Regarding capital gain

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m.faruk yusuf patel (Querist)
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13 December 2012 Dear expert following is a Query regarding cost of indexation to be taken on enhanced construction in residential property after few years of Allotment .Mr X booked a house in 2000-01 , allotment money was paid in 2002. For this Mr X paid Rs20 lacs over the years in installments . In 2010 due to enhanced construction the property cost increased to Rs30 Lakhs.(ie 10 is the cost of enhanced compensation)Question :-Cost of indexation for the enhanced property will be taken for 2002 when the allotment money was paid or when enhanced construction was made in 2010please reply ASAP :)

Amol S Joglekar

Amol S Joglekar (Expert)
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13 December 2012 computation of "Period of holding" is important in capital gain cases. In this case the capital asset as on allottment date was "Right in imovable property." The possession of the imovable property will convert this capital asset into "property.. residential or commercial" as the case may be. The question of indexation will come if the capital asset to be sold is "right in imovable property." The same shall not arise if capital asset is "residential/commercial property" The cost in second case shall be taken as 30 lakh.

V K Bajaj

V K Bajaj (Expert)
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13 December 2012 Please note that the cost of indexation shall be worked payment wise and shall be clubbed into one whenever to work Long Term Capital Gain.

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