Hello friends, how are you all?
This is the continuation of the last lecture.
In the last lecture, the video was a little long.
That is why I am recording this as a second part.
In the last video, we were talking about the transactions
whose year of transfer will not be taxable in that year.
When will the capital gain be taxable?
It will be taxable in some other year.
The year you sell the capital asset, it will not be taxable
in that year.
It will be taxable in some other year, my dear.
We talked about two such transactions in the last lecture.
One, you may remember Mr.
Lappi Lahiri's example when he was converting his capital
asset into his stock.
Second, you may remember a person's factory in which a
person threw a cigarette and it caught fire.
These two examples, two cases, two situations
I had discussed with you.
And today I will discuss the remaining cases with you.
It is very simple.
Keep supporting me.
Your support is very important, my friend.
If you do not support me, then this lecture will have no
meaning.
Always maintain your confidence and attention.
Now we will discuss a new case.
It is a very common case.
You will definitely hear it somewhere.
For example, this is your house.
What is this house of yours?
Sir, you make the same image of a house, the same image of
a factory.
What a joke!
You do not even know what my drawing skills are, my friend.
I have got Padam Bhushan in the matter of drawing.
It was a little big, so I made it a factory.
This is a little small, so I made it a house.
There is also talk of dimensions in drawing.
Do you know?
You do not even know anything.
My poor people are talking about drawing.
One day you will suffer without me.
When I will remember you, then you will suffer and cry and
shed tears that I used to be a master who used to make
upside-down drawings and used to teach us.
Come here.
Sir, for example, this is your house.
And this house is at such a location from where the
government has to come up with a highway project.
The government has to make a highway from here like this.
This road has to be made.
The highway is coming.
This is your highway.
So, this highway has been made.
And this highway has to take them till here.
Now the problem, the problem that the government is facing
is that this highway is going in the middle of your house.
You can say that your house is coming in the middle of this
highway.
In this case, the government has two options.
The first option is that the government compulsorily
acquires your house.
Your house comes under inspection.
And the government gives you the money for it.
This is option number one.
The second option, which I feel is a simple option, is that
I will remove this road from inside your house.
This will become your toilet.
This will become your drying room.
The road will come out from here.
Right? The road will come out from here, from inside your
drying room.
A person must be drinking tea in your house.
The road must be going from here.
A truck must be going from here.
You are sitting here and drinking tea.
A truck is going from here.
You are watching a cricket match in front of you.
There is a TV in front of you.
A truck or a car is coming from the middle.
Or let's do this option.
That in the middle of your house's drying room, in the
middle of the toilet, let's remove a road.
People will keep coming and going to your house.
A stall will open there.
A tea shop will open there.
Should I do this?
Should I remove a road from inside your house?
Does this happen?
Have you ever seen this?
That a road comes out from the middle of a person's house.
And that person sits here and watches the traffic.
Sir, what does the government do in this case?
Any land or any house
comes in the middle of a project like this.
It is compulsorily acquired.
Whoever has that house, some money is given to him.
And it is assumed that you have sold that asset to the
government.
It is assumed that you have sold that asset, the capital
asset you had, the land and building you had, that you have
sold to the government.
All the money you get is your receipts.
So in this case, for example, because it is a government
work, you know that the heart of the government of our
country is something like this.
Assume that this was the case of 2020.
What happened to your land in 2020?
That land was acquired compulsorily.
Acquired compulsorily.
In 2020.
But the government
you know the style of its work.
The government in 2022, here in 2022, what did it give you?
It gave you 1 crore rupees.
Here you go.
You got 1 crore rupees, but in 2022 you got the money.
Yes, when should the transfer be accepted?
In 2020, when the government took that land from you.
But did you receive any money?
If you were told that 1 crore rupees, they would have told
you in the beginning that we are acquiring your capital
asset
compulsorily for 1 crore rupees.
That in 2020, you will be told that your house is coming in
the middle of our highway and we will give you 1 crore
rupees for it.
This house, for now, we are acquiring it compulsorily.
Give it to us.
Okay sir.
I did not get the money.
Because this is a transfer.
In the case of transfer, capital gain will be imposed on
him.
And section 45 says that the year capital asset is
transferred, capital gain tax is also imposed.
In this case, did this person receive any money?
When this person did not receive any money, then from where
will he pay the capital gain tax?
Will he pay it by selling his wife's jewellery?
Will he pay his children's fees
and pay his capital gain tax?
In this case, the government said that it would be better
if you do not emotionally blackmail us.
Because the year you receive this, the same year you will
pay your capital gain tax.
This is the point.
The year you receive compensation money, even if a part of
it is received, see, the government is playing a game here.
The government said that we will give you a compensation of
1 crore.
But let's assume that instead of giving 1 crore, they would
have given a compensation of 20 lakhs.
Even then, the capital gain imposed on you for 1 crore,
would have become taxable.
The year you get compensation,
that year, the capital gain tax will be imposed.
Even if you get a part of the compensation, or even if you
get the entire compensation, but the capital gain tax, my
dear, only then it will become taxable.
The year you receive the compensation.
When do you have to do the indexation?
The year it is being transferred.
The year it is being acquired compulsorily, that year you
have to do the indexation.
Why? The year it is being transferred.
When the government killed it, that was the year it was
killed.
They just gave you the benefit that when you get the money,
you can deposit your tax.
Is the point clear?
Look at it once.
A little higher.
This point should be slightly higher.
Look, sir, this house is coming in the middle of the
highway.
Come, sir, come.
Assume that this person was of this kind, who received this
compensation.
He said that the value of my house,
Madam Finance Minister, the value of my house, you have
given very little.
Its value is not 1 crore, its value is 5 crore.
And you are giving us very little money.
Sir, this is the actual case.
Let me tell you.
You can ask anyone.
In your friendship and relationship,
if someone's land comes under check, if the land is worth
20 crores, you get 5 crores.
The government does not give you money according to the
market value.
The government gives you money according to the value in
its records.
Whether the market value of the land is 20 crores or 2,000
crores,
you get what is in the record.
If the rate in the record is 500 rupees per acre,
the government will give you 500 rupees per acre.
Keep fighting the case in the court.
And on what basis will you fight this case in court?
What will you tell the judge?
You will tell the judge,
I want enhanced compensation.
What do I want?
Enhanced compensation.
I want increased compensation.
The value of one crore has come down a lot.
My actual value is five crore rupees.
I want enhanced compensation.
Is it okay, sir?
Now tell me one thing, the judge himself became kind.
He was a lawyer of Jolly LLB type.
And the judge of Jolly LLB type was the same judge.
Their setting was already going on.
He said, Mr.
Jagdishwar Tyagi, you have fought a very good case.
Not a compensation of one crore, but a compensation of five
crore.
Now in this case, how much enhanced compensation did he get?
Extra four crore rupees.
He got four crores.
He got enhanced compensation.
He lost four crores.
My work is done.
No one stopped me.
And no one stopped me.
Sir, but in this case,
who will stop this person?
Madam Finance Minister.
What will she say?
She will say, tell me one thing, earlier your value was one
crore.
This one crore value was considered as your sale
consideration.
It was considered that the capital asset you sold or
transferred was worth one crore.
But now, you are fighting a case in the court.
And the judge got impressed with you.
He compensated you for five crores.
So now, what should be your total sales?
Should it be one crore or five crores?
Your total is five crores.
But we have already paid the tax.
What is the extra?
Four crores.
The extra will be considered as four crores.
The cost of acquisition was already minused.
Now should we minus anything from this?
Sir, I am an SSE.
What is my objective?
At least my tax should be paid.
At least there should be a profit.
I went to the government and said,
Madam, I have gone to the court.
I have gone to the court and rubbed my back.
I have mortgaged my wife's bangles and paid the fees to the
lawyer.
The expenses I have done,
I have paid the fees to the lawyer.
The expenses I have incurred in the court.
If I had not incurred these expenses, would I have been
able to receive four crores?
If I had not hired a lawyer, if I had not filed a case,
would I have received four crores?
No.
To earn four crores,
I have incurred the expenses of the lawyer.
Minus that.
Madam said, it is true.
If I had not hired a lawyer, if I had not mortgaged my
wife's bangles,
I would have never received the compensation of four crores.
The government said, you have paid the capital gain of one
crore.
You have taken the cost of acquisition.
There is no problem here.
Now, let's talk about four crores.
What should you minus out of four crores?
The expenses of litigation that you have incurred.
You have minused the expenses of the lawyer.
Minus that.
Minus the expenses of the lawyer.
The balance that will be left, will be considered as the
capital gain.
We had put a separate amount of one crore.
We had minused the cost of acquisition.
Here, out of four crores,
I cannot minus the cost again.
What will I minus out of this?
My expenses will be minused.
They will be minused, my dear.
And when will this be taxable?
The year I receive it.
The year I receive the final order of the court, that year,
my four crores will be taxable.
I will enjoy my life with four crores.
And I will look for a place to build a house that will come
in the middle of a highway and I will file a case again.
And I will go to the court and tell the judge that four
crores
is my daily work.
Do you understand?
This is the matter.
Is the point clear to you?
Compensation and enhanced compensation, both.
I have made you discuss both the points.
Come here.
Let's see quickly.
Compensation on compulsory acquisition.
Sometimes a building or a capital asset belonging to a
person is taken over by the central government by way of
compulsory acquisition.
In this case, it is chargeable as income of the year in
which compensation is received.
Everything is being received.
In 2020, the government committed a murder.
But the money was given in 2022.
So, in 2022, it will be assumed that the capital gain will
be imposed on me in 2022.
And what do you mean by enhanced compensation?
It is said that sometimes the person who gets compensation
reaches the court of law with Jolly LLB for enhancement of
the compensation.
If the court awards him a higher compensation than the
original compensation, it will be said that the value of
the compensation is 5 crores.
And 5 crores is higher than the original.
So, the difference is 4 crores.
That will be chargeable to capital gain in the year in
which the same is received from the government.
And what about the cost?
The cost of acquisition improvement is nil.
Yes, but the expenses of a lawyer can be deducted.
In that case, it can be done.
Is there any problem?
Is there any problem in this?
Is there any problem?
And at the time of the final order, when you get the final
order, then it will be taxable in your hands.
You will deduct the litigation expenses from this.
Is the point clear?
Shall I move ahead?
Shall I move on to the next topic?
Taxability of capital gain in the case of specified
agreement.
In the case of specified agreement.
Come, let's see how it is done.
Don't take tension about anything.
I am telling you, you take a lot of tension about things.
Don't take it.
What will happen in life? How will it happen?
Whatever will happen, it will be good.
Are you doing something wrong? You are studying.
You are learning things.
Once you learn things, you will feel it from inside.
Today, when I teach,
I feel very good that
I am telling such good things.
There is a positivity that we are changing people's lives.
Now, it is not about earning money.
Now, it is about how many lives, how many people's lives
you touch.
How many people's lives you influence.
It all happens.
For that, you will have to work hard.
You will have to understand.
My objective is to teach in a very simplified way.
So that even if you don't read, even if you listen, it will
remain in your mind.
Brother has come, he will explain.
Now, let's talk about a specified agreement, which is
called joint development agreement.
Sir, is it the same case that transfer will take place in
some other year and capital gain will take place in some
other year?
Yes, it is the same case.
Sir, believe me,
I have a plot.
I have a plot of 500 acres.
I live here.
I live here peacefully.
I have a bed.
I sleep on this bed.
I live here.
I have an empty plot.
A builder saw this plot.
A builder saw this plot and said that the location of the
plot is amazing.
Come, let's talk to the owner of this plot.
So, the builder came to me and said,
Mr. Gupta,
I have an offer for you.
I said, I won't sell the plot.
What is the offer?
He said, there is no need to sell it.
Do one thing, make an agreement with me.
I said, what kind of agreement?
He said,
I will give you 5 flats on this 500 acre plot.
Did you hear the builder's voice?
I will give you 5 builder's floors.
Okay? I will give you 5 builder's floors.
1, 2, 3, 4, and the last one, 5.
Okay? I will give you 5 floors.
Do one thing, the land is yours.
The construction is mine.
The land is yours.
The construction is mine.
As a reward,
I will give you these 2 floors.
And apart from this floor,
I will give you 2 crore rupees more.
I will give you 2 crore rupees cash.
I got 2 crore rupees.
And he gave me 2 more floors.
The price of 1 floor is 1 crore rupees.
He said, the remaining 3 floors are mine.
I will pay the rent.
A joint development agreement was made.
The land is mine.
The construction is being done by someone else.
And in return for the construction, what is he giving me?
He said, this land is yours, you do one thing, you keep 2
crore rupees.
And you keep 2 more flats, rest everything is mine.
I said, okay, no problem.
Tell me one thing, is this a transaction like this?
First of all, tell me, is this land a capital asset for me
or not?
Is this land a capital asset for me or not?
Answer is yes.
It is a land and building, it is a capital asset.
Is it being transferred in this case? Yes.
Take the definition of transfer and open it.
In the definition of transfer, it is covered.
This is a transfer.
It is a capital asset, it is being transferred.
So capital gain should be imposed by the law.
Where will be the problem?
The problem will be, in which year should we impose tax on
capital gain?
The year in which it is being transferred, should we impose
tax on that year?
The year in which it is being transferred, should we impose
tax on that year?
Or in which year?
Because in property transactions,
you get a completion certificate.
You get a completion certificate from the authority.
The authority of that place, the authority of development,
you get a certificate from there,
that yes, this construction is completely completed,
according to us.
We have inspected it.
Our engineers have inspected it.
The place is absolutely correct.
The construction has been completed.
A certificate is issued for this.
So in this case, friends, this is capital gain.
But in which year will it be taxable?
Tax will be imposed on it in the year in which you get a
completion certificate issued.
The year in which you get a completion certificate issued,
what is it called?
The short form is CC.
The year in which CC is issued, what will happen for you?
That year, capital gain will be imposed.
Sir, capital gain will be imposed.
It is understandable.
But in this case, what will be the sale concentration?
Because two things are involved in this.
Two crore rupees are also involved.
Plus two flats are also involved.
What will you believe?
Sir, it is a simple thing.
Sale concentration.
Try to understand.
What will be the sale concentration in this case?
Two crore rupees plus these two flats.
Their fair market value or stamp duty value.
Tell me.
There are property transactions.
We have covered a lot.
We have also seen something in house property.
We had thought about it.
We had understood such things.
Sir, in this case, you don't have to take the fair market
value.
In this case, you have to take the stamp duty value of this
project.
For which date?
See this.
Stamp duty value of the flat.
For which date do you have to take this?
You have to take all this the year you issue the
Certificate of Completion, CC. That year, you have to take
two crore rupees plus SDV.
What will you deduct from this?
Your cost of acquisition.
Deduct that.
You know the cost of acquisition.
In how much did you buy the plot?
Deduct that.
What will you deduct from this?
Either short term or long term capital gains.
There was a plot.
You were living there.
The builder came.
He said, I will give you five flats.
Three will be mine.
You keep two.
Apart from that, keep two crore more.
In a way, it was transferred.
But when will you pay the tax?
The year you issue the Certificate of Completion.
How much will it cost?
It will cost two crore.
Along with that, the stamp duty value of the two flats.
The date on which you get the Certificate of Completion.
Whatever is the stamp duty value on that date.
Take that.
Minus cost of acquisition.
If it is long term, then the indexed cost.
If it is short term, then
simple cost of acquisition.
Minus.
Do it, my dear.
Is this point clear?
Is everything clear?
Let's move ahead.
Let's take a look at it.
Let's do its reading and finish this topic.
Come here.
Are you not getting bored?
Are you not getting bored, my friend?
Look, the topics are a little boring.
But try to understand.
They have a lot to do with practical life.
It is very common to land in Chakbandi.
It is very common for joint development to get such offers.
You have land.
You will get an offer from somewhere.
Now you have to see here what will be taxable in your hands
and when it will be taxable. You have to check when you
have to pay tax on it.
Since you are taking a tax class, it is your responsibility
to keep this information.
If no one benefits, you will benefit yourself.
This knowledge will come in your own work.
You will get your own benefit.
Come here.
We are talking about specified agreement.
What is genuine hardship?
In transfer, it is part performance of the contract.
Leave it.
It will be a little long.
Read it from below.
Look.
Read from here.
With a view to minimize the hardship which the owner of the
land may face, 45A says that in case of SSE being
individual or HUF who enters into a specified agreement,
the capital gain shall be chargeable to income tax as the
income of the year in which
Certificate of Completion is issued by the competent
authority.
The year you get Certificate of Completion, that year your
capital gains will be taxable.
Full value of consideration.
Stamp duty value.
Stamp duty value of the share.
Stamp duty value of his share being land building both in
the project
on the date of issue of the CC.
Stamp duty value as increased by consideration received in
cash.
This will be considered as FVOC.
Full value of the consideration.
In our language, sale proceeds.
Stamp duty value.
On the date of issue of CC.
Plus.
Whatever you get in 2 crores, add that.
Simple.
No problem.
Competent authority stamp duty value.
Look at this chart.
Individual HUF is entering into a specified agreement.
Is this individual transferring his share after the date of
issue of CC? If yes, then it is a simple thing.
The year CC is issued, liability of capital gains will be
there. What will be the sale consideration?
Stamp duty value plus cash consideration.
It is a simple thing.
This was the topic.
What were we reading in the last 2 lectures?
Sir, what have we read?
Sir, in the last 2 lectures, we have read
In the last 2 lectures, we have read that generally what
happens is the year in which capital gains are transferred,
that same year, means the year in which capital assets are
transferred, that same year, capital gains are issued.
But what did we read in these 2 lectures?
That capital assets are being transferred in this year, but
when will capital gains be taxable? In some other year.
We have read these 4-5 cases.
They were simple cases.
Once you will watch it again, you will understand
everything, my dear.
This is the point, sir.
Go home and revise it once.
If you don't understand, rewind it once.
If you don't understand, call me.
I will explain it to you.
Chalo. Bye.