Search Results For: capital gains


QUERY: The piece of agricultural land owned by the assessees is surrendered to Govt. urban land improvement authorities under land for land scheme. The plot is allotted after 2-3 years. What should be the date of acquisition for such plot received on surrender, for treatment of capital gain at the time of sale
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For the purpose of capital gain at the time of sale of allotted plot, the date of allotment of plot would be considered as date of acquisition.

QUERY: An assessee had purchased agricultural land in 1991 which was subsequently surrendered to the local authority for their development scheme in 2004. In 2012 he was allotted a plot of land for the agricultural land surrendered in 2004. What should be the date of acquisition of plot of land allotted by the local authority in 2012 and sold in 2013?
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The date of acquisition of plot of land allotted by the local authority on surrender of agricultural land would be 2012, as section 49 r.w.s. 2(42A) of the Act would not be applicable to such

QUERY: Assessee along with other family persons had inherited a row house from his father during 2008. Row House was originally constructed in 1953. During 2009 said row house was demolished and residential building was constructed by all the legal heirs. In the building assessee was entitled for 2 flats. Building construction was completed in 2012 and immediately on completion assessee had sold one of the two houses allotted to him. What is the nature of gains on sale of flat? What would be cost of acquisition for the said house?
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Section 49(1) of the Income-tax Act, 1961 prescribes for cost with reference to certain modes of acquisition. The section reads as under:

“Where the capital asset became the property of the assessee

QUERY: Payment of regular installment for the house to be allotted. The house has been booked but the same will the delivered later on after several years (Possession later on – on completion of project by the housing board of the Govt./ Builders). It can be illustrated as under:

1. House booked & advance taken 1-4-1995

2. Installment payment on regular basis from 1-4-1996

3. House allotted (No. given) 1-4-2007

4. Possession given 1-4-2008

5. Registration u/s 17A 30-10-2008

6. Sold on 30-9-2011

What will be position of indexation for the cost of acquisition? What will be the date of acquisition?
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From the fact it is clear that house is held by the assessee from 1-4-2008 when the possession is received. Therefore indexation would be available from the same date

QUERY: A person acquired inherited property before Independence. Thereafter, he had obtained, the court order for legal heirship in the Financial Year 1991/92, At that time stamp duty was paid amounting to Rs. 1,98,840/-. Can it be considered as cost for indexation?
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Section 49(1) provides that where the capital asset acquired by an assessee by way of inheritance, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it. In this case,

QUERY: Mr. A retired from a partnership firm. Upon retirement, the assets of the firm are revalued and the excess amount is credited to each partner’s capital account. Mr. A is paid the amount standing to his capital account [which is inclusive of revaluation amount]. What would be tax implications in the hands of the firm and/or in the hands of the Mr. A?

Will the position be different if:

(i) Instead of revaluation being carried out in the books of account, a lump sum huge amount is paid to Mr. A by drawing up a memorandum of settlement.

(ii) The amount paid to Mr. A is debited to the rest of the partners’ account or is debited goodwill account of the firm.

(iii) There is admission of a new partner who brings the amount required to be paid to Mr. A and who is given the same share as of Mr. A

(iv) There is no new admission and the existing partners distribute the share of Mr. A equally /unequally.
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Section 45(4) of the Income-tax Act, 1961 provides that, profits or gains arising from transfer of capital assets by way of distribution of capital assets on dissolution of a firm, association, etc. “or otherwise” shall be chargeable to tax as income of the firm, association, etc. of the previous year in which the said transfer takes place and for purpose of section 48,

QUERY: A firm having three partners and doing construction work.

In the said firm, there are tippers and JCB machines standing in balance sheet for business purpose.

Out of three partners, one partner wants tipper and another partner wants JCB machinery for his individual business purpose.

Can it be the transferred by debiting their capital account and crediting machinery account during the continuation of partnership business with-out attracting capital gain tax.

What will be position, if the said transaction is effected on dissolution of firm?

Further, if the firm is decided to be dissolved on April 01, 2016 and the said transaction is made then as to whether the entry is to be passed on March 31, 2016 or April 01, 2016 and in that circumstances as to which date will be treated for taxation purpose i.e. March 31, 2016 or April 01, 2016 and in which year liability to pay income tax, if any, will arise?
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If plant and machinery are withdrawn by the partners at book value during the continuance of partnership firm, then, the same can be debited to partners ac-count and credited to plant and machinery account in such case there is no question of any liability of capital gains. [See Malabar Fisheries Co. [120 ITR 49 (SC)]

QUERY: BP was holding certain shares since 2010 as stock-in–trade. On October 30, 2013, he converted certain shares of public listed companies into capital asset, by passing a journal entry at the book value of Rs. 5 lakhs. He intends to sell the same through stock exchange. He wants to know how his tax liability will be computed?
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Unlike section 45(2), there is no provision under the Income-tax Act, when the stock-in-trade is converted into capital asset. However in the extant case, BP was holding shares of listed companies as stock-in-trade and he had converted the same into capital asset as on October 30, 2013, which he wants to sell through stock exchange. In this case,

QUERY: M/s. GE is a registered partnership firm in the business of property development. It holds certain residential flats / office premises, which are not yet sold and which are held as stock-in-trade. Out of such properties, it intends to distribute certain premises among the partners at book value, by journal entries. It wants to know –

(i) What are the implications under the Income- tax Act, 1961 and under Stamp Duty / Registration Act?

(ii) Will it make any difference if the distribution takes place upon dissolution? How accounts are to be settled?

(iii) What will be the character of the property received in the hands of the partners?

As regards the balance stock remaining with the firm, it desires to know what are the implications under Income-tax Act, 1961 and Wealth Tax Act, 1957?
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(i) Section 45(4) of the Income-tax Act, 1961 would not be applicable, as M/s. GE is holding properties as stock-in-trade.

Now, as per the query M/s. GE want to distribute the stock-in-trade to its partners. In other words, the partners would withdraw the stock from business. In Sir Kikabhai Premchand v. CIT [24 ITR 506],

QUERY: Assets being land and building acquired on 1-8-1978 for Rs. 2,00,000/- and being used in business on which year to year Depreciation allowed W. D. V. as on 1-4-2009 come to Rs. 20,000/-. The Assessee sold the entire depreciated property on 25-3-2010 for consideration of Rs. 10,00,000/-.

What will be taxable income as business income, long term capital gain, short term capital gain and tax liability.
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From the query, it is not clear whether the building forms a part of block of assets, as no depreciation is allowable on the land as per CIT vs. Alps Theatre 165 ITR 377 (SC). Followed by the Delhi Tribunal in Dy. CIT vs. Capital Caps (P) Ltd. 114 ITD 286.