§ 45 of the Income Tax Act, 1961 – Capital gains on disposal – (In case of conversion of assets into shares at negotiation) – investment years 2008-09 and 2009-10 – Assessee-Gesellschaft acquired in 2002, a plot of land – On 30-12-2005, it transferred this land to a developer through a development contract – instead of such a transfer, Assessee received 27 per cent of the built-up area in the form of apartments/bunglows, which were then sold to different buyers – the income from the transfer of land by town planning contract and the subsequent sale of housing and bunglows was calculated in accordance with Article 45(2). Given that 27 per cent of the built-up area of the project was received by the appraiser in return for the transfer of 73 per cent of the land area, the construction cost of this 27 per cent could reasonably be considered the fair value of 73 per cent of the land area, in order to calculate the capital gains incurred by the appraiser when transferring land by development contract. This also led to the conversion of capital into shares in trading. That capital gain is taxable in proportion to the sale of commercial assets in the form of housing and bunglows consisting of built-up land and proportional shares of land, whereas sums going beyond the cost of such housing and bunglows are taxable in the hands of Assessee as business income. The tax capacity of capital gains in the hands of the landowner resulting from the transfer of land ownership from the land owner to the developer in a JDA has always been a contentious issue. The JDA model is often questioned by Assessing Officers due to a lack of clarity regarding taxation in the hands of landowners, as well as the determination of the amount of taxable consideration received by the landowner. When concluding such a JDA/DA, both parties should be aware of both trade and tax issues. Here are some commercial aspects that must be taken into consideration and negotiated between the parties: as shown by the agreements and legal principles in the matter, all housing received in the development contract would technically become a house for the u/s 54/54F claim, although they come from independent entities. As indicated above, the new tax regime in Article 45(5A) applies only in the event of a transfer of capital to the JDA. In case of conversion of assets into shares in the context of negotiation by the owner before the conclusion of a registered development contract, the advantage of Article 45 (5A) is therefore The deferral of the tax debt until the date of completion of the project is not available and the capital gain resulting from the conversion and the commercial profit resulting from the sale / disposal of shares in the context of the negotiation are taxable in accordance with Article 45, paragraph 2 of the Act. . .