kollipara sundaraiah asked 1 year ago
It assessee(brother) one immovable property gift to sister son dt:10-10-22 and another date sister own immovable property gift to brother son dt:15-10-22.
Question:
Above mentioned gift transactions capital tax applicable in it act.
ADITYA answered 1 year ago
There are two parts of your question, first is about exchange of property, let’s discuss it first:-
Exchange of property is also considered as transfer for the purpose of capital gain. As per Section 2(47) of income tax act, for the purpose of capital gain, “Transfer” includes: –
“(i) sale, exchange or relinquishment of the asset, or
(ii) the extinguishment of any right therein, or
(iii) the compulsory acquisition thereof under any law, or
(iv) in a case, where the asset is converted by the owner thereof into or is treated by him as stock-in-trade of a business carried on by him, such conversion or treatment, or
(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 5 3A of the Transfer of Property Act, 1882, or
(vi) any transaction, whether by way of becoming a member of, or acquiring shares in a co-operative society, company or other AOP or by way of an agreement or any arrangement or in any other manner whatsoever which is effected by transferring or enabling enjoyment of, any immovable property.”
Hence exchange of capital assets is also a transfer and capital gain tax is applicable.
Coming to second part of your question, In your transaction, brother gifted the property to Sister’s son and in another transaction, sister gifted her property to brother.
Please note that Gift of Rs. 50000/- or more is from non-relative is liable to income tax if it is not-given on the occasion of marriage. As we know that gift from relative is not subject to tax. The following relative are covered in the definition of relative: –
- Spouse of the individual.
- Brother or sister of the individual.
- Brother or sister of the spouse of the individual.
- Brother or sister of either of the parents of the individual.
- Any lineal ascendant or descendant of the individual.
- Any lineal ascendant or descendant of the spouse of the individual.
- Spouse of the persons referred to in (2) to (6).
As brother of mother is covered in definition of relative and brother sister are also relative. Hence if this is gift transaction then not liable to tax. But If this is exchange of capital assets, then if is liable to capital gain tax. Please check registration documents for confirmation of nature of transaction.