11 September 2012
What is the cost inflation rate for the financial year 2012-2013. for the purpose of capital gain. and my another query is that if any person makes the flats on his residential land then at the time of sale , it should be treat as short term or long term capital gain , if he purchased in the 2002 and would sold in the year 2012.
but here my main query is that if he makes 4 flats on the said Land and sales to the various persons , in that case how should be income tax treatment . he will make flats in current year. how he will calculate cost inflation and short term and long term.
11 September 2012
It is a short term Capital Gain. When you enter into the transaction of selling of House property in any form, land is indivisible from building. Moreover Land looses it's identity when you sell any constructed Property on said Land. Selling of Land and Selling of Flats constructed thereon are distinct transactions. Hence in your case no CII is applicable and it is a short term capital gain.
cost of construction will be treated like cost of improvement of property , its like that after doing construction the price of property increased so it will be treated as LTCG.
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