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Capital gain

21 March 2012

My quarry is regarding the Capital Gain. Facts of the case - 1. Received the inherited property in 2009-10 by “will”. Original property acquire in 1960 2. Demolishes the property and construct the Building during 2010-11 ( construction cost – 50 Lakhs) 3. Sale the 2 flat in 2011-12 – at 3 Cr. Whether it is treated as Short term or long term capital gain ? How the capital gain is calculated? How the cost of land is consider while calculating the CG.?

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Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 21 March 2012

It would be a long term capital gain, as the cost of acquisition for the previous owner would be the same for the one who inherited the property. the calculation of LTCg is as given below:

Sale consideration	30000000
Less: Indexed Cost of Acquisition
Less: Indexed Cost of improvements	-5520394
Long Term Capital Gina	24479606

You have not given the Cost of acquisiont originally acquired in 1960. That will also get reduced from the above. As the property was acquired in 1960, therefore the fair value as on Apr81 or the COA in 1960 whihcever is hihg would be eligible for deduction by indexation.

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Gaurav Chiplunkar (CA) (40 Points)
Replied 23 March 2012

How it is LTCG ? Original property is demolishes and new building is constructed in 2010-11 & 2 flats are sold in 2011-12. i.e. flats are sold within 36 months bt land where building is situated in inherited property so there is mixture of LTCG & STCG. BT HOW TO CAL THIS ?i.e cost of land ? (cost of original property purchase in 1960 is 50000)