How to tax this? A typical case.

Tax queries 1382 views 6 replies

Ankit

77 Points Joined October 2011

An Assessee had a property which was used for business purpose (medical) till 31.3.2007. After that Assessee transferred that property from Properietorship to Individual. He claimed deprication till the year 2007 and could not claim it thereof as he didnt use the property after 2007. He rented the property from 2007 and now he wants to sell it to an individual.. The property is purchased in 1998 and he intends to sale the property and the amount he receives wants to invest in house property .

WHAT WILL THE TAX IMPLICATION FOR THE ASSESSEE??

IS THE TRANSFER OF PROPERTY IN THE YEAR2007 VALID? THE GAIN ARISING THEREOFF WILL BE LONG TERM/ SHORT TERM??

WILL HE GET ANY BENEFIT FOR THE INVESTMENT IN FUTURE?

Replies (6)

Paras

Mcom CA Final

122 Points Joined July 2009

Status - Individual

Transfer- Valid

Cost will be WDV on 31-3-2007

Short term

NO BENEFITS TO AVAIL AS THE TRANSFER IS SHORT TERM.

For investment purpose you have to hold it atleast for 3 years .

Shriram Ramachandran

IPCC Student CWA Inter & Processing off

492 Points Joined October 2010

ANkit,

Status - Individual

Transfer- Valid

Cost as per 1998

long term

BENEFITS can be availed if u invest the LTCG in another house property before you file your return

Regards,

R S hriram

CA Ksheerabthi Nathan

CA in practise

167 Points Joined August 2010

wdv as on 31.3.07 will be taken as cost

it is a LTCG

so exemption can be availed under sec 54 by investing in other house

CA Tarun Jagdish

8893495263

153 Points Joined March 2011

In my opinion.. It is a depreciable Capital Asset till 2007. Then he started letting out the building.. So in my opinion in 2007 it should be treated as a Short term CApital Gain while it is transferred from Depreciable Asset to a Non Depreciable one.. Sale value will be the value at which it is transferred..

Secondly again when this rented building is sold, then Sale consideration will be the Actual amount received less Value at which the asset was converted from a Depreciable asset to a NON DEPRECIABLE ONE..

in sHORT WHEN YOU CLUB BOTH .. STCG WILL COME ON SALE VALUE LESS WDV..