Capital gain on commercial property

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Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2013 A party is in possession of a property, being a godown, for last 30 years. He is surrendering his possession for the same on “as is where is basis” , for a consideration of Rs. 35,50,000/-

Purchase cost is Zero being rental property.
No stamp duty has been charged .

What are the tax implications?

Where can be the capital gain invested to reduce tax liability?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 November 2013 is the party individual or an incorporated entity?

Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 Individual

Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 individual

Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 November 2013 taxable under capital gains. if no premium was paid for possession (as is the fact in your case) no cost of acquisition. The whole of consideration shall be treated as capital gains. You may invest the whole of to buy or a construct a residential house under 54F or to invest under 54ec to avoid tax.

Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 Thank you for the reply.
If the property has gone through redevelopment, than can cost of improvement be claimed?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 November 2013 have you borne the cost of improvement?

Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 If yes, what record are required to prove the same.?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 November 2013 invoices for the construction material or payments to contractors/ labour etc.