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Controversial question on LTCG

Tax queries 766 views 1 replies

darshit

CA Student

179 Points Joined October 2007

One of my clients had purchased a shop for Rs. 150000 in F.Y. 1998-99. Through over sight the investment made in the shop was not recorded in the Balance Sheet.Now during the F.Y. 2008-09 he wants to sale the same for Rs.450000 (the value prescribed by Stamp Duty Authority).Now he wishes to show this transaction in the books of accounts.

Now my questions are:

1. Does he liable to pay tax on L.T.C.G. of Rs.201282 (450000-248718 being indexed cost of acquisition)?

2. Will entire Sale Value of Rs.450000 will be liable to tax in the year of sale i.e. F.Y. 2008-09?If yes how?

Kindly opine with remedy

Replies (1)

CA Nitin Wadhwani

Chartered Accountant

4469 Points Joined April 2008

See you can go for the first option, but if the case opens up for scrutiny assessment you must able to satisfy the assessing officer that the investment was made from accounted income or else he will add the investment made as unaacounted investment u/s sec.68 of i.t act and tax thereon will be payable along with interest from the year in which investment was made.