Taxes on selling a immovable property

First we need to compute the cost of acquisition of the land.

Cost of acqusition of land is the value of property given to the land owner.

Now consider cost of construction of the houses [all 5] This is the cost of constructing building

Divide this by 5, you get cost of construction of your house.

Now take proportionate cost of land [Index it] and proportionate cost of construction[index it]

If the construction was not finished within the same financial year , then you will have to compute 2 capital gains

[In light of judgement in C.R. Subramanian]

1 will be for proportionate selling of land and other will be proportionate selling of building [1 house]

[Other view points are most welcome]

Thanks for throwing some light Z,

Please also help me know the following

1. Capital gains on land should be for the whole portion of land OR only the part of land on which my house is built.

2. Proportionate cost of land should be indexed from the date of statring of constrution OR the date when the land owner had purchased the land.

Thanks in advance.

In 1991 , when the land was acquired by your father , the land owner transferred his 20% of the land to your father IN CONSIDERATION of 20% of the land and 20% of the built up area [House property unit/ flat]

Whats the land which your father would left out with? 80% of the land

Now out of this 80% of the total land , 3 units were sold further, for which he transferred 60% of the total land and the built up [3 units]

I am presuming that necessary computations were done at the time of selling those 3 units

Now you are left with 20% of the land and 1 unit

Since the property was constructed I think it is safe to assume that it was not completed within same financial year

NOTE- HAD CONSTRUCTION BEEN COMPLETED IN FINANCIAL YEAR 1991, THE FOLLOWING COMPUTATION WOULD NOT BE REQUIRED

The capital gain on land and the capital gain on building shall be bifurcated [There are 6 or so High Court judgements, am citing the one which I can currently recall i.e C.R. Subramanian]

Now for the purpose of indexation of land, period of holding of 20% of land shall be computed from date of its acquisition.

and for the purpose of indexation of building , period of holding of 1 unit shall be from the date when the unit was constructed.

Next point is what is the cost of acquisition of the land to your father

Your father had acquired 100% of the land and for that he has given 20% of the land and 20% of total unit [1 unit] [Net he has 80% of land only]

Therefore cost of acquisition of the land is 20% of the cost of land + cost  of 1 unit (which was given)

[The fair value of land can be taken as cost of land for your father]

Now how to compute cost of  of 1 unit ?

There are 2 ways to compute this

One is you take the sale value and other is you take the cost of construction.

In case sale value method is used and different floors or units have different price, you need to compute WEIGHTED AVERAGE Value and apply this value to your share

say total sale price 100 L for 200 Sq yard and your area is 40 sq yard so value for you would be 20 Lacs

Alternatively you can use the total cost of construction and apportionate it to your share.

In case sales value method is used then it means that amount charged from land owner is at par with others and that he has earner profit under the head profit and gains from business and profession ,but  if construction cost approach is used then it means you are only recovering cost of construction from him and you have not gained anything.

(See whether your father filed return and treated that sale of 3 units as business income)

I hope it helps.