Capital gains u/s. 45(2) or 45(3)

This query is : Resolved

rajesh (Querist)
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03 January 2013 WE ARE TWO BROTHERS AND HAVING A LAND OF 500 SQ YARDS WHICH IS INHERITED FROM MY FATHERS.WE HAVE DECIDED TO FORM A PARTNERSHIP BUSINESS AND CONSTRUCT AN APARTMENT CONSISTING OF 10 FLATS ON MY INHERITED VACANT LAND. I WAS TRANSFERRED MY INHERITED PROPERTY IN TO MY NEW PARTNER SHIP FIRM IN THE FY. 2011-2012 IN THE FOLLOWING MANER. PLEASE TELL HOWMUCH CAPITAL GAIN TAX IS PAYABLE AND IN WHICH SECTION I.E. 45(2) OR 45(3).

PARTNERSHI FIRM HAS TWO PARTNERS ONLY I.E. ME AND MY BROTHERS WHO IS APPARTMENT CONSTRUCT LAND OWNERS.

1.) ACTUAL COST OF LAND – 100000

2.) AMOUNT RECORDED IN BOOKS OF ACCOUNT – 1795000

3.) FAIR MARKET VALUE – 1850000

4.) YEAR OF PURCHASE – FY – 1991 - 1992

Prakash Kochar

Prakash Kochar (Expert)
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05 January 2013 Calculation of Long Term capital gain u/s. 45(3) will be as under-

Fair Market value of land ----- 925000/-
Less : Indexed Cost of acq.
50000 X 785 / 199 ----- 197236/- = Long term capital gain ----- 727764/-
The year of taxability will be in the year in which such converted stock is sold, along with business income.
Long term capital gain will be chargeble to tax u/s. 112(1)(a)(ii) @20/- + surcharge and SC.
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