How to determine the capital gain

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CA Sandeep Bohra

Practicing chartered accountant

83 Points Posted on 12 June 2018

I purchased a land of rs, 900000 on 16.02.2016. After that i started to construct a residential house on that land from 12/12/2016 and my cost was rs 160000. I sold entire property for rs 300000 on 26.03.18

Now while calculating capital gain, land has completed 24 months and 10 days while house is less than 24 months.

Should i consider entire gain as long term gain and constuction should be cost of improvement?

or should i consider long term and short term but in this case i dont have seperate sale considertaion for both as i made one agreemnt fo rs 3000000.

please advice what be correct way.

thanks

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121543 Points Posted on 12 June 2018

Yes, you can declare entire gain as long term gain and constuction cost as cost of improvement; but AO may not accept the same under scrutiny. So let the FMV of land be obtained from registered valuer.

Nihar Ranjan Rout

CA Final & CS Final

409 Points Posted on 12 June 2018

You can value the assets separately as well, if somehow you can determine the considerations separately (which is strictly between you, the buyer and FMV). A case law to your aid: CIT vs. C.R.Subramanian.

CA Sandeep Bohra

Practicing chartered accountant

83 Points Posted on 15 June 2018

thanks for reply

as per registart of property the fmv of land is rs 1020 per feet making it 918000 rs. if i take this fmv than the value of buiding will be 3000000-918000 i.e2082000. M I correct?

But if take 918000 rs as fmv of land than the actual gain of my land will be 18000 only in 2 years? can it be accepted?