16 October 2019
Mrs A is selling a 12-acre land (coffee estate – growing coffee) approx. for 90 lac, originally purchased by her father Mr X in the year 2001 for approx. 20 lac and inherited by Mrs A (daughter of Mr X) in 2014. During the 13 yrs money was spent on improvement, development and plantation of coffee and pepper plants on the land of approx 5.5 lac per acre for coffee and 6.5 lac per acre pepper (no records maintained or kept). Mr X couldn’t sustain the business and as a result of this ended up taking a lot of loan approx. 60 lac Husband of Mrs X helps the in repayment of entire loan by paying 60 lac (by transferring money to father in law’s account) Question 1. Assuming the land does not fall in the category of Agricultural land what can be done to save on capital gain tax 2. If the land falls under the purview of agricultural land what is the taxability of amount which is received from the sale proceed 3. Can the cost of improvement and development be claimed (if there is a case of capital gain)? 4. Can the repayment of loan by husband of Mrs X be considered as gift to father in law? 5. Can the funds be utilized elsewhere in buying plot or land?