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Need help on long term capital gains tax calculation for it returns filing

Sriii (Others) (39 Points)

29 July 2018

Hi,

I purchased a residential flat in FY2011-12 for 25 lakhs but sale consideration was mentioned as 15 lakhs in sale deed during registration. I sold the flat last year during FY2017-18 for 40 lakhs and the amount of 40 lakhs was transferred to my bank account by buyer.

For LTCG calculation, would my cost of acquisition be considered as 15 lakhs (consideration value in sale deed) or 25 lakhs (total amount paid to builder) ??? Please help with your expert advise as I want to file my IT returns accordingly before 31 July.

Regards,

Sri

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7 Replies

A B Kundu (Professional) (1422 Points)
Replied 30 July 2018

You can take 25L as you can state this extra 10L as incidental expenses related to acquiring such flat. But it is recommended only when you have certain proof of such payment. If the department doesn't select your return for scrutiny then you are saved, otherwise, if department raises objection, you can't defend yourself.

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Sriii (Others) (39 Points)
Replied 30 July 2018

Hi Kundu,

Thank you for your reply. During purchase, I paid 25 lakhs to builder in tranches through online banking so I have proofs of payment. But as you said I may not have justification about why it was registered at 15 Lakhs in sale deed when I paid 25 Lakhs.

While sale deed mentions sale consideration value as 15 lakhs, the sale agreement which I and builder signed prior to registration captures value as 25 lakhs. Can I use sale agreement document to justify flat acquisition cost as 25 lakhs ? Will the sale agreement copy help me in justifying my case ? Sale agreement was not registered though but signed by both builder and me.

Regards,

Sri

Ashok Kumar (CA qualified) (389 Points)
Replied 30 July 2018

Yes, you can claim full 25 lakhs as cost. Just check from your sale deed whether it also includes the descripttion about the building. There can be two ways - 1. You buy the land, you engage the builder for construction.. then you don't register for the value of building. 2. The builder builds the building and sell both land and building to you. Then both the values should be registered.

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RAJA P M ("Do the Right Thing...!!!") (127542 Points)
Replied 30 July 2018

Yes... I agreed to Mr Ashok Kumar.,

See the descripttion of deed. If it's shown land and building then you ll consider both value (25lakhs). Otherwise it will taken 15 lakhs...

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CA Dheeraj S (Practicing CA) (427 Points)
Replied 30 July 2018

The Cost of acquisition to be considered for computation for CA shall be Rs. 15 lacs until the deed clearly states that the value for the land and building appurtenant thereto was 25 lacs (15L + 10L).

If the deed is silent with respect to the payment of Rs. 10lacs, Online payment transactions for the 10L will not be legally considered for Cost of acquisition as it is paid over and above the declared purchase value in the office of registrar.

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Sriii (Others) (39 Points)
Replied 30 July 2018

Originally posted by : CA Dheeraj S
	The Cost of acquisition to be considered for computation for CA shall be Rs. 15 lacs until the deed clearly states that the value for the land and building appurtenant thereto was 25 lacs (15L + 10L). If the deed is silent with respect to the payment of Rs. 10lacs, Online payment transactions for the 10L will not be legally considered for Cost of acquisition as it is paid over and above the declared purchase value in the office of registrar.

Hi Dheeraj,

Thank you. So my long term capital gains with out indexation will be 40 - 15 = 25 lakhs ?

Regards,

Sri

Peeyush (Proprietor) (54 Points)
Replied 31 July 2018

Hi Srinivas, You have received replies for both 15 and 25 laks as taking your cost of purchase, but if you are clear on saving the said long term tax by reinvesting in another house by paying the entire sale consideration received of 40 lacs, then there will not be much difficulty in deciding the course of action u/s. 54.

Alternately if you want to stick to purchase consideration of 25 lakhs, then the unregistered agreement might not be of much help as it can be cooked up. Also if there is some genuine communication from builder to you, like reminders for installment/tranches due for 25lakhs, then am sure the goof up of 15 lakhs can be over powered.

You can also check the ready recknor cost of purchase in INDEX 2 of your purchase agreement and if needed, pay differential stamp duty and rectify the said purchase agreement from 15 to 25 lacs. Ya i know its too much of an ask but hope it helps.

Good luck!

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