Tax treatment of capital gain or transfer of land

Tax queries 349 views 6 replies

Arundas

CA Practice

63 Points Joined July 2015

Hi guys,

One difficult practical problem arouse today. A land was sold on March 2012 and the receipts were deposited in a bank in FD by one of my relatives. Today notice came from income tax that he must file return of income in 10days or else actions will be intiated.

The said land was acquired in 1950 by the said persons grandfather and was in possession of his mother when it was transfered and his mother is not a senior citizen. No return was filed on that date.

The problems that i noticed are

Its in a rural area and was used for agri purposes for some period of time. How to make sure if the said land is a rural land or not. The area of 8 kms aerially is to be considered or back then it was not aerially

How to compute the FMV as on 1.4.81

Can some amount be added up and shown as improvement costs even though no evidence is there in hand related to the said improvements.

Is there any chance of making the payments in installments if the said rural area thing wont work out

My relative is supposed to file a return within 10 days and the return is to be filed for the Assessment Year 13-14 right?

Please reply guys.. Its a real emergency!!!!

Thank you

Replies (6)

Arundas

CA Practice

63 Points Joined July 2015

Thank you for the no reply guys.. Really appreciate it!

S. Shiroor

Others

1212 Points Joined July 2015

You will get the Market value in april 1981 from registrars of land record/ Talathi of that area.

If the land in rural area is sold there is no Capital gains tax.

Talathi/land registrar can give certificate of status - urban/rural

This can be shown to IT dept along with ur return

S. Shiroor

Others

1212 Points Joined July 2015

In order to check mal practice , Finance Bill 2012-13 has proposed to amend the provisions of section 55A of the Income-tax Act to enable the Assessing Officer to make a reference to the Valuation Officer where in his opinion the value declared by the assessee is at variance from the fair market value. Therefore, in case where the Assessing Officer is of the opinion that the value taken by the assessee as on 1.4.1981 is higher than the fair market value of the asset as on that date, the Assessing Officer would be enabled to make a reference to the Valuation Officer for determining the fair market value of the property.

This amendment will take effect from 1st day of July, 2012.

Arundas

CA Practice

63 Points Joined July 2015

Thank you soo much.

The current place which is under discussion is not in the corporation limits and it is in a panchayath. So can the same be treated as rural land?

S. Shiroor

Others

1212 Points Joined July 2015

The status of land at the time of sale will be taken.

A approved valuer should be appointed for the fmv on 1/04/1981.

You can ask to an Old lawyer in the area or land records &registration office.

If the land is rural in nature - there is no LTCG.

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

I wish to add that since the property was sold in march 2012, at that time capital asset excluded agricutural land which is

land situated-:

(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or

(b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette

If the condition mentioned in (a) above is not satisfied then for (b) you will have to refer the relevant notifications issued in this behalf. You will need to tell the area.