taxability-sale of willed property by three heirs

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DEAR FRIENDS,

A WILLED PROPERTY IS SOLD BY THREE SONS TO DISTRIBUTE INHERITED PROPERTY AMONGST THEM.

WILL IT ATTRACT CAPITAL GAIN TAX AND WHAT WILL BE TAKEN AS COST -THE PRICE AT WHICH THE SAME WAS PURCHASED BY FATHER OR COST AS PER INDEX IN THE YEAR 1981. CAN IT BE CONSIDERED AS DISTRIBUTION OF PROPERTY OF H.U.F. WHERE TAXABILITY IS NOT THERE AS THE SAME IS NOT CONSIDERED EVEN TRANSFER.

PL. GIVE VIEW ALONGWITH CASE LAW IF AVAILABLE IN THIS REGARD.

 

THANKS

 

VIJAY

Replies (1)

In case inherited property or property received through a  will  is sold, cost to the previous owner will be taken as cost of acquisition. In case the  previous owner  has purchased the property prior to 1.4.1981, the  previous owner's cost or market value of the property as on 1.4.1981, at the option of the assesee,  will be taken as cost of acquisition. 

For the purpose of deciding Long Term or Short Term Capital Gain, holding period of previous owner will be taken into account and if the capital asset is long term indexation will be done in respect of year of sale to year of acquisition or 1.4.1981 , as the case may be.

At the first instance when property is coming in the hands of sons from father either through gift or will, it will not be treated as transfer and hence question of capital gain does not arises here. However, when the property is sold by the sons to other(s) , then tha will be called transfer and in such situation capital gain would arise.

 

 


 


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