Computation Of Indexed Cost of The Property

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Ankit Agrawal

Technical Leader

32 Points Joined March 2010

I have to find the indexed cost of my property, havinh following details:

Purchase Details:

Indexing:

1999-00 -> 151484*632/389 = 246113 (Plot with Registration Cost)

2000-01 -> 410912*632/406 = 639646 (Loan Disbursement + MAP Approval)

2000-01 -> 38735 *632/406 = 60297 (Interest on borrowed capital)
2001-02 -> 55035*632/426 = 81648(Interest on borrowed capital)
2002-03 -> 44960*632/447 = 63568(Interest on borrowed capital)
2003-04 -> 40000*632/463 = 54600(Interest on borrowed capital)
2004-05 -> 36905*632/480 = 48592(Interest on borrowed capital)
2005-06 -> 30000*632/497 = 38149(Interest on borrowed capital)
2006-07 -> 21572*632/519 = 26269(Interest on borrowed capital)
2007-08 -> 17930*632/551 = 20566(Interest on borrowed capital)
2008-09 -> 10899*632/582 = 11835(Interest on borrowed capital)

246113+639646+(393689) = 1279448

Sale Details:
29/12/2008 : Rs. 1,00,000/-
16/01/2009 : Rs. 6,00,000/-
30/04/2009 : Rs. 16,00,000/-

Total: Rs. 23,00,000/-

Transfer/Agreement/Registry is done in April 2009

Queries:

1) Total Indexed Cost

2) Interest on borrowed Capital (As a cost of Improvement) be taken into account for computing Indexed Cost? (Provided benefits of Section24 for interest is already availed)

a. If Yes, what would be the Capital gain for last three years interest, would it be considered in Short term or Long-term

3) What would be the CII be taken into account.

a. Is it for 2008-09

b. OR for 2009-10

i. If it is to be taken care for both the years, how the cost of acquisition/improvement be distributed in each year.

Replies (5)

Aditya Maheshwari

CA in Practice

35867 Points Joined June 2009

Firstly interest cost cannot be said to be an cost of improvement and the should have been claimed as a deduction u/s 24 as interest paid for loan taken to purchase house.

Since the agreement is made in the year 2009 and substantial consideration is received in this year the same will liable for tax in F. Y. 2009 - 10.

CA. Abhishek K. Pandey

Manager (Advance)

901 Points Joined March 2008

You cannot take interest as cost of acquisition and hence and it will not be indexed. Only the cost which is 2,46,113.00 + 6,39,646.00, which I have assumed as house loan would be indexed.

kumarsatish022

Professional

165 Points Joined September 2008

Since agreement and possession are both given in 2009-10 hence capital gain in 2009-10

Ankit Agrawal

Technical Leader

32 Points Joined March 2010

Dear All,

Thanks to all for prompt responses.

For considering the interest on borrowed capital, i have read the same in one book on "Income Tax Guidelines & ini Ready reckoner" from Nabhi publications, wherein it is mentioned that interest on borrowed capital would also be accounted for indexing.

My concerns are:

1) Since, i have referred to this book for the Page284 of the 2005-06 & 2006-07. I would like to know whether you guys are reponding as per latest laws, or the one i have been referring was never in picture.

2) Would it be possible that i have already taken the tax exemption in Section24 for home laon interest, and hence tehereforth it is not eligible for indexation.

Thanks & Regards

Ankit

Ankit Agrawal

Technical Leader

32 Points Joined March 2010

Hello,

I have also referred to Taxmann's Direct Taxes Ready reckoner by Dr. Vinod K. Singhania, at Para66, where it is clearly mentioned that Interest on moneys borrowed to purchase asset is part of actual cost of aset.

Can anybody help me on this.

Thanks & Regards

Ankit (9958521199)