Section 45(5A) - Special provisions for computation of capital gains in case of joint development agreement - Income Tax - Ready Reckoner - Income Tax

Section 45(5A) - Special provisions for computation of capital gains in case of joint development agreement Where the capital gain arises to an assessee being an individual or HUF , from the transfer of capital asset being land or building or both, under a specified agreement, then the capital gains shall be chargeable in the previous year in which the certificate of completion of the whole or part of the project is issued by the competent authority, and the stamp duty value, on the date of issue of certificate, of his share, as increased by the consideration received in cash any consideration received in cash or by a cheque or draft or by any other mode [ substituted by FA 2023 ] , if any, shall be deemed to be the full value of consideration as a result of transfer of the asset. Provided that these provisions shall not apply where the assessee transfers his share in the project on or before the issue of certificate of completion and the capital gain shall be deemed to be the income of the previous year in which such transfer takes place and the capital gains shall be determined under the provisions of the Act without taking into account these new provisions. CRUX OF THE SECTION :- Thus, this particular section intends to defer the taxability from the year of transfer to the year in which the completion certificate is received. This particular section will hold good if the assessee has not sold his share in the land/building before the date of issuance of such completion certificate. Section 49(7) : COA of share received in JDA COA = Amount deemed as FVOC u/s 45(5A) (SDV of share in project). NOTE:- 'Specified Agreement' means a registered agreement in which a person owing land or building or both, agrees to allow another person to develop a real estate project on such property, in consideration of a share in such project, whether with or without payment of a part of the consideration in cash.