Tax payable on sale of non recorded house property..

This query is : Resolved

Bhavdip (Querist)
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23 December 2014 Land purchased in 1933 for rupees 55 only, house constructed in 1983/84. Expenditure for house construction was rupees 70,000 only. That particular house sold on 26/02/2014 for rupees 11,21,000 only.

What will be amount of tax if fair value of that land on 1.4.1981 was rupees 10,000 only?

How to treat above transaction Income tax and Accounting if land and building not recorded in Income tax and Accounting?

Guest

Guest (Expert)

23 December 2014 First include house property at fair value by crediting Capital (individual) and debiting land.

Then calculate indexed value and capital gains on the same.

The remaining procedure is the same as normal.

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CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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24 December 2014 Full value consideration 1120000
Less Indexed cost of acquisition: (93900)
Less Indexed cost of improvement : (566638)

Long term capital gain 460462

93900=10000/100*939
566638=70000/116*939

You have two way to maintain books of account,
1st by directly booking credited sale proceeds in Individual capital account
Bank A/c 11,21,000
To Capital A/c 11,21,000

2nd by first create asset in books then sold
Asset 55
To Capital A/c 55

BAnk A/c dr. 11,21,000
to Asset A/c 55
to profit on sale/capital account 11,20,945

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Bhavdip

Bhavdip (Querist)
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26 December 2014 Is it justified to take face value as on 01.04.1981 as cost of acquisition even if original cost of acquisition is available?

If yes, then as per which section it is permissible?

Guest

Guest (Expert)

26 December 2014 Explanation (iii) to Section 48 contains the provision for indexed cost of acquisition. You may refer to that.

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Bhavdip

Bhavdip (Querist)
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26 December 2014 Thank you Adit Sharda