How capital gain will be taxed

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virendra (Querist)
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07 June 2012 A Residential building owned by my grand mother, now a builder is offering that he will make 4 floor building on that property, and after construction he will give three floors to my grand ma and will take only one floor in that newly constructed building and for that he will pay Rs. 35 lacs through cheque.

what will be capital gain consequence on my grand ma, how it will be taxed, and whether exemption u/s 54 available

Ca Anand Dubey

Ca Anand Dubey (Expert)
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07 June 2012 In the entire process your grand mother is selling only third floor of the building ,which doesn't exist at present, and also giving right to do construction .
Capital gain can be calculated as follows:-

1. Rs. 35 lac as sales consideration for sale of right to make construction the cost of acquisition of right will be nil and exemption u/s 54f can be availed.

2.After completion of building the sales consideration of floor given to builder will be cost of construction of entire building or market value of the floor less 35lacs (as it was already taxed) and the cost of acquisition will be actual cost of the house + cost of improvement as the expenses done by the builder for construction attributed to the particular floor . exemption u/s 54 can be availed

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