case is: Assessee purchased one floor of a building in fy 1997-98. In fy 2005-06 he gave consent to demolish and construct a new building. He paid Rs.8lacs to a contractor.Contractor demolished the complete building and constructed 5 flats and gave assessee 2 flats. Now assessee sold those two flats in fy 2007-08. What will be cost of acquisition for computing capital gains ?
27 July 2011
Assuming that the assessee did not get any cash benefit when the consent was given: Cost of Acquisition should be the Price that he paid for the acquisition in 97-98. The 8 lacs paid in 2005-06 could be shown as cost of improvement. Indexation benefit to be taken for the both the above.
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