Sunshine (Helping All) (10575 Points)
11 June 2010suppose i buy a house in 1990-91 for rs 10 lakhs nd incur some cost of improvement in 1995-96 worth rs 5 lakhs.......i gift it to mr.X in 1999-00....he sells the house in 2009-10 for 20 lakhs.........while computing LTCG in the hands of mr.X.,...indexation of the cost we take the base of 1999-00 for the initial cost of 10 lakhs .....but fr the cost of improvement which year will we take as a base for indexing?1995-96 or 99-00???
Sunshine
(Helping All)
(10575 Points)
Replied 11 June 2010
Mr. Girish Ahuja wants the cost of improvement to be indexed taking 95-96 as the base year....is this treatment correct?
Ankit CA and CS
(Manager - Accounts)
(204 Points)
Replied 11 June 2010
For Cost of improvement base year is to be taken as the year in which cost was actually incurred...
What is Indexed Cost of Improvement?
Indexed cost of Improvement is calculated as under: -
|
Cost of Improvement --------------------------------------------- Cost Inflation Index number of the previous year in improvement was made to the asset. |
X | Cost Inflation Index for the year in which the asset is transferred |
it will help you....
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8311 Points)
Replied 11 June 2010
Cost of Improvement should be calculated by taking base as in the year in which imrovement expenditure was incurred i.e 1995-96.
And computation will be
Rs. 20 Lacs
Less: Indexed cost of acquisition
(i.e Rs. 10 Lacs* CII of 2009-10)/CII of 1990-91
i.e Rs. 10 Lacs*582/182
Less: Indexed cost of Improvement
(i.e Actual cost of Improvement*CII of 2009-10)/CII of 1995-96
i.e Rs 5 lacs*582/281.
Rs. 20 lacs i.e sale value will exceed the indexed cost of acquisition & Improvement.
Hence it would be LTC Loss.
Sunshine
(Helping All)
(10575 Points)
Replied 12 June 2010
well...1st of all CII of 2009-10 is 632 nd the indexing of initial cost is done taking base year of 1999-00 in which mr. X got the property as a gift
shrikant kalyani
(CA-Final Student)
(60 Points)
Replied 13 June 2010
Treatmaent done by Dr. Girish Ahuja is Correct...Because for improvement Base yr is always the yr in which Exp. has incurred...
Indexed cost of Improvement
i.e Actual cost of Improvement*CII of 2009-10)/CII of 1995-96
i.e Rs 5 lacs*632/281.
C.Balaji
(Learner)
(1867 Points)
Replied 13 June 2010
Agree with shrikant kalyani.....
INDEXED COST OF IMPROVEMENT = ACTUAL COI * CII OF 2009-10 / CII OF 1995-96....
LIVE Course on Foreign Exchange Management Act (FEMA)(with recording)
LIVE Course on Foreign Exchange Management Act (FEMA)(without recording)
CAclubindia
