Capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 March 2013 My father in law has aquired a 50% share in a property built in 1965. The property was divided and transfered to his name in Jan 2011. He died in 2011 Nov. The property was transfered to my wife, her sister and mother. Now we want to sell it. How capital gain would be calculated? How can three of them show it in IT return?

CA. PIYUSH GOEL

CA. PIYUSH GOEL (Expert)
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08 March 2013 dear user...
as per sec. 49(1) of income tax act cost of acquisition of a capital asset acquired in any of the modes specified therein (one of which is acquired through will or inheritance) shall be the cost to the previous owner and if previous owner also acquire it from another person by any of the mode specified u/s 49)1) i.e. inheritance then cost to the previous to previous owner shall be taken as cost of acquisition. however as per second proviso to sec. 48 of income tax act indexation shall be available from the year in which asset is first held by the assessee. but there are many case laws which held that indexation in such case should be available from the year in which property is acquired by the previous to previous owner.

more over if capital asset is acquired before 01.04.1981 then FMV as on 01.04.1981 shall be taken as cost.
in your case each person shall deduct the FMV of capital asset as o 01.04.1981 in his respective share in the capital asset.

Querist : Anonymous

Querist : Anonymous (Querist)

08 March 2013 Thank you very much, Mr. Goel for your quick response. Please answer my one more query, say for example FMV of that property is 2 Lakhs, and we sell it for 15 lakhs. As per your answer each one has to deduct FMV from his share. so each one has to pay Capital gain on 3 lakhs (i.e. 60000+3% education cess).

Is it right?

CA. PIYUSH GOEL

CA. PIYUSH GOEL (Expert)
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09 March 2013 no dear..

each co-owner share in cost of property is around 67000/- and sale consideration is 5 lac. capital gain will be as follows:-
consideration is 500000/-

indexed cost of acquisition is 67000/100*852 = 570840
LTCL will be 70840/-