plz CALCULATE

11 Replies

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CA. Shikha (Chartered Accountant) (4143 Points)

25 November 2008

cOST OF LAND PURCHASED IN 86-87- 2.25 LACS

COST OF CONSTRUCTION OF BLDG IN 99-00- 12.00 LACS(ON WHICH DEP CLAIMED EVERY YEAR )

LAND & BLDG SOLD IN 07-08 - 39.50 LACS

MY QUERY IS WHETHER THERE WUD BE LONG OR SHORT TERM CAPITAL GAIN AND HOW MUCH ????????

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LONG TERM CAPITAL GAIN

SALES CONSIDERATION

LESS: INDEXED COST OF ACQUISITION (225000*551/140)

LESS: INDEXED COST OF IMPROVEMENT (1200000*551/389)

CA. Shikha (Chartered Accountant) (4143 Points)
Replied 25 November 2008

WHETHER THIS SOLUTON IS RIGHT ????????

HOW IT IS TO BE TREATED ????????

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CA Abhash Mishra (Chartered Accountants) (598 Points)
Replied 25 November 2008

Long Term Capital Gain

Building 31/03/2008
Sales Consideration		3950000
Less:indexed Cost
Land	885536
F.Y. 1986-87 225000/140*551
Building	1699743
F.Y. 1999-2000 1200000/389*551
		2585279
		1364721

jitender (Article) (33 Points)
Replied 25 November 2008

hi friends

i am doing articleship in govt organisation means outsourcing

i want to know that is earning of govt organisation liable to income tax on their earing

the another question is : consolidated fund of india attract income tax?

CA. Rajeev Aggarwal (Chartered Accountant) (3424 Points)
Replied 25 November 2008

Firstly

As per CIT vs C. R. SUBRAMANIAN :- In case of sale of a land along with the building constructed thereon, for the purpose of Capital Gains, Site & Building were treated as seperate assets and period of holding to be checked for both assets separately.

Hence in the above case capital gain will be Long Term Only

Secondly

Now the capital Gain is (as per information provided)

Sale Consideration 39.50 Lac

Less: Indexed COA 12 Lac * 551 / 389 = Rs. 16,99,473

Less: Indexed COA 2.25 Lac * 551 / 140 = Rs. 8,85,536

Hence Capital Gain is Rs.13,64,991

Pls let me know if there is any mistake on my part

Rajat Kedia ACA CS MCOM (Assistant Manager) (613 Points)
Replied 25 November 2008

correct

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CA. Yogesh Malpani (Chartered Accountant) (216 Points)
Replied 25 November 2008

Land & Building to be treated as seperate assets and period of holding to be checked for both assets separately.

Sale consideration shall be divided in parts as per the agreement of sale.

Long term Capital gain for Land and hence indexation should be done

Short term capital gain for building as per Sec 50 which states that incase of depricable assets there will be only short term capital gain/loss. so no indexation

CA Sunny Sharma (Service) (234 Points)
Replied 25 November 2008

Hi Shikha, Rajeev, Abbasmishra

I do not agree with your views as on building you are claiming depriciation under PGBP head and then while calculating LTCG you are dedcuting whole 12 Lac , it would mean that you claiming double credit on depriciable amount.

Solution provided by Yogesh seems to be correct

CA Sunny Sharma (Service) (234 Points)
Replied 25 November 2008

Sec 50 & 50A suports the solution

Sourav Modi (Learner!) (306 Points)
Replied 15 January 2009

it was judicially held that where land and building are sold together, land being long term capital asset and building being short term capital asset either because it is newly constructed or it is so treated by virtue of sec. 50, separate computations shall be done in regard of both land and building and sale consideration should be split up so as to compute STCG in regard of building applying block concept and LTCG in regard of land applying normal CG provisions.

from exam point of view if this problem is taken, it can be further added that in the absence of opening WDV, the computation of capital gain in regard of building shall be done applying normal CG provisions and no split up is required henceforth.

Sourav Modi (Learner!) (306 Points)
Replied 15 January 2009

one issue though remains here is when opening WDV is given but split up of consideration in between land and building is not given.......

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Anirudh (Student/Articled Trainee) (45 Points)
Replied 09 February 2009

Originally posted by :CA. Yogesh Malpani
"	Land & Building to be treated as seperate assets and period of holding to be checked for both assets separately. Sale consideration shall be divided in parts as per the agreement of sale. Long term Capital gain for Land and hence indexation should be done Short term capital gain for building as per Sec 50 which states that incase of depricable assets there will be only short term capital gain/loss. so no indexation	"