Capital gain tax after selling flat ownership of which was not registered
Querist :
Anonymous
(Querist) 15 March 2011
This query is : Resolved
My friend has got allotment of a flat from a builder in 2004 at Gurgaon. By 2006 he has paid the entire consideration to the builder & Apartment buyer Agreement with the builder was signed. He was given a letter of possession by the builder . He did not take possession of the Apartment & wan’t to sell it now at a premium. He has not registered his purchase from the builder. He wants to claim his profit as long term capital gain as per I.Tax Act & want rebate/relief by buying dwelling house for him & investing in specified bonds. My question is
1) Can he claim long term Capital gain for the profit he made by selling his Apartment when his purchase of the said apartment was not registered? He has all other documents to prove that it was allotted to him, he paid the consideration etc. but the title was not registered in his name.
2) Can he claim long term capital gain by terming his position as right to title of the Apartment or deemed ownership of he property? Is there any such coinages in I.Tax Act?
3) Some suggested that he can claim that he had right to title which he sold & it will be treated as Long Term Capital Gain for which he can not buy dwelling house but can buy specified Bonds to claim rebate/relief from long term capital gain tax. Is it correct? If correct then what section & sub-section of the Act applies here?
4) Can his case be defended if I.Tax department rejects his claim of long term capital gain?How?
5) What should he do now to show it as long term capital gain?
An urgent answer is requested. Thanks in advance
soumitra basu
(Expert) 09 April 2011
Answers :
1. Registration is immaterial but allotment letter is material.
2. He is de facto owner.
3. He can buy dwelling house by investing entire sales proceeds or purchase capital gains bond by investing only the portion of capital gain.
4. There is no question of rejection.
5. He should possess the allotment letter and if require submit the same before the taxing authority. In this connection case of Podar Cement Company held by Supreme Court is important.
