Regarding Cap gain last term paper IPCC

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ABHINANDAN JAIN (Querist)

31 October 2010 Mr. Raj Kumar sold a house to his friend Mr. Dhuruv on 1st November, 2009 6 *^ for a consideration of Rs.
25,00,000. The Sub-Registrar refused to register the document for the said value, as according to him, stamp duty
had to be paid on Rs. 45,00,000, which was the Government guideline value. Mr. Raj Kumar preferred an appeal to
the Revenue Divisional Officer, who fixed the value of the house as Rs. 32,00,000 (Rs. 22,00,000 for land balance for
building portion). The differential stamp duty was paid, accepting the said value determined. Assuming that the fair
market value is Rs. 32,00,000, what are the tax implications in the hands of Mr. Raj Kumar and Mr. Dhuruv for the
assessment year 2010-11 ? Mr. Raj Kumar had purchased the land on 1st June, 2006 for Rs. 5,19,000 and completed
the construction of house on 1st October, 2007 for Rs. 14,00,000.
Cost inflation indices may be taken as 519 for the financial year 2006-07, 582 -for the financial year 2007-08 and 632
for the financial year 2009-10.

This is the LAST TERM PAPER (May, 10), In this sum, I have some doubts regarding a sum on Capital Gain.
IST:
who is revenue Divisional Officer?
In all solution the FVC is taken as adopted by him?
2nd:
Why we have not taken FVC value adopted by STAMP Valuation Authority:
3rd:
why we have not calculated the Capital gain For HOUSE (i.e. by combining the Building Portion and Land Portion)?
4th
Even if we calculate Cap Gain by segregating both the asset,why we have not charged Depreciation on building portion, since i think its a depreciable asset and in my opinion capital gain for a Depreciable assets is computed in the manner in which we calculate depreciation for a asset in PGBP heads i.e. Op WDV add Additions during the year and less sale proceeds from sale of assets during the year?

Pls ans my queries as soon as possible as i am going yo apper in nov,10 exam

thank you !

Nikhil Kothari

Nikhil Kothari (Expert)

04 November 2010 Long Term Capital Gain 15,68,000
Short Term Capital Gain (4,00,000)
As per section 74, short term capital loss can be set-off against long term capital gain
of the current assessment year, therefore, the short term capital loss of Rs. 4,00,000
shall be adjusted with Rs. 15,68,000
∴ Net Long Term Capital Gain = Rs. 11,68,000
Tax payable in the hands of Mr. Raj Kumar –
As per section 112, Long term capital gains are taxed @ 20%
∴20% of Rs. 11,68,000 = Rs. 2,33,600
∴ Mr. Raj Kumar will be liable to pay tax of Rs. 2,33,600 for the assessment year
2010-11.
[Based on assumption that Mr. Raj Kumar is having other income more than Rs.
1,60,000]

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