Prateek (Top Management) (213 Points)
14 July 2012A land existed in the books of a company in 2003 for Rs. 20,000/- (Very old company very old land)
In 2004 the land was revalued by 2.5 Crore by adding to Land Value in Fixed Assets and same amount was shown as Capital Reserve.
In 2012 the land is now being sold for 3.4 Crore.
On what amount does the IT need to be paid ???
SIDDHARTH KOTHARI
(N.A)
(280 Points)
Replied 14 July 2012
hi ashish,
In your case the ,the income will be considered as the Capital Gain.
It doesn't matter that what amount you have shown in your books of accounts.It doesn''t matter by what amount and when you have revalued the asset in the books of the company for the purpose of the capital gain tax.
The capital gain will be calculaed based on the cost of purchase(as per sale deed at the time of purchase of the land) of the land which is required to be indexed and reduced by the net consideration received by the company.
kailash soni
(CA. FINAL STUDENT)
(63 Points)
Replied 14 July 2012
I completely agree with siddharth.
CA CS CIMA Prakash Somani
(Landmark Group)
(23502 Points)
Replied 19 July 2012
siddharth has got it right...... use below indexation to calculate the gross cost of land
Cost Inflation Index:- Cost inflation index (CII)as notified by Central Government alongwith analysis of the same is as under:
| FINANCIAL YEAR | COST INFLATION INDEX | Increase in CII and 75% of percentage of real inflation allowed | Real inflation % of CII Increase allowed / 3 X 4 |
| 1981-1982 | 100 | ||
| 1982-1983 | 109 | 9 = 9% | 12% |
| 1983-1984 | 116 | 7= 6.422 | 8.563% |
| 1984-1985 | 125 | 9=7.7586 | 10.344% |
| 1985-1986 | 133 | 8=6.4 | 8.5333% |
| 1986-1987 | 140 | 7=5.263 | 7.0173% |
| 1987-1988 | 150 | 10=7.1428% | 9.5237% |
| 1988-1989 | 161 | 11=7.333% | 9.7777% |
| 1989-1990 | 172 | 11=6.8323% | 9.1097% |
| 1990-1991 | 182 | 10=5.8139% | 7.7519% |
| 1991-1992 | 199 | 17=9.340% | 12.4542% |
| 1992-1993 | 223 | 24=12.060% | 16.080% |
| 1993-1994 | 244 | 21=9.4170% | 12.556% |
| 1994-1995 | 259 | 15=6.1475% | 8.1967% |
| 1995-1996 | 281 | 22=8.494% | 11.325% |
| 1996-1997 | 305 | 24=8.5409% | 11.388% |
| 1997-1998 | 331 | 26=7.8549% | 10.473% |
| 1998-1999 | 351 | 20=6.0423% | 8.0564% |
| 1999-2000 | 389 | 38=10.826% | 14.435% |
| 2000-2001 | 406 | 17=4.370% | 5.827% |
| 2001-2002 | 426 | 20=4.926% | 6.568% |
| 2002-2003 | 447 | 21=4.929% | 6.573% |
| 2003-2004 | 463 | 16=3.579% | 4.773% |
| 2004-2005 | 480 | 17=3.6717% | 4.896% |
| 2005-2006 | 497 | 17=3.5416% | 4.7222% |
| 2006-2007 | 519 | 22=4.4265% | 5.902% |
| 2007-2008 | 551 | 32=6.1657% | 8.221% |
| 2008-2009 | 582 | 31=5.6213% | 7.501% |
| 2009-2010 | 632 | 50=8.591% | 11.455% |
| 2010-2011 | 711 | 79=12.36% | 16.485% |
| 2011-12 | 785 | 74=10.44% | 13.8772% |
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