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LTCG OR STCG

pradeep (business) (46 Points)

04 October 2010

Sir,
I received a house from my relative,who was owner of the house more than 10 years, as a gift to me, and I sold the same house within one year with profit, Is this profit will be treated as Long Term Capital Gain or Short Term Capital Gain in my hands.
Urgent reply is needed.
Thanks in advance,

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10 Replies

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 04 October 2010

Look If U Sold This House After 3 Years From U Get From Relative, Then It Will Be Treat as LTCG Otherwise STCG

& Indextation Benefit is Available of Year of Gift.

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 04 October 2010

Dear Pradeep,

Its LTCG, COZ as per Sec.49(1), if a capital asset is acquired by the assessee by any gift, inheritance, etc, then the period for which the previous owner held the asset should also be taken into consideration in determining the period of holding. Hence, in ur case, it will be more than 3 years. hence, it is a LTCA

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 04 October 2010

Yes, In UR Case 3 Yeras Criteria is Not Applicable

Ya.Its Treated as LTCG.

But Indextation is Available of Year of Transfer as Gift.

I Mean Gift Transfer Year Indextation is Available.

Sunshine (Helping All) (10575 Points)
Replied 04 October 2010

Originally posted by : CA.G.Muguntha Narayanan
	Dear Pradeep, Its LTCG, COZ as per Sec.49(1), if a capital asset is acquired by the assessee by any gift, inheritance, etc, then the period for which the previous owner held the asset should also be taken into consideration in determining the period of holding. Hence, in ur case, it will be more than 3 years. hence, it is a LTCA

i agree......

Bhav Bhuti Sharma (Towards Professionalism ) (823 Points)
Replied 04 October 2010

Originally posted by : CA.G.Muguntha Narayanan
	Dear Pradeep, Its LTCG, COZ as per Sec.49(1), if a capital asset is acquired by the assessee by any gift, inheritance, etc, then the period for which the previous owner held the asset should also be taken into consideration in determining the period of holding. Hence, in ur case, it will be more than 3 years. hence, it is a LTCA

agree ...

ADITI MALIK (article assistance) (78 Points)
Replied 04 October 2010

Originally posted by : CA.G.Muguntha Narayanan
	Dear Pradeep, Its LTCG, COZ as per Sec.49(1), if a capital asset is acquired by the assessee by any gift, inheritance, etc, then the period for which the previous owner held the asset should also be taken into consideration in determining the period of holding. Hence, in ur case, it will be more than 3 years. hence, it is a LTCA

totally....totally agree....even i got confused...thks sir for clearing the doubt

C.A. LINESH PATIL (CA) (910 Points)
Replied 04 October 2010

Ya agree with the experts.however indexation shall be done from the year when it was received as a gift to you.

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 05 October 2010

I am not agree from above discussions..its absolutely right that period of holding will be considered under sec 41 (9) i.e cost to the previous owner...and period of holding will also include the holding period of previous owner...but the aquired asset under gift is transfered with in 3 years hence will be taxable as SHORT TERM CAPITAL GAINS in the hands of new owner....if more than 3 years only then it would be taxable as LONG TERM CAPITAL GAINS.

as per new inserted provisions of sec 56(2)(vii) the cost of aquisition in the hands of new owner will be taken as nil if the property is aquired on or after 1-10-2009...and the full value of consideration in the hands of transferor(previous owner) will be the stamp duty valuation as per sec 50 C.

only sec 54 EC and 54 F are the transformation sections where period of holding before transfer is not considered and it will always be taxable as LONG TERM CAPITAL GAINS no matter for how long asset is reatined by transferee...!!

Sunshine (Helping All) (10575 Points)
Replied 05 October 2010

Originally posted by : Prachi Jindal
	I am not agree from above discussions..its absolutely right that period of holding will be considered under sec 41 (9) i.e cost to the previous owner...and period of holding will also include the holding period of previous owner...but the aquired asset under gift is transfered with in 3 years hence will be taxable as SHORT TERM CAPITAL GAINS in the hands of new owner....if more than 3 years only then it would be taxable as LONG TERM CAPITAL GAINS. as per new inserted provisions of sec 56(2)(vii) the cost of aquisition in the hands of new owner will be taken as nil if the property is aquired on or after 1-10-2009...and the full value of consideration in the hands of transferor(previous owner) will be the stamp duty valuation as per sec 50 C. only sec 54 EC and 54 F are the transformation sections where period of holding before transfer is not considered and it will always be taxable as LONG TERM CAPITAL GAINS no matter for how long asset is reatined by transferee...!!

agree that the cost will be nil as it was a gift...but the period of holding will include the period of holding of the previous owner also...so it will be an LTCG only no matter the assessee sold it in less than 1 year,..the total holding period includes 10 years holding of previous owner too...

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 05 October 2010

Dear Prachi,

For the purpose of finding out whether an asset is a LTCA or STCA, period held by previous owner should also be considered. There is no revision to the above mentioned section. so it s a LTCA