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Long term capital gain query

mak ( ) (35 Points)

22 March 2013

Hello CCI members,

Plz help me out for the below given practical case.

a) Mr. X purchased a non agricultural land in 1954 for approx Rs.5000. On his death in 2006, the same property was inherited by his 10 children.

The said property was sold in 2012 for around 95lakhs n d income was divided equally among 10 members. How to calculate LTCG in d hands of each of the 10 assessees?

b) Moreover, the transfer of capital asset is by way of inheritence. If an inherited land property sold and income received by children does it amounts to 'transfer' of capital asset? I've stuck up here.

pls clear this . . .

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6 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 22 March 2013

In case of inherited property, the legal legitimate heirs of the deceased are entitled to get equal shares in the sale consideration from the proeprty. The Fiar Value of the land as on Apr81 or purchase price as on the date of purchase whichever is higher shall be taken as cost of acquisition. The indexed Cost of acquistion shall be divided equally among all the 10childeren alongwith equal share of sale consideration. balance LTCg would be taxable @ 20% in each of the children; hand. However they can save tax by investing in 54EC bonds or by purhcaseing house property and claiming exemption u/s 54F.

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VIKAS.A (SOMETHING IS BETTER THAN NOTHING) (1095 Points)
Replied 22 March 2013

AGREED WITH GIRIDHAR SIR.

Mihir (Wealth Manager) (5293 Points)
Replied 22 March 2013

Find the value of the property as of 1981. That would be the cost of acquisition. The indexed cost of acquisition, however, would be 2006.

mak ( ) (35 Points)
Replied 26 March 2013

Originally posted by : Giridhar S Karandikar
	In case of inherited property, the legal legitimate heirs of the deceased are entitled to get equal shares in the sale consideration from the proeprty. The Fiar Value of the land as on Apr81 or purchase price as on the date of purchase whichever is higher shall be taken as cost of acquisition. The indexed Cost of acquistion shall be divided equally among all the 10childeren alongwith equal share of sale consideration. balance LTCg would be taxable @ 20% in each of the children; hand. However they can save tax by investing in 54EC bonds or by purhcaseing house property and claiming exemption u/s 54F.

Dear sir,

In addition to this case, the following expenses have been incurred.

a) Rs. 100000 paid for brokerage(total).

b) Around Rs. 60000 have been spent on producing legal documents such as title deeds, agreements, khatha, n travelling expense.

Can the assessees claim the above expenses for arriving at taxable LTCG? Could it be(Rs.160000) divided and borne(shown) equally by 10 assessees? Thanks in advance...

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 26 March 2013

Yes expenses incurred in connection with the transfer can be claimed as deduction from the sale consideration. So each of you can claim 16000 as a deduction out of the total exp of Rs. 1.60lacs

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mak ( ) (35 Points)
Replied 28 March 2013

Originally posted by : Giridhar S Karandikar
	Yes expenses incurred in connection with the transfer can be claimed as deduction from the sale consideration. So each of you can claim 16000 as a deduction out of the total exp of Rs. 1.60lacs

ok sir... thanksss a lottt for clearing my doubts.