Capital Gain

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Hardik Sarvaiya (Querist)
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05 January 2011 a lady get a flat by will from her uncle which was transferred in her name by society on 11.05.1994.

she sold the flat on 18.09.2010.
can she take market value as on 11.05.1994 and cost of acquisition and index their from.

stamp duty ready recknor in the year 1994 was published late and revenue department for stamp duty gave a method to be adopted as follows:
Take market Value as in 1991 (rate in 1991+ 200 for lift) and increase it by 30% for the market value for the year 1994, that comes to (1700+200)+30% = 2470/sq.ft. where as recknor value as in 1994 is Rs. 3,000+200 = 3200/sq.ft.

As per income tax authorities market value as on 11.05.1994 should be taken.

please guide what steps to be taken, lady will be benefited only if value as on 1994 is taken to save tax.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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05 January 2011 the cost of acquistion will be the cost to the previous owner.

Cost with reference to certain modes of acquisition.

5149. 52[(1)] Where the capital asset became the property of the assessee—

(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;

(ii) under a gift or will;

(iii) (a) by succession, inheritance or devolution53, or

54[(b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or]

(c) on any distribution of assets on the liquidation of a company, or

(d) under a transfer to a revocable or an irrevocable trust, or

(e) under any such transfer as is referred to in clause (iv) 55[or clause (v)] 56[or clause (vi)] 57[or clause (via)] 58[or clause (viaa)] 59[or clause (vica) or clause (vicb)] of section 47;

60[(iv) such assessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969,]

the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.