Immovable property

This query is : Resolved

Saroj Jyoti (Querist)
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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.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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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.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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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

Saroj Jyoti

Saroj Jyoti (Querist)
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30 August 2018 Property purchase by Mr. Ramesh is consider as Capital Assest.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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31 August 2018 In that case, Cost of acquisition will be the stamp value/guideline value

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