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Immovable property

This query is : Resolved 

30 August 2018 Dear Experts,

My query is regarding, Purchase of Immovable Property.

Mr. Ramesh (Buyer) purchased Immovable Property from Mr. Mahesh (Seller).
Details of Property : Market Value = 651000/- , Consideration Value = 437000/- (As per Sale Agreement)

Mr. Ramesh made Cash Payment of Rs. 220000/- and 437000/- by Cheque to Mahesh. BUT

Mr. Mahesh mentioned only 437000/- to sale agreement. (consideration Value) remaining 220000/- not consider in consideration value.

Situation is, Under valued property is purchased by Mr. Ramesh.

I want to know the taxbility in hand of Mr. Ramesh (Buyer) and Mr. Mahesh (Seller).

If Mr. Ramesh will pay tax NOW on 214000/- ie. ( 651000/- Minus 437000/-) by considering it "Income from Other Sources" ,than what will be effect of capital gain when Mr. Ramesh will sell the property.

Please help me expert to understand this situations.




30 August 2018 I assume that the market value you refer here is the Guideline/Stamp value.
In that case, If Ramesh sells the property, the cost of acquisition will be the Guideline/Stamp value i.e 651000 here and not 437000.

30 August 2018 One exception:

If Ramesh purchases the property as stock in trade, in which case, the consideration value 437000 will be considered for arriving the profit/loss on sale of the property

30 August 2018 Property purchase by Mr. Ramesh is consider as Capital Assest.

31 August 2018 In that case, Cost of acquisition will be the stamp value/guideline value



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