Capital gain

entire sale consideration shall be considered as long term capital gain.nothing to do with the -50000

Greetings Basavaraj,

Here's my brief:

1. As per s/48 of the IT Act read with sec 51, your asset value is required to be taken as NIL.

You might want to refer to the decision in Smt Sunita N. Shah (2005) 94 ITD 492 (Mum) that is in line with the above statement.

2. Also, if excess of money is forfeited over the cost of acquisition, such asset shall be a capital receipt and not chargeable to tax .

The same was held in the case of Travancore Rubber & Tea Co. Ltd (2000) 243 ITR 158 (Supreme Court)

3. Consequently, Capital gains liable to tax for 31.3.14 will be as:

3cr - [ 50000 - (1 lakh restricted to 50,000) ]= = 3cr. If you have made any constructions on the property, take indexed cost and deduct accordingly.

On another note: Had you booked the 100000 as income of that year itself and paid tax accordingly, you would be well off right now by claiming an indexed cost on 50000 original purchase. The law is silent on this because the earnest money received by you is a capital receipt and not an income.

Hope it helped.

Regards

dear bhatt bhadresh,

very well explained.

Dear Basavarj,

About your additional query:

No, you will not get the indexation on 50,000.

Kindly refer to the working in point. no.3 of the last post.

Kind Regards