Indexation of cost of improvement

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Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2014 I Purchased a house in the year 31.3.2000 and in 31.3.2012 I demolished that house and constructed a Three houses in three floors In those three houses I Sold Two houses in 31.3.2013 whether the capital gain arising for me is Long-term or Short-term If Long-term can I claim Indexation for cost of improvement or not?

Please quote Section or case laws if possible..

Thanks in Advance.

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2014 capital gain is longterm but you can not claim indexation on cost of improvement.

Nikhil Kaushik

Nikhil Kaushik (Expert)

15 March 2014 there is a case law Ch. Sudheer Reddy, Hyderabad vs Assessee ITA No.202/Hyd/2009

In this case, the assessee had similar circumstances. What he did was to calculate the value of land and apportion it to the each floor/unit sold. the value of land was offered as long term capital gains (but natural that there was no cost of improvement involved here). the units constructed and sold were offered to tax as short term capital gains after reducing the cost of construction.

that should be the right treatment in your case too.

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