Kunal (Manager) (46 Points)
13 May 2010Hi,
I have sold a property within 3 years ( on Feb '10) of purchase with capital gains of ard 3 lakhs and acquired a new property (April' 10) jointly with my wife. Cost of the new property is more than the cost of the old property which i sold.
Is there any way i can save tax on this transaction ?
Which from do i have to fill while filling up ITR for the year ?
Neither me nor my wife hold any other property.
Regards,
Amir
(Learner)
(4016 Points)
Replied 13 May 2010
Dear Sir,
The above transaction will be classified as "Short Term Capital Gains"...
As such no tax saving schemes are available for this case (acquisition of new house grants relief in case of Long term gains)...one can set off Short Term Capital loss with this gain...
{Remember - Short Terms Loss on sale of shares/MF on which STT stands paid cannot be setoff with the above gain}
Regarding ITR forms - the answer wil depend upon ur other incomes.....Most likely ITR 2 will be required...
Kunal
(Manager)
(46 Points)
Replied 13 May 2010
Thanks for the revert , pls clarify another point .
Can i increase my cost price of the sold property by taking into account , money i had spent in furnishing the interiors (Currently i am adding only the cost priice and the stamp duty to calculate the gain of Rs 3 lakhs)
CA Shiv
(Business Controller)
(2987 Points)
Replied 13 May 2010
No you cannot add the cost of furniture to the cost...
.. You had done correctly for the cost price and stamp duty.....
Amir
(Learner)
(4016 Points)
Replied 13 May 2010
Dear Sir,
Can u pls throw some more light on "furnishing".....was it things like "hardware & ceramics" or fee paid to "interior decorator" etc
or proper furnture like "couch & table etc?? and if yes then whether this has also been transferred along with the house??
CA Shiv
(Business Controller)
(2987 Points)
Replied 13 May 2010
Amir, a question to you...
Will it make any difference if its transfeered... When you calculate the tax, cost is taken from the purchase deed and stamp duty from documents. I dont think interior and all is covered in cost by IT. Normally if its interior deco in home than it has to be transferred to other person....
IF have any case law than it wil be nice...
Kunal
(Manager)
(46 Points)
Replied 13 May 2010
Amir,
It was in the form of Tiling , Grilling the house , Bathroom fittings , Modular Kitchen , Electrical Fitings .
I had removed the Sofa and AC.
Does this change the cost price in anyway ?
Amir
(Learner)
(4016 Points)
Replied 13 May 2010
Shivang sir,
Sry that I waited for the reply from the author....
Kunal sir,
Yes the amount spent on Tiling, grilling, sanitary works , electrical fittings can be included in Cost of acquisition...
Cost of AC & sofa,etc cannot be claimed even if they are transferred along with the house.....
CA Rahul Jain
(CA)
(1162 Points)
Replied 13 May 2010
agree with amir...the amount spent on tiling, sanitary etc are actually the 'cost of improvement' which is allowed to be deducted from the sale consideration when computing CG.
Nicky
(Chartered Accountant)
(245 Points)
Replied 13 May 2010
Amir pretty well answered....
I have a slightly different opnion wanting to know yours on that one too...
See A/c, Sofa's and all can be called personal effects to an extant any money say recd towards them wouldn't be called capital gains per say.. so it is possible to bridge the transaction not in the given case but in an case where they are trasnferred
Kunal
(Manager)
(46 Points)
Replied 13 May 2010
Amir,
Now In essence what i gather is that i can add the cost of improvement to the cost of house . This takes me to another point is that does IT dept ask for proof for these fittings , or can i increase the cost of the house in " good faith " and fill up the ITR
regards
Amir
(Learner)
(4016 Points)
Replied 13 May 2010
Hi Nicky sir,
After a long time.......:)
I was also thinking on the lines of Personal effects when I asked for the details of "furnishing"...
So if AC's / Couch , etc are transfered then it should be treated as personal effects only & any amount realised for that should be reduced to calculate gain on sale of house but if someone tries to manipulate things like spilover of sale consideration betwwen the two then I dont think the ground of personal effect can come to rescue....
Nicky
(Chartered Accountant)
(245 Points)
Replied 13 May 2010
Yes was a tad ocuupied ...
We here discuss only planning and not evasion:.), jokes apart agree to your say
Amir
(Learner)
(4016 Points)
Replied 13 May 2010
Dear Kunal Sir,
As such you are not required to submit the details/proof of expenses on your own..Its only when a query/notice comes from the Department side then u have to produce all documentary evidence before your AO....So better to keep the genuine expenses only..
If u have not preserved the bills etc of the expenses then u should try to get duplicate invoices/certificates from the supplier etc...
Kunal
(Manager)
(46 Points)
Replied 13 May 2010
I will keep genuine expenses only , but you know how small time contractors work - they take cash payments and dont give bills to evade tax , so even though i have incurred the cost but will not bills right away. Photographs of the house can be provided (but dont know if it will work )
Anyways if the AO asks for it them will look into some way for arranging the same or else will pay up what ever i would have saved due to house improvement portion .
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