Capital Gain
This query is : Resolved
25 July 2020
Dear Friends,
Please guide me on below issue,
Assessee is having Shop on lease/rental basis taken from local Body since 1980 and now the assessee sold the said shop to 3rd person, can he claim "Index Cost of Acquisition" on the said shop considering FMV as on 01 April, 2001?
Thanks in advance.
Please guide me on below issue,
Assessee is having Shop on lease/rental basis taken from local Body since 1980 and now the assessee sold the said shop to 3rd person, can he claim "Index Cost of Acquisition" on the said shop considering FMV as on 01 April, 2001?
Thanks in advance.
25 July 2020
Such shops or premises given by local bodies on lease/rental basis are generally Non-transferable and user has just the right to use the premises and has no Title on such premises/shop to sell the same.
You should check the details first from the local governing body about such right and legality of this sale transaction.
Otherwise, for any transaction of Capital gain/loss nature will attract indexation benefits for FMV calculations.
You should check the details first from the local governing body about such right and legality of this sale transaction.
Otherwise, for any transaction of Capital gain/loss nature will attract indexation benefits for FMV calculations.
25 July 2020
Thank you Mr. Punit for your reply.
Assessee has transferred right he has, to use the shop for commercial purpose with NOC of concerned owner and got consideration for it.
But I got the your view, that in case of any transection of Capital Gain/Loss, one can consider FMV as Cost of Acquisition, right?
Assessee has transferred right he has, to use the shop for commercial purpose with NOC of concerned owner and got consideration for it.
But I got the your view, that in case of any transection of Capital Gain/Loss, one can consider FMV as Cost of Acquisition, right?
27 July 2020
Here the cost of acquisition is nil so no indexation benefits available. Treat entire sale consideration as capital gains.
27 July 2020
CA R Seetharaman Sir..
We cannot consider FMV of 1st April, 2001 as Cost of Acquisition?
We cannot consider FMV of 1st April, 2001 as Cost of Acquisition?
27 July 2020
Such premises are not acquired free of cost and Local bodies charge reasonable premium on such transactions and the same amount paid for taking possession of such property is to be taken as Cost of Acquisition.
27 July 2020
No you can't consider FMV of 1st April, 2001 as Cost of Acquisition as cost of acquisition is nil in this case.
28 July 2020
I thank both of you for your valuable opinions.
I am confused because of tow different views, sir if you can provide any judgement to support your view.
I am confused because of tow different views, sir if you can provide any judgement to support your view.
28 July 2020
If you can share, the mode of acquisition of said shop and the amount paid for such acquisition, than there will clarity on the issue.
28 July 2020
Refer section 55(2)(a) of income tax act cost to be taken as nil.
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