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income tax query

CMA RAVI GUPTA (MT in VPL) (493 Points)

03 October 2009

A inherited a house from his father B on 1 APRIL 2005 and the same was inherited by B from his father C on 1 APRIL 1995 and C purchased the house on 1 sept. 1993 for Rs. 150000.
A sold the house on 1 SEPT.2005.What is the period of holding for A?

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16 Replies

Shashi Bhushan (Learner, Jalandhar) (996 Points)
Replied 03 October 2009

period of holding for A will be april 05 to sept 05. indexed cost of acquisition will be multiplied by index of 2005 and divided also by index of 2005.

BHAGYESH RAVANGE (C.A Job) (1528 Points)
Replied 03 October 2009

According to me the Period of holding would be from 1 sept 1993, for the details refer Section 49(1) of Income tax Act.

If I am wrong then tell me the same

Manmohan ACA, CS (Chartered Accountant ) (14243 Points)
Replied 03 October 2009

iv) such assessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969,]

49. Cost with reference to certain modes of acquisition

(1) Where the capital asset became the property of the assessee—

(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;

(ii) under a gift or will;

(iii) (a) by succession, inheritance or devolution, or

(b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or

(d) under a transfer to a revocable or an irrevocable trust, or

(e) under any such transfer as is referred to in clause (iv) 3 or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vica) or clause (vicb) of section 47;

[(

[Explanation.—In this [sub-section] the expression "previous owner of the property" in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) 11[or clause (iv)] of this sub-section.

so in the light of above explanation to section 49(1), period of holding of all previous owner who does acquired the property by mode specified in 49(1), shall be included in period of holdiong of A , and total period of holding will be 12 years (deom Sept 1993 to sept 2005) for the purpose of computing capital gain under income tax Act, 1961.

CA Manish K Dhoot (CA, B. Com, NCFM, CPCM) (5015 Points)
Replied 03 October 2009

Originally posted by :Shashi Bhushan
"	period of holding for A will be april 05 to sept 05. indexed cost of acquisition will be multiplied by index of 2005 and divided also by index of 2005.	"

agree

CA Manish K Dhoot (CA, B. Com, NCFM, CPCM) (5015 Points)
Replied 03 October 2009

For calculating the period of long term /short term the period of previous owner will also be counted but the benefit of indexation will be available from that year in which the current assessee become the owner.

(Guest)

FROM 1st sep 1993

CMA RAVI GUPTA (MT in VPL) (493 Points)
Replied 04 October 2009

Thanxxx for reply,BUT you all guys are wrong.THE ANSWER IS................ Period of Holding For A,1 APRIL 1993 TO 1 SEPT. 1995(2 yrs 5 months) and 1 APRIL 2005 TO 1 SEPT.2005(5 months).TOTAL period of holding is 2 yrs 10 months.IN this situation period of holding of B will not be counted because he didn't purchased the house.previous owner of the capital asset who acquired house by a mode of acquisition other than u/s49(1) will be counted.So it will be a short term capital gain

Deepika Manglani (CA & CS Final Student) (26 Points)
Replied 04 October 2009

Mr. Ravi Gupta, you are absolutely wrong & Mr. Shashi Bhushan is right.

Please refer again.

vaibhav (M.Com. CA ) (178 Points)
Replied 04 October 2009

DEAR RAVI,

THE PERIOD OF HOLDING FOR COMPUTATION OF STCG OR LTCG IN THE CASE OF PROPERTY ACQUIRED BY WAY OF GIFT , WILL ,INHERITENCE ETC.SHALL BE DETERMINED ON THE BASIS OF DATE OF ACQUISITION FOR LAST OWNER , AND THE COST SHALL BE TAKEN AT THE VALUE PAID BY THE DONOR WHO ACQUIRED THAT PROPERTY THROUGH PAYMENT (NOT GIFT ,WILL ....)

SO FAR THE ABOVE CASE CONCERNED PERIOD OF HOLDING SHALL BE 5 MONTHS.

CMA RAVI GUPTA (MT in VPL) (493 Points)
Replied 04 October 2009

DEAR VAIBHAV,

I THINK YOU DON'T KNOW ABOUT THE SECTION 49(1) COST OF THE PREVIOUS OWNER.IT IS SAID THAT IN THIS SECTION THAT ANY PROPERTY WHICH IS RECEIVED UNDER A GIFT,WILL(NOT ACQUIRED BY PURCHASE) THE PERIOD OF HOLDING OF PREVIOUS OWNER WILL COUNTED WHO PURCHASED THE PROPERTY.

IN ABOVE THE SITUATION C ACQUIRED THE PROPERTY BY PURCHASED AND B ACQUIRED THE PROPERTY BY WILL. SO PERIOD OF HOLDING OF C WILL BE COUNTED AND PERIOD OF HOLDING OF B WILL NOT BE COUNTED

I THINK VAIBHAV YOU UNDERSTOOD THE SECTION OF 49(1) WITH PROPER EXPLANATION

CA Manish K Dhoot (CA, B. Com, NCFM, CPCM) (5015 Points)
Replied 04 October 2009

u r correct that period cost of previous owner will be taken. the period for previous owner is checked only for Long term/ short term gain.

but the indexation will be done of that yr in which assessee becomes owner.

vaibhav (M.Com. CA ) (178 Points)
Replied 04 October 2009

DEAR RAVI ,

KINDLY GO THROUGH RESPECTIVE SECTION AND UNDERSTAND ITS INTERPRETATION PROPERLY.

AS PER SECTION COST OF PREVIOUS OWNER WHO ACQUIRED SUCH PROPERTY OTHER THAN BY WAY OF GIFT ,WILL IS TAKEN AS COST OF ACQUISITION, BUT PERIOD OF HOLDING FOR INDEXATION PURPOSE IS TAKEN AT THE ACTUAL PERIOD OF HOLDING FOR THE LAST OWNER.

GAIN / LOSS IS WHETHER STCG OR LTCG IS DEPEND UPON HOLDING PERIOD WHICH STARTS FROM THE DATE OF ACQUISITION FOR THAT OWNER WHO PAID FOR PROPERTY (NOT INHERITED,GIFTED) TILL DATE OF SALE .

BUT INDEX VALUE IS TAKEN FOR THE YEAR OF SALE AND FOR THE YEAR OF ACQUISITION FOR LAST OWNER WHO IS SELLING THE PROPERTY.

REGARDS

VAIBHAV

Shashi Bhushan (Learner, Jalandhar) (996 Points)
Replied 07 October 2009

Originally posted by :Deepika Manglani
"	Mr. Ravi Gupta, you are absolutely wrong & Mr. Shashi Bhushan is right. Please refer again.	"

thanks deepika!

CMA RAVI GUPTA (MT in VPL) (493 Points)
Replied 08 October 2009

MR.SHASHI BHUSHAN AND MISS.DEEPIKA.................

IF DO U HAVE CA FINAL BOOK OF YOGENDRA BANGAR THEN SEE THE EXAMPLE NO. 15 ON PAGE NO. 7.27 (COMPUTATION OF CAPITAL GAINS IN THE CASE OF PROPERTY ACQUIRED IN SECTION 49(1) MODE).

LET'S SEE A ANOTHER EXAMPLE.....................

A inherited a house from his father B on 1 APRIL 2005 and the same was inherited by B from his father C on 1 APRIL 1995 and the same was inherited was by C from his father D on1 april 1990.Dpurchased the property on dated 1 july 1988.
A sold the house on 1 SEPT.2005.What is the period of holding for A?