Determination of Cost of Acquisition

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This discussion clarifies how to determine the cost of acquisition for land that was originally agricultural and later converted to non-agricultural use under a joint development agreement. The consensus is that the cost of acquisition should be based on the original inherited agricultural land's value, or the Stamp Duty Ready Reckoner (SRV) value as of April 1st, 2001, whichever is higher. Costs incurred for conversion in 2022 can be added as 'cost of improvement'.

raghavendra b

raghavendra b (Querist)
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09 September 2025 DEAR SIR,

ONE OF MY CLIENT ENTERED INTO JOINT DEVELOPMENT AGREEMENT IN THE YEAR OF 2020 FOR DEVELOPING AND CONVERTING INTORURAL AGRICULTURAL LAND TO NON AGRICULTURAL LAND. THE AGRI LAND WAS INHERITED PROPERTY. THE DEVELOPER DEVELOPED THE AGRI LAND AND TRANSFER TO MY CLIENT NAME IN THE YEAR OF 2022.

HE SOLD THE SITES IN THE YEAR OF 2024.

IN THIS SITUTION HOW TO DETERMINE COST OF ACQUISTION AND YEAR.
BEFORE 2020 OR 2022

THANK YOU SIR ,

REGARDS

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 September 2025 Whether possession was handed over to the developer?
Whether developer was paid his fees by part of land? or monetarily?

raghavendra b

raghavendra b (Querist)
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09 September 2025 Thank you sir,

Developer paid 10lakhs Good will and they have devided sites 50:50 shares last year 10 sites were transferred to his name

Regards

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 September 2025 This particular transfer will be seen with different angle. It will be considered sell of 50% land in 2022 in lieu of NA charges. Remaining part sold in 2024. The cost of acquisition remains that of original purchaser (for-father) or that 01.04.2001.

raghavendra b

raghavendra b (Querist)
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09 September 2025 Thank you sir,
cost of acquisition fore father means agriculture land before conversion.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 September 2025 Purchase price of his for father or circle rate as on 2001, whichever higher.

raghavendra b

raghavendra b (Querist)
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10 September 2025 THANK YOU SIR,

BUT THE LAND SITUATED IN RURAL AREA STILL COMES UNDER LOCAL PANCHAYATH PERVIEW. SO BEFORE THE CONVERSION IT WAS PURELY AGRICULTURAL LAND.
1. I WAS THOUGHT THAT IT IS CORRECT OR NOT WHEN THE LAND TRANFERED TO MY CLIENT NAME AFTER CONVERSION THE CIRCLE RATE OR SR VALUE AS PER 2022. NOW THE CIRCLE RATE PER SITE IS RS.700000/- BUT THE SITE SOLD IN 2024 IS RS.1400000/-.

2. ONLY 10 SITE WERE TRANFERED TO MY CLIENT IN THE LAST YEAR
3.STILL NEARLY 30 SITES WILL BE TRF. TO MY CLIENT THIS CURRENT YEAR.
4. I THOUGHT BEFORE CONVERSION THE AGRI LAND IS NOT A CAPITAL ASSETS

THANK YOU SIR,

PLEASE SUGGEST ME I WERE WRONG IN OPINION

REGARDS

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 September 2025 Whether sell deed was registered in 2022? How can you call it transferred in 2022?

raghavendra b

raghavendra b (Querist)
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10 September 2025 SORRY THANK YOU SIR,

IN YEAR OF 2001 THE SR VALUE OF THE CONVERSION LAND TO BE CONSIDERED TO CALCULATE COST OF ACQUISTION.

THANK YOU

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 September 2025 No. That of agricultural land.
Conversion happened in 2022. You can add the cost as 'cost of improvement' in 2022.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 September 2025 Good Luck..

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