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Long term capital gains

CA PAVAN KUMAR (CHARTERED ACCOUNTANT) (68 Points)

07 July 2017

I came across a case. A person inherited a residential house from her father through a will (will was dated Dec 1965).

In 2016, she sold the property. From the sale consideration, half of the amount was invested in a new residential house (new house is registered in her son's name). Balance amount, they have kept in fixed deposits. Now, the queries are:

1. Cost to previous owner not known - So what is the way forward;

2. Can the new house registered in son's name qualify for deduction.

Thanks

Pavan

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 07 July 2017

1. Valuation by Approved valuer as on 01.04.1981.

2. As per plain reading of the act........... No.

But search out for any case law in favour.....

1 Like

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 07 July 2017

fair market value as on 01.04.81 or cost to the previous owner whichever is more will be considered as COA and accordingly indexed and LTCG wud be calculated.
please note that the entire Capital Gains arising on transfer of capital gains needs to be invested in the new residential house. you can't invest it in any other mode else LTCG tax wud be payable @ 20%. if u want you can invest the. balance capital gains remaining in NHAI bonds upto 50 lacs only

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 07 July 2017

as per law of inheritance after the death of the assessee the property gets devolved on the immediate legal heirs. since you are the immediate legal heir of your father property needs to be registered in your name only and not in your sons name else you won't get the tax benefit

1 Like