Capital Gains

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Deepa

CA and CS Final B.Com University First

85 Points Posted on 30 May 2011

please help me on this issue

An assessee has obtained a flat from her mother which was originally transferred from assessee's father.

The mother had made a will (unregistered) which stated that the property once gets transferred to the assesse has to be shared with the assessee children in some specified ratio.

The issue are:

1. Whether the Capital Gain is taxable in the hands of Children or the assessee it self?

2. if the father had acquired the property prior to 1.04.1981 and subsequently transferred by will after 01.04.1981. Mother dies in 2008, whether it is long term or short term Capital Gain as on the transfer date n the hands of assessee?

3. any case law for the above issue?

Thank you

Replies (6)

Dheeraj

Learner

1263 Points Posted on 30 May 2011

Do u mean, Property transferred from Father to Mother

And as per will now transferred to Child.

If it is so than there is no Capital Gain, as property transferred as per will does not attract Capital Gain

praveen

Chartered Accountant

5709 Points Posted on 30 May 2011

Family Arrangements are not taxable hence no capital gains shall be applicable.

SAMAR JEET SINGH

88 Points Posted on 30 May 2011

Hi Deepa,

Under Section 47(iii) any transfer of a capital asset under a gift or will will not be transfer under section 45, so in your case transfers has been under the will so there does not arise question of capital gain.

However if the property is sold by you or by your children the cost to the previous owner shall become the cost of acquisition under sect 49 for the purpose of the indexation.

Warm regards

Viren

Chartered Accountant

132 Points Posted on 31 May 2011

Originally posted by : SAMAR JEET SINGH
	Hi Deepa, Under Section 47(iii) any transfer of a capital asset under a gift or will will not be transfer under section 45, so in your case transfers has been under the will so there does not arise question of capital gain. However if the property is sold by you or by your children the cost to the previous owner shall become the cost of acquisition under sect 49 for the purpose of the indexation. Warm regards

Agree, transffer by way of will is not within the perview of capital gain.

C.Balaji

Learner

2680 Points Posted on 31 May 2011

Hi Deepa,

Section 47. TRANSACTIONS NOT REGARDED AS TRANSFER.

(iii) Any transfer of a capital asset under a gift or will or an irrevocable trust...

If the property is sold by the assessee or by her children, Cost of Acquisition shall be the cost to the previous owner for the purpose of the indexation... It will be treated as long term capital gains in the hands of the assessee...

CA Rakesh Garg

Asst. MGR Taxation

286 Points Posted on 01 June 2011

Originally posted by : Viren
	Hi Deepa, Under Section 47(iii) any transfer of a capital asset under a gift or will will not be transfer under section 45, so in your case transfers has been under the will so there does not arise question of capital gain. However if the property is sold by you or by your children the cost to the previous owner shall become the cost of acquisition under sect 49 for the purpose of the indexation. fully agree