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Capital Gains and subsequent receipt

Suraj S (Audit Executive) (335 Points)

11 July 2011

One of my client's mother had an ancestoral property which was sold in Dec 2010 and the receipt from this sale was shared equally by my client and her sister and this amt was deposited to their bank account directly. I wanted to know how my client have to file the return and under which Head of income can she show the amt??

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24 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 11 July 2011

Its Long Term Capital Gain, and would be taxed after taking cost of indexation on fair value after 1981 deducted from sale proceeds.

Sunshine (Helping All) (10575 Points)
Replied 11 July 2011

if the property of of theoir mother and the receips have been tranferred to the accounts of client and sister,i think the capital gain will be filed in your client's mother's return ...

rz's (TRAINEEE) (243 Points)
Replied 11 July 2011

yup sunshine is ryt...capital gain has to be filed in mother's return..

the sum recieved by your client wud be taxable if he/she has recieved it directly from the purchaser..

but if ur clients mother has transferred the amount it can be treated as gift and wud not be taxable...

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 11 July 2011

funny that property sale proceeds are divided in bro and sis, but the query posting person did not bothered to mention that mother is alive or not

this is the unique beauty in discussion seen on CCI only, where the members fight without any issue on half query itself

rz's (TRAINEEE) (243 Points)
Replied 11 July 2011

lolzz..thts ryt..

Suraj S (Audit Executive) (335 Points)
Replied 11 July 2011

Ofcourse my client's mother is very much alive!!!!!!!!

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 11 July 2011

if mother is alive then how did the bro and sis shared the sale proceeds? its the property of mother and only she can sale it, so the amount goes to her only............................

also the amount gone to bank directly of bro and sis, despite of mother alive?

Sunshine (Helping All) (10575 Points)
Replied 11 July 2011

haha...my presumption was correct..mom is always there..

Suraj S (Audit Executive) (335 Points)
Replied 11 July 2011

The prob here is whether the mother will have to file the return showing LTCG on full value of the consideration as the property is in her name(even though ancestoral property)????

Also, my client don't have any taxable income and whether she has to file the return showing this Income transferred by the mother as a gift or whether its enough for the mother to file the return???

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 11 July 2011

but when mom is alive , kids sold the property of her and deposited amount to their own account ................................ bad children :(

rz's (TRAINEEE) (243 Points)
Replied 11 July 2011

yup momz are always there..and we do love that...

Suraj S (Audit Executive) (335 Points)
Replied 11 July 2011

Ya..the mother asked the purchaser of land to deposit the amt directly to both of their bank accounts.....

Sunshine (Helping All) (10575 Points)
Replied 11 July 2011

yes the full ltcg will be taxable in the hands of mother...if its ancestral property then take the value of 1981 fr indexation pupose....no taxes on client or sister coz gift to a relative is exempt...u/s 56(2)