Capital Gains

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Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2009
srinivas aro
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I Have inherited a land of 500 sq yds from my father in 1963

I have now given it for development and obtained 4 flats out of which i retained two flats and sold two flats for 30 lakhs.The land valued in 1991 was 7 lakhs

how much of capital gains tax should I pay?

for capital gains should I considerthe entitre land araea or only the area which I sold?

Tejas Chokshi

Tejas Chokshi (Expert)
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13 December 2009 Land is always considered as long term capital asset. Also the intent behind holding the land is important, whether the same was with the intent to make construction activity at later stage in time or whether it was held for investment. If the same was held for investment, the tax would be capital gain and if the intent was for business purpose, it should be charged as Income under business profession. In the later case, also the land would be considered as stock in trade and it should be proved to the satisfaction of the income tax authorities.

Once the above is clarified, the tax liability can be deteremined if the income either in business profession or under Capital Gain.

In your case, there are fair chaces that you can treat the land as stock in trade,as you yourself has given the same for development and have sold 2 flats and retained 2 for your own house. The tax arises on the "income" and if there is no income, no tax liability can be arised.

Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2009 Clarification:

I inherited land from my father and after 7 years constructed a house in which I continued to live for more than 30 years.
Because of age and security we decided to
give it for development and then acquired
4 flats as per agreement and sold two of them immediately.
how to calculate Capital Gains using Inflation Index.

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