It is also proposed to define the terms “competent authority,” “specified agreement” and “stamp value”to this end. Section 45 of the Income-tax Act, 1961 – Capital gains – (By converting assets into shares in trading) – Valuation Year 2008-09 and 2009-10 – Assessee companies bought n.A. 2002 – On 30.12.2005, it transferred this land to a real estate developer through a development agreement – Instead of such a transfer, 27 per cent of the built-up area was in the form of dwellings/bunglows, which were then sold to various purchasers – the revenues from the transfer of land through the development agreement and the subsequent sale of dwellings and bunglows were to be calculated in accordance with the provisions of section 45, paragraph 2. Given that 27 per cent of the built-up area was taken into account by the expert in return for the transfer of 73 per cent of the land area, the construction costs of this 27 per cent area could reasonably be considered a fair market value of 73 per cent of the area, in order to calculate the capital gains generated to assess the transfer of land through a development agreement, which at the same time led to the transformation of capital in exchange for trade. This capital gain should be taxed pro-rata in the hands of the valuation-eligible company if the shares held in the form of dwellings and bunglows consisting of built land and pro-rata shares are sold, while the amount that goes beyond the costs of these dwellings and assets would be taxed as business income in the hands of the valuation company. The analysis of such agreements, assessments and determination of the tax debt could become complex and complicated. Therefore, consulting with an Indian audit firm may reduce the possibility of default in the calculation of capital gains/loss and related tax debt. The same thing was discussed as follows: Assessee owned land – It entered into a cooperation agreement with “S” for the development of land such as 2-5-1987. With respect to the agreement, the auditor agreed to divest 40 per cent of the land instead of 60 per cent of the construction on land – the building was finally built in 2000 – and then the expert gave irrevocable authority in favour of “S” to sell the land allocated to him on 10.9.2003. On substantive issues, real estate was converted into shares when an agreement was signed between the notator and the “S” and such a conversion would amount to a “transfer” under Section 2, paragraph 47, point iv). Some of the roles and responsibilities of the various parties in the AIC agreements, supported by documentary evidence that each party played its role and that this role played an important role in the overall development of the project. CA.
Vinay V. Kawdia provided an interesting overview of the tax legislation of the Joint Development Agreements (JDA). He identified the many controversies that are not there. He presented a clear analysis of the legal provisions and provided practical examples to explain their impact.