Capital gains
This query is : Resolved
19 November 2015
Dear Sir,
An assesse having a proprietorship business and he had purchased a flat in 2001 in his name and he wants to sell the flat in 2015 which would result in capital gains tax. He has original documents of the flat which is reflected in his personal balance sheet but in ITR 4 he if filing the return in No Account Case i.e. where regular books of accounts in business are not maintained. So can he show the capital gains on account of sales of the flat in ITR 4 because he has not shown the flat in ITR 4 in previous years.
Please rely as early as possible.
Thanks,
Abhishek.
An assesse having a proprietorship business and he had purchased a flat in 2001 in his name and he wants to sell the flat in 2015 which would result in capital gains tax. He has original documents of the flat which is reflected in his personal balance sheet but in ITR 4 he if filing the return in No Account Case i.e. where regular books of accounts in business are not maintained. So can he show the capital gains on account of sales of the flat in ITR 4 because he has not shown the flat in ITR 4 in previous years.
Please rely as early as possible.
Thanks,
Abhishek.
19 November 2015
No harm. Can file ITR-4 in which income from proprietory business and capital gains can be declared.
Message likes :
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20 November 2015
Dear Sir,
Please answer to one query that can I.T. Deptt say that the assesse has not shown the value of flat in balance sheet in previous years so how can he show the capital gains tax in ITR during the year of sale i.e. F.Y. 2014-15.
Hope to get a reply from you.
Thanks,
Abhishek.
Please answer to one query that can I.T. Deptt say that the assesse has not shown the value of flat in balance sheet in previous years so how can he show the capital gains tax in ITR during the year of sale i.e. F.Y. 2014-15.
Hope to get a reply from you.
Thanks,
Abhishek.
21 November 2015
Dear Sir,
Please reply to solve my problem.
Thanks,
Abhishek.
Please reply to solve my problem.
Thanks,
Abhishek.
21 November 2015
Dear Sir,
Please reply to solve my problem.
Thanks,
Abhishek.
Please reply to solve my problem.
Thanks,
Abhishek.
21 November 2015
Dear Sir,
Please reply to solve my problem.
Thanks,
Abhishek.
Please reply to solve my problem.
Thanks,
Abhishek.
18 July 2024
In the scenario you've described, where an assessee has a proprietorship business and owns a flat personally, here's how the tax treatment of capital gains from the sale of the flat should be approached:
1. **Capital Gains Calculation:**
- The capital gains from the sale of the flat will be calculated as the difference between the sale consideration and the indexed cost of acquisition.
- **Sale Consideration:** This is the actual amount received or accruing from the transfer of the flat.
- **Indexed Cost of Acquisition:** This is the cost of acquisition adjusted for inflation using the Cost Inflation Index (CII) provided by the Income Tax Department.
2. **Reporting in ITR-4:**
- If the assessee is filing ITR-4 (Presumptive Taxation Scheme), which is applicable when the turnover is less than Rs. 2 crore and the assessee is engaged in specified professions or businesses, the capital gains from the sale of the flat should be reported in Schedule CG of the ITR-4.
- Even though the flat was not shown in the balance sheet of the business in previous years (assuming it was held as a personal asset), the capital gains from its sale should be declared in the personal capacity of the assessee.
3. **Disclosure and Compliance:**
- It's crucial to disclose the capital gains accurately in the ITR for the year in which the sale took place (FY 2014-15 in your case).
- The Income Tax Department may inquire about the source and acquisition of the flat if it has not been previously disclosed. However, as long as the sale transaction and the capital gains are correctly reported in the current year's ITR, backed by proper documentation such as sale deed, purchase documents, and computation of indexed cost, the assessee should be compliant.
4. **Capital Gains Tax Liability:**
- Long-Term Capital Gains (LTCG) from the sale of a property held for more than 24 months are taxed at 20% with indexation benefit. Indexation adjusts the purchase price for inflation, thereby reducing the taxable gain.
- The assessee can avail of exemptions under Section 54 or Section 54F if the LTCG is reinvested in another residential property within specified timelines, subject to conditions.
### Conclusion:
- The assessee can show the capital gains from the sale of the flat in the ITR-4 for FY 2014-15, even if the flat was not previously shown in the business's balance sheet.
- Proper documentation and computation of indexed cost should support the declaration of capital gains.
- If there are any queries from the Income Tax Department regarding the non-disclosure in previous years, the assessee can explain that the flat was held as a personal asset and not as part of the business.
It's advisable to consult with a tax professional to ensure compliance with all tax laws and proper reporting in the Income Tax Return.
1. **Capital Gains Calculation:**
- The capital gains from the sale of the flat will be calculated as the difference between the sale consideration and the indexed cost of acquisition.
- **Sale Consideration:** This is the actual amount received or accruing from the transfer of the flat.
- **Indexed Cost of Acquisition:** This is the cost of acquisition adjusted for inflation using the Cost Inflation Index (CII) provided by the Income Tax Department.
2. **Reporting in ITR-4:**
- If the assessee is filing ITR-4 (Presumptive Taxation Scheme), which is applicable when the turnover is less than Rs. 2 crore and the assessee is engaged in specified professions or businesses, the capital gains from the sale of the flat should be reported in Schedule CG of the ITR-4.
- Even though the flat was not shown in the balance sheet of the business in previous years (assuming it was held as a personal asset), the capital gains from its sale should be declared in the personal capacity of the assessee.
3. **Disclosure and Compliance:**
- It's crucial to disclose the capital gains accurately in the ITR for the year in which the sale took place (FY 2014-15 in your case).
- The Income Tax Department may inquire about the source and acquisition of the flat if it has not been previously disclosed. However, as long as the sale transaction and the capital gains are correctly reported in the current year's ITR, backed by proper documentation such as sale deed, purchase documents, and computation of indexed cost, the assessee should be compliant.
4. **Capital Gains Tax Liability:**
- Long-Term Capital Gains (LTCG) from the sale of a property held for more than 24 months are taxed at 20% with indexation benefit. Indexation adjusts the purchase price for inflation, thereby reducing the taxable gain.
- The assessee can avail of exemptions under Section 54 or Section 54F if the LTCG is reinvested in another residential property within specified timelines, subject to conditions.
### Conclusion:
- The assessee can show the capital gains from the sale of the flat in the ITR-4 for FY 2014-15, even if the flat was not previously shown in the business's balance sheet.
- Proper documentation and computation of indexed cost should support the declaration of capital gains.
- If there are any queries from the Income Tax Department regarding the non-disclosure in previous years, the assessee can explain that the flat was held as a personal asset and not as part of the business.
It's advisable to consult with a tax professional to ensure compliance with all tax laws and proper reporting in the Income Tax Return.
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