Capital gains tax

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Puneet (Querist)

01 December 2015 How does assessing officer determines the cost of construction (house) while giving benefit of exemption under section 54F ?

what is income tax rules/guidelines on this
Thanks.

Amol S Joglekar

Amol S Joglekar (Expert)

01 December 2015 The actual cost is considered for giving the benefit u/s 54F

Puneet

Puneet (Querist)

07 December 2015 To clarify, my question was : what method AO uses to determine the cost of construction, does he vouch the bills of materials, labour etc...which in many cases pakka bills are not available , or he uses some other method like cost per square foot multiplied by total squarefeet constructed or some other method, please throw some light on this who have dealt such cases, thanks.

Amol S Joglekar

Amol S Joglekar (Expert)

07 December 2015 Actual Cost.....as declared by the assessee. If , to the best of AO's knowledge and belief, the cost so declared by the assessee is NOT acceptable to AO, then AO has the option to refer the case to the valuation officer.

If the bills, evidence etc produced by the assessee is not acceptable to even the valuation officer, he may proceed on to value the house based on the quality of construction and the then prevailing market rate.

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Puneet

Puneet (Querist)

07 December 2015 Thanks Amol, are there some guidelines/rules under income tax act for valuation officer as to how he is suppose to value the construction which we can refer, please let me know ? Thanks.

Amol S Joglekar

Amol S Joglekar (Expert)

08 December 2015 https://www.incometaxindia.gov.in/Pages/acts/income-tax-act.aspx

In the first place, it will rely on section 43 as is said in above url.

The next step would be Fair Market Value

The reference is to be taken from Wealth Tax Act. Schedule III

you may refer the following url.

https://saiindia.gov.in/english/home/Our_Products/audit_report/Government_Wise/union_audit/recent_reports/union_performance/DT%20Scan%20Reports/2001_book2/chapter1.htm

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