query on capital gain

Tax queries 870 views 3 replies

Gaurav

student

89 Points Joined October 2008

Plz help me???

There is a property(land) which is held by Mr.A.On the death of Mr.A the property was inherited by his sons B,C.There was an arrangement made between B,C and D,that Mr.D will be constructing a residential complex on that land and after completing the construction B and C will be given a flat each.(purchase of land 03-06-1977)

The construction was completed and as per the agreement a flat was given to B and C each respectively.(flat was given on 15-02-2003)

Mr.C sold the flat on 13-06-2008.

What will be date of acquisition and the cost of acqistion to be considered for the sale of the flat(by Mr.C)???

Plz do let me know about the tax treatment for such a case!!!

Replies (3)

Jagdish Bhalia

Practicing CA

453 Points Joined January 2009

1.Cost of acquisition would be fair market value as on 01.04.1981

Capital Gain calculated as under

Sale consideration xxxx

Less cost of acquisition (1/2) xxxx

Capital Gain xxx

PiyushAgrawal

Chartered acooutant in practice

575 Points Joined September 2008

Originally posted by :Jagdish Bhalia
"	1.Cost of acquisition would be fair market value as on 01.04.1981 Capital Gain calculated as under Sale consideration xxxx Less cost of acquisition (1/2) xxxx Capital Gain xxx	"

i think it also include cost of improvement.

Ritesh Sharma

58 Points Joined December 2008

It looks like it is jopint development agreement. In that case there will be two components:

One: This will be the sale of land comprised in the portion of construction that the builder(D) retains. In case we assume that the total land was 1000 sft total construction was 5000 sft and the area that A and B got was 1500 sft. In that case the land sold will be 1000/5000X3500 i.e 700 sft. You need to calculate the long term capital gains tax accordingly.

Two: The sale of apartment will be taxed again