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Plz answer

sahil (LEARNER) (371 Points)

19 February 2010

1. Conversion charges to get house freehold – Rs 5 lacs

2. Lawyer Fees – Rs 4 lacs

3. Brokerage – Rs 10 lacs

4. Evicting Occupants- Rs 6 lacs

5. Interest on Loan taken for above-Rs .50 lacs

Can these expenses be claimed while calculating capital gain?

What is the Position of capital gain tax, is it Short term or long term?

How much will be capital gain?

is indexsation apllicable? if yes frm which yr?

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9 Replies

ANKSS (CA) (151 Points)
Replied 19 February 2010

only brokerage can be claimed, date of inheritance shall be the date of acquisition & hence ltcg i.e. 2cr-10lacs-27lacs/100*indexation of fy 09-10=????? u can calculate

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C.Balaji (Learner) (1867 Points)
Replied 19 February 2010

Mr.Sahil...

According to me, you can claim legal expenses and brokerage exp....which comes to Rs.14 lacs

And it will be LTCG.....Date of Acquisition relates back to the previous owner...1.4.81...

Since it is a LTCA Indexation benefit will be available...

CII for f.y. 09-10 is 632...

LTCG
sale consideration	20000000
Less: Selling exp/legal exp	1400000
Net consideration	18600000
Less : Indexed Cost of Acquisition	17064000
	1536000

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Amir (Learner) (4016 Points)
Replied 19 February 2010

Dear Sahil,

1) Expenses-

a) Conversion charges to get house freehold - YES it can be claimed

b) Lawer's Fess - would depend upon the purpose for which lawer was hired

c) Brokerage - would depend upon the purpose for which it was paid

d) Evicting occupants - It was held as an allowable expenditure in one of the judgement but the facts may change the answer becos in that case the ocupants were hutment dwellers.

e) Interest - It will not be allowed

2) Capital Gain will be Long Term

Indexation will be applicable from 01.04.1981

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Ameet (L) (1678 Points)
Replied 19 February 2010

Conversion charges to get house freehold – Rs 5 lacs - Yes allowed.

Lawyer Fees – Rs 4 lacs - Yes allowed

Brokerage – Rs 10 lacs - Yes allowed

Evicting Occupants- Rs 6 lacs - Yes allowed

Interest on Loan taken for above-Rs .50 lacs - Not allowed

IT WILL BE LIABLE FOR LONG TERM CAPITAL GAIN TAX AT 20 % .

YES U WILL GET BENEFIT OF INEXATION.

SALES VALUE 2,00,00,000

-EXPS 25,00,000

NET CONSI 1,75,00,000

-INDEX COST 1,70,64,000

NET GAIN 4,36,000

TAX 87,200

1 Like

shushantsinghal (BCOM(HONS),C.A) (283 Points)
Replied 19 February 2010

hiii ..

since sahil did not mention the year in which property is acquired by his wife along with sisters then how can we indexation......COA SHALL BE TAKEN AT 1.4.1981

2700000/year of acquired*632

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sahil (LEARNER) (371 Points)
Replied 19 February 2010

Originally posted by : sahil

QUES. My wife along with three sister inherited the Residential house as per will of their mother . The house was constructed before 1.4.81 & the cost of property as on 1.4.81 was Rs 27 Lacs as per valuer.The sisters got the house vacated from tenants & got it free hold in F.Y 09-10.They also sold house in F.Y 09-10 for Rs 2 crore. They have spend the following expenses

1. Conversion charges to get house freehold – Rs 5 lacs

2. Lawyer Fees – Rs 4 lacs

3. Brokerage – Rs 10 lacs

4. Evicting Occupants- Rs 6 lacs

5. Interest on Loan taken for above-Rs .50 lacs

Can these expenses be claimed while calculating capital gain?

What is the Position of capital gain tax, is it Short term or long term?

How much will be capital gain?

is indexsation apllicable? if yes frm which yr?

i think the indexsation is not applicable becoz the ladies get house free hold in 09-10 & sell in 09-10,so indexation is not taken frm 1981 but frm yr in which house firt owned by assesee.i.e 09-10(freehold) plz reply

C.Balaji (Learner) (1867 Points)
Replied 19 February 2010

Mr.Sahil...

Please follow this link....

https://www.itatindia.com/Datafolder/flaash/Flashbn10-11-09_1.htm

C.Balaji (Learner) (1867 Points)
Replied 19 February 2010

Mr.Sahil...

Please see this case law too.....

Mrs.Pushpa Sofat v. ITO [2002] 81 ITD 1 (chd.) (SMC)...

In this case the house was acquired around the year 1972 by the assessee's father and the assessee inherited the property through a will left by her father. The assessee's father expired on feb 17, 1991 and the assessee disposed of property during the assessment year 93-94. The issue arose whether index point 223 pertaining to the acc. year 91-92 ( the year during which the father of the assessee expired) should be adopted or index point of 100 pertaining to april 1 1981 should be adopted. The appellate Truibunal after referring to the provisions of sec 48 and 49 (1) held that the cost of acquisition of the asset has to be deemed to be the cost for which the previous owner had acquired it. The tribunal therefore ultimately held that the point 100 pertaining to April 1 1981 should be taken as the indexed cost of acquisition to work out the CG and as the cost of property by applying the cost inflation index in terms of section 48 (1) (a) was more than the sale consideration it was held that no taxable CG accrued to the assessee...