19 February 2011
Mr. X purchased a residential property on 13.08.1968 at a cost of Rs. 55,000/- and was resudubg there till february,2009. On 27.02.2009 he transferred the said property by way gift to his grandson Mr. A. The property was valued at 20,59,830/- by the registering authority and stamp duty was paid Rs. 22,649/-. On 19.11.2009 the said gifted property was sold by Mr. A at a Rs. 25,00,000/- (Valuation made by registering authority Rs. 25,61,000/-) Question is whether the gain in the hand of donee would be treated as Long Term or Short Term Capital Gain? What would be taken as cost of acquisition?
19 February 2011
1. Long term capital gains. Holding period of the property should be determined as per section 2(42A), explanation (i)(b). 2. Cost of acquisition is cost incurred by the donor as per section 49(1)(ii). Here, since the property is purchased in 1968, fair market value as on 1/4/1981 has to be taken as the cost as per section 55(2)(b)(ii) of the Income tax Act,1961.
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20 February 2011
Gains in the hands of donee would be treated as Long Term Capital Gain?
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