Long term Capital Gain

This query is : Resolved

CA. Satish Singla (Querist)
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27 November 2007 Hello Sir

My Grandfather purchased a commercial Land at Rs.28000 in 1979 & after his death this shop is transfered to my father(Age 60 Years) and his brother(Age 70 Years).Now they wanted to sell this shop at Rs. 12.50 Lacs.My father & his brother also incurred some improvement costs on this Plot & build a shop in 1982 by spending 50000 Rs. on that.but they donot have any Documentary proof in support of that.
Now querries are as follows.
1. is it necssary to give any proof for cost of improvement.
2.Can both of them take advantage of slab exemption on their portion of LTCG(assuming they donot have any other total Income)
3.can they take cash in consideration of this shop.
4. Is their any other exemption available in this case.

R.V.RAO

R.V.RAO (Expert)
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27 November 2007 CAPITAL GAINS ON LAND AND BUILDINGS WILL BE SEPARATELY COMPUTED AND TAXED .
THIS IS ALSO GOOD FOR THE ASSESSEE.
SALE VALUE LESS ORIGINAL COST OF ACQUSITION AND IMPROVEMENTS WILL BE COMPUTED IN BOTH CASES IF APPLICABLE.
IF YOU OPT FOR INDEXATION IT IS TAXED @20 % .
IF ONE DOES NOT OPT FOR INDEXATION IT IS 10% TAX STARIGHT.
BASE INDEX (IF INDEXATION IS OPTED) IS TAKEN AS APR 1981 TO MAR 1982= 100.
CURRENT YEAR COST OF INDEXATION IS 551.
IF THE ASSESSING OFFICER IS NOT SATISFIED WITH YOUR EXPLANATION AS TO THE COST vs benefits of improvements, then only he may deamand proof or A CERTIFICATE FROM VALUER OR A COMPETENT AUTHORIty to satisfy himself on cost of improvements.
ANY EXP. INCURRED TO INCREASE THE VALUE OF THE CAPITAL ASSET IS TREATED AS COST OF IMPROVEMENT.
ALSO REMEMBER A DEPRECIABLE ASSET IS NOT ELIGIBLE FOR INDEXATION BENEFIT.
EXP. INCURRED BEFORE 1 ST APRIL 1981 ON IMPROVEMENTS OF A CAPITAL ASSET IS TAKEN AS ZERO.
INDEXATION IS APPLIED BOTH FOR COST OF ACQUSITION AND COST OF IMPROVEMENT.
EXP. ON TRANSFER ARE ALSO ALLOWED AS DEDUCTION WHILE COMPUTING CAPITAL GAINS.

The capital gains will have to be computed on a proportionate basis by bith, by taking the proportionate cost of acquisition of the property by both.
WHEN capital gains tax which is due is paid, it is IMMATERIAL , HOW one RECEIVEs THE CONSIDERATION. ONE MAY TAKE PAYMENT BY CHEQUES, WHICH IS SAFE.
R.V.RAO