Chandigarh in danger
IT slaps tax on Punjab politicians for Camelot
Tribune News Service
Chandigarh, December 5
Dismissing the politicians’ plea against reopening their returns filed for the assessment year 2007-08, the IT department has now slapped capital gains tax between Rs 36 lakh and Rs 72 lakh on each member of The Punjabi Cooperative House Building Society (PCHBS). The tax amount varies according to plot size.
The proposed housing project is coming up in Kansal village, just north of the Capitol Complex, where all development is banned. The 19 towers, some soaring to 35 storeys, violate the New Capital Periphery Control Act, which bars development in the 16-km radius around Chandigarh.
According to IT department sources, inquiries revealed that members of The Punjabi Cooperative House Building Society had entered into an agreement with the project developers in February 2007 and had received Rs 15 lakh to Rs 36 lakh, depending on plot size, from them in February and April 2007. However, they had not declared any gains or profits in their income for the assessment year 2007-08.
The IT department has also dismissed the main contention of the politicians (read members of The Punjabi Cooperative House Building Society) that execution of the land sale deed had not been completed with the developer and they had merely entered into a “joint development agreement”. The IT department has, however, concluded that the joint development agreement is in fact a sale agreement resulting in transfer of assets as all the requisite clauses — consideration, schedule of payment, rights and liabilities of each of the three parties and termination indemnity and arbitration — are mentioned in it.
According to the assessment notice issued to the society members, a copy of which is in possession of The Tribune, they are liable to pay capital gains tax on full value of the consideration accrued to them on the transfer of assets, effected with the signing of the joint development agreement in February 2007 and not just on the cash component received by them. The IT department has raised the demand for the payment of the long-term capital gain in assessment year 2007-2008.
According to the IT department’s calculation, a member with a 1,000 sq yard plot is said to have received a consideration of Rs 3.67 crore. This includes a cash component of Rs 1.65 crore and two flats costing Rs 2.02 crore in the proposed Camelot complex.
The assessment order allows for a deduction of Rs 12.28 lakh on this amount on account of the cost for acquisition based on indexed cost from 1999 to 2006. The amount on which the long-term capital gain is to be paid is Rs 3.55 crore. Similarly, members with a 500 sq yard plot will have to pay long-term capital gain tax on Rs 1.83 crore. At the average rate of 20 per cent tax on long-term capital gains, members will have to pay a tax of close to Rs 36 lakh for a 500 sq yard plot and Rs 72 lakh for a 1,000 sq yard plot.