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Capital gain - cost of acquisition of construction of buildi

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CA Mayur Gundeti (Querist)
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26 July 2011 Dear Sir

case is:
Assessee purchased one floor of a building in fy 1997-98. In fy 2005-06 he gave consent to demolish and construct a new building. He paid Rs.8lacs to a contractor.Contractor demolished the complete building and constructed 5 flats and gave assessee 2 flats.
Now assessee sold those two flats in fy 2007-08. What will be cost of acquisition for computing capital gains ?

Thank you

CA Anisha Ray

CA Anisha Ray (Expert)
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27 July 2011 Assuming that the assessee did not get any cash benefit when the consent was given:
Cost of Acquisition should be the Price that he paid for the acquisition in 97-98.
The 8 lacs paid in 2005-06 could be shown as cost of improvement. Indexation benefit to be taken for the both the above.

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CA Mayur Gundeti

CA Mayur Gundeti (Querist)
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27 July 2011 sir can you provide any case law for the same.
Thanks

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