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Capital gain

pankaj p mistry (Consulting in tax) (93 Points)

27 August 2013

dear all,here is my query. pl help me to clear it.
porperty purchased on 15.4.1999 with Rs.303000,Improvement made on 10.4.2000 with Rs.50000,2nd Improvement made on 15.4.2009 with Rs.242000.
property sold on 12.10.2010with RS.1000000

pl calculate me the capital gain.

my query is that,whether there should be long term gain or short term gain ?.

ito says it is short term gain...

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11 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 27 August 2013

You haven't mentioned the Sale consideration received from the sale of above Property. Unless the Sale consideration is given, the capital gain cannot be calculated.

CA BHAVESH MEHTA (self employed) (67 Points)
Replied 27 August 2013

The property which is discussed here is more then 36 month old so long term capital gain is there, now for calculation all Three amount, cost of purchase and both the cost of improvement should be incredased with the Indexation of that particular different yeras, after getting cost deduct that amount from sale consideration that will be your long term capital gain. and tax will be charged accordingly

CA Pooja Sharma (Chartered Accountant) (192 Points)
Replied 28 August 2013

Sir,

As replied by Bhavesh Sir, this transaction is liable to LTCG as it is held for more than 36 months and calculation comes to Rs.86,376/- as per attached file.

Attached File : 1119503 1224539 ltcg.xlsx downloaded: 143 times

Mihir (Wealth Manager) (5293 Points)
Replied 28 August 2013

There must be 36 months gap between purchase and sales of property to be called long term capital gain. You purchased the property in 1999 and sold in 2010. That is definitely long term capital gain. Indexation of cost of improvement shall also be allowed.

ASWINI (ARTICLE ASSISTANT) (44 Points)
Replied 28 August 2013

PLZ SEE THE ATTACHMENT

ASWINI (ARTICLE ASSISTANT) (44 Points)
Replied 28 August 2013

PLZ SEE THE ATTACHMENT

Attached File : 1110646 1224910 aswini.xlsx downloaded: 144 times

pankaj p mistry (Consulting in tax) (93 Points)
Replied 28 August 2013

dear all friends,here is my query. pl help me to clear it. porperty purchased on 15.4.1999 with Rs.303000,Improvement made on 10.4.2000 with Rs.50000,2nd Improvement made on 15.4.2009 with Rs.242000. property sold on 12.10.2010 by 10000000

all of you & more experts says it's long term gain but,

ITO SAYS,NO I CAN'T GIVE INDEXATION BENEFIT AGAINST 2ND IMPROVEMENT MADE IN F.Y.2009-10 DUE TO PERIOD BETWEEN IMPROVEMENT & SALES OF PROPERTY IS LESS THAN 36 MONTHS WHAT SHOULD I DO ABOUT THIS DISPUTE ?

Mihir (Wealth Manager) (5293 Points)
Replied 28 August 2013

Indexation is allowed if the capital asset is held for more than 3 years. After the improvement made and expenses incurred in 2009, the property was sold before completing 3 years. I will have to agree with the judgement of ITO. Last improvement made will not enjoy indexation, and I don't think it makes a big difference.

ASWINI (ARTICLE ASSISTANT) (44 Points)
Replied 29 August 2013

INDEXATION BENEFIT WON'T BE GIVEN TO THE IMPROVEMENT MADE IN 2009 BECAUSE THE PROPERTY WAS SOLD BEFORE COMPLETION OF THREE YEARS. YOU HAVE TO AGREE WITH THE ITO.

Pushpender Kadian (Student) (28 Points)
Replied 29 August 2013

Dear Pankaj,

As the property in question was held for more than 3 years, hence long term capital gain or loss will arise.

Dear Mihir,

I think, if the property is a LTC Assets, we can claim for indexation benefit. In this prob. 2nd improvement was made on 15.04.2009 (P.Y. 2009-10) and the property was sold on 12.10.2010 (P.Y 2010-11)