Capital gains on sale of land

Hi One of my client was part share holder in property sold land in 2005 & received part consideration out of which he invested in purchase of property. no ITR was filed by the client.Due to dispute within sellers ,the byuer registered property in 2013 only,but the sales consideration is the same i.e of 2005. Now he has received a notice & summons for 

1 Why property is sold for less value.

2 Compute the capital gains & file ITR.

Now how do we calculate the capital gains i.e the date of sale should be 2005 or 2013 & do we have to file return from 2005 onwards where consideration was received in advance.

Regards

Uday Sakrikar

uday.sakrikar @ gmail.com

7028023182

 

Replies (2)
In your Case:
1. Sale Consideration shall be amount recieved as well as amount to be received from the buyer ( Subject to Stamp duty value section 50C).
2. SDV of 2005 shall be taken into consideration provided advanve money has been received though banking channel ( Provided 50 is applicable).
3. Computation of Capital gains shall be in A.Y.2006-07 , as transfer of property is is done when possession of property is transferred irrespective of Registeration (Section 2(47)).
4. Capital Gains in the hands of assessee shall be in proportion to its share of holding in the property.

Specific Answers to your queries:
1. Case 1: If property is sold less than SDV, SDV shall be taken for computation of Cap gains (50C). AO may also be wiling to know the relationship of buyer with assessee ( if it seem buyer is not relative he may invoke section 56(2)(vi) now 56(2)(x) ).
Case 2: Cap Gain computed may be less than due to appropriation of Cap gains in the hands of assesse , in this case you have to justify with relevant supportings.

2. Compution of capital gain has already been specified above. You will have to file return accordingly.

Hope this will help you out.
Thanks.
thanks a lot

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