Ashok Asthana (Secretary) (669 Points)
03 May 2011Mr. X sells part of his jewellery and receives the payment of Rs. 300,000 by cheque. The same is deposited in his bank and opens a fixed deposit.
Whether the consideration received against sale of jewellery be treated as taxable income or the interest earned on FD will be taxable.
CA. Arpita Singhal
(Partner)
(100 Points)
Replied 03 May 2011
Jewellery is a capital asset. So Capital Gain should be calculated on sale of jewellery. Entire sale consideration will not be taxable only the capital gain on sale will be taxable.
Interest on FD will be included in taxable income as income from other sources.
Harpreet
(* * * * * *)
(1670 Points)
Replied 03 May 2011
The profit part on sale of jewellery is taxable for you as well as when you make FD then interest thereon also be taxable for you.
CA SAURABH GARG
(Working with MNC)
(360 Points)
Replied 03 May 2011
Ashok,
Understand these are two different transections.
One is related Capital Assets and taxable under the head Profit and Loss of Capital Assets
Second is related to Investment in FD and taxable under the hear profit and loss from Income from Other Sources
CA.Naveen Kailkhuri
(CA)
(38 Points)
Replied 03 May 2011
@ Ashok..
agreed wih Saurabh. account for both.. Capital Gains and Income from Other Source.
Ashok Asthana
(Secretary)
(669 Points)
Replied 04 May 2011
Agree with the experts. How will the capital gains will be calculated. The jewellery si old and has been inherited. Say the sale value as on date is Rs. 300,000.00. How will the profit from sale be worked out ?
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 04 May 2011
In case your ancestor had bought the ornaments before 1st April, 1981, then the cost of ornaments will be the fair market value (FMV) as on 1st April, 1981. You can obtain the FMV from a government approved valuer. Find out if your jeweller is an authorized valuer.
get indexed cost on the date of sale, as per the valuation done on basis of 1981 basis
Amol Gopal Kabra (CA,CS,DISA)
(Practicing CA)
(8539 Points)
Replied 04 May 2011
1. The sale of jewellary shall be subject to capital gain. The amount of gain shall depend on the date of acquisition of the jewellary and shall be taxable as short term or long term as applicable.
2. The interest on Fixed Deposit shall be charged to tax under Other Sources.
3. If the Fixed Deposit is made in a Scheduled Bank for a period of 5 years or more, then you can claim a deduction u/s 80C of the Act in gross upto Rs. 1 Lakh.
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