Capital gain

kamal (Querist) 31 January 2022 This query is : Resolved
Hi,
In 2000 at Noida, a Commercial property was bought through an unregistered sale agreement, jointly in two names A & B and a Power of Attorney was executed and Registered at the same time jointly in names of C & D.
Today A & B wants the Power of Attorney C & D to register the sale in their name through a Transfer from the NOIDA authority.

Apparently, NOIDA authority has stopped transferring the Commercial property in joint names, in this case A & B. NOIDA's recently started a policy to transfer commercial property only to single person, partnership or LLP or a Pvt Ltd Company.

If one has no alternate but to register a transfer/conveyance deed by creating a PARTNERSHIP FIRM of A & B ?

My Question is if any Capital Gain issue would arise out of this registration of Transfer/Conveyance deed to a partnership firm of A & B.

Is there anyway one can resolve this ?
Thanks for your time in advance.

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A query regarding capital gains tax implications when transferring a jointly owned Noida commercial property to a partnership firm due to new NOIDA authority regulations. The original purchase was via an unregistered sale agreement in 2000, with a registered Power of Attorney. The NOIDA authority now only permits transfers to single individuals, partnerships, LLPs, or private limited companies, posing a challenge for the joint owners. The discussion explores whether registering a transfer deed to a partnership firm created by the joint owners would trigger capital gains tax and seeks solutions.

kavksatyanarayana (Expert) 01 February 2022
When an unregistered sale agreement was executed in the year 2001, now how can it be possible to create a Partnership Firm?

Dr J C Vashista (Expert) 02 February 2022
Besides the relevant and valid question raised by expert Mr. Kavksatayanarayana, which I endorse, there are certain local procedure / laws applicable in case of commercial properties applicable in NOIDA, therefore, it is prudent to consult a local lawyer with all documents.

kamal (Querist) 02 February 2022
Mr. Vashishta & Mr. Kavksatyanarayana, you are right. Since the exchange of money had happened between the Allottee (from NOIDA) of the property and 2 individuals jointly, it is weird of NOIDA office to not accept Joint transferee. NOIDA Authority (an Industrial Township Development Authority) is the Lessor of all the properties in this NCR. Even if for the sake of clearing the title if the transfer deed is registered in either of the two joint names or partnership. It would attract Capital Gains Tax in the hand of Power of Attorney A & B, but there is no exchange as of today. Wonder how to tackle this situation.
Thanks for your time and patience.

krishna mohan (Expert) 02 February 2022
Better to consult CA with available title papers. Normally capital gain is applied for a registered transaction where investment is made and tax charged on capital gain.

K Rajasekharan (Expert) 02 February 2022
Capital gain tax, short term or long term, will apply to any sale of capital assets including immoveable property at the rate, depending on the taxpayer's tax bracket for that year.

In case, the sale amount exceeds Rs fifty lakh, the buyer will have to deduct one percent of the tax, and pay it to the income tax department at the time of the sale itself, so as to ensure the payment of the balance tax by the seller later.

kamal (Querist) 12 February 2022
Thank you esteemed experts for your time.
Regards

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