in case of income from other sources ..if a gift is taxable....then it is to be taken on fair maket value .......in capital gain when the gift recieved under will or inheritance is sold cost to previous owner is taken...it is creating confusion for me ...as in one we are taking the value of asset on fair market value and in one ...in cost to previous owner.........pls explain me ....
4 Replies
Aravind..
(CA)
(1262 Points)
Replied 06 November 2010
we have two cases here- the best example for your question is ipcc may 2010 question.
cost of previous owner has to be considered when a capital asset which was previously received as gift is transfered in this AY....
Capital gains will be calculated on the basis of cost whereas other sources is based on fair market value.
Aravind..
(CA)
(1262 Points)
Replied 06 November 2010
another difference is when a gifted property is sold it is taxable in hands of the seller whereas when the gift is received above FMV it is taxable in hands of the receiver..
Aravind..
(CA)
(1262 Points)
Replied 06 November 2010
the keypoint here is whoever is benefited ll be taxed.... you can clearly demark if you are able to identify the benefits derived by each person involved...
Azim Khan ACA,CS,CMA*,LLB*
(Proprietor)
(1312 Points)
Replied 06 November 2010
Why are you getting confused? its very simple, please understand,
under income from other sources, an assets is valued at FMV beacuse it is only an asset in general.not necessarily a capital asset.(i.e.it may be a movable/immovable asset) it may be an asset of personal in nature also.
whereas under Capital Gain, the assets must be A CAPITAL ASSETS U/S 2(14).
it means a property of every kind held by the assessee whether or not connected with the Business/Profession. i.e. Movable/Immovable/Tangible/Intangible subject to some exclusions.
Thanks
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