Land development and taxation
Querist :
Anonymous
(Querist) 10 December 2011
This query is : Resolved
Mr X owns a land on which he has constructed a building in which he conducted his business. Mr X has entered into a Land Development agreement with some construction company to construct apartments in the place by demolishing the old building. In return he gets half of the flats to be constructed and some cash also.
Now the question is whether the amount received in cash is taxable or not? If it is taxable, in which head? whether Business income or Capital Gains? Will there be any change in the answer if he has stopped the business before some months ago before he has entered into the contract?
If it is subject to tax, when it is actually taxed? I mean whether in the year it is received or in the year of completion of construction and upon getting of the flats.
For the flats he is getting, will there be any tax. If yes, how we have to compute the taxation?
Raj Kumar Makkad
(Expert) 11 December 2011
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