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Confusion to understand 56(2) vii

25 February 2014

Dear Sir ,

I bought a flat @ 43.65 L while market cost or stamp duty is paid on 55.35L.I Know as per 56(2) Vii the diffrence 55.35-43.65 will be considered as Other source of income this year and taxable.

My Questions are

1. This property is registered to my name and my wife name , can i show entire difference in my wife account for IT calculation so I could be out of liability as i am already under 30% slab. My wife is house wife and doesnt earn

2. We paid 3.87 L as stamp duty could it be added into Flat cost to minimize the difference.

3. We spent 4.1 L as renovavtion in flat (bills are with me) could this amount help to minimize tax liability.

Kindly Help me

Manoj 9312757730

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1 Replies

Shivani Mittal (Practice) (425 Points)
Replied 25 February 2014

1. The entire difference cannot be claimed in your wife's return solely. It has to be apportioned between both of you in the holding ratio.

2. The taxable difference will be the cost of acquisiton (excl. stamp duty) less stamp duty value as the sec 56(2) states "any immovable property transfered,—

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration."

In my opinion, consideration here means the amount paid to the seller which is excluding stamp duty. Stamp Duty will form a part of cost of acquisition(COA) for the purpose of computing capital gains in case u sell the property.

3. Renovation will also be considered as a part of COA for the purpose of computing capital gains in case u sell the property and only if such renovation is a capital expenditure.