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Income tax

JAYA KUMAR (ACCOUNTANT) (42 Points)

27 July 2016

If a person purchases land at lower rate but DR fixes higher rate and collects stamp duty accordingly then which one should be taken as cost of puchases.For eg : If I purchase 1 acre land for Rs 200000.00 but DR fixes it as Rs 11,00,000 and collects stamp duty accordingly ..then which one will be the cost of purchase for IT purpose?

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2 Replies

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 27 July 2016

Firstly, the difference between the value adopted by stamp duty authorities and consideration amount I.e Rs.9 lakh will be treated as income from other sources u/s 56(2)(vii).

Now, as per section 49(4), where the capital gain arises from the transfer of a property, the value of which has been subject to income tax under clause (vii) or clause (viia) of sub section (2) of section 56, the cost of acquisition of such property shall be deemed to be the value which has been taken into account for the purposes of the said clause (vii) or clause (viia) I.e. Rs.11Lakh in this case.

However,for other purposes the cost of acquisition will be Rs.2Lakh plus stamp duty charges.