duty value of the superstructure received and whether section 78 / section 50C of the old Act applies. For the second site, the issue is the tax effect of returning only half the site or equivalent compensation and whether the corresponding provision under the new Act applies.