Search Results For: 45


QUERY: An old lady was residing at Malad in tenanted chawl having about 1000 sq. ft. area. After her death her daughter-in-law became successor and continued to live there.
Subsequently the building was re-developed and she was allotted two flats of 650 sq. ft. each in her name in exchange of surrender of tenancy right. Out of which one was sold by her at an handsome price.
Now the ITO wants to tax the whole sum as long term capital gain without allowing any deduction as purchase value or cost price plus index cost.
Kindly advice whether the AO is correct?
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The Finance Act, 1994 has amended the provisions relating to capital gains for the purpose of taxing the capital gains arising from transfer of tenancy right.

QUERY: Cost to be taken on the basis of original cost of land surrendered or the estimated value on the date of allotment? What should be the period of holding?
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The term ‘exchange’ has been specifically defined in section 118 of the Transfer of Property Act,

QUERY: What shall be the tax implications (LTCG), on sale of shares:
a) Purchased / acquired by gift / allotment / purchase before October 1, 2004 where no STT was paid (it was not through a stock exchange).
b) Acquired before October 1, 2004 by purchase through broker from recognized stock exchange. No STT was paid.
c) Shares acquired after October 1, 2004 through off market purchase or gift but no STT was paid.
d) Purchase / acquisition before October 1, 2004 through IPO’s / FPOs/ Bonus issue / Right issue by company are eligible for exemption u/s. 10(38) though no STT was paid as there was no share transaction). Sale of shares shall invite LTCG after availing indexation benefit.
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So in queries (a) and (b) purchased / acquired before October 1, 2004, the transaction would be chargeable as LTCG @ 20%. In case of query (c) purchased before October 1, 2004 off market where no STT was paid would also be chargeable as LTCG @ 20%. In case of query (d) from the facts, it is liable as LTCG @ 20%. However, as per explanatory memorandum, it has been indicated that purchase through IPO, FPO bonus or right issue by a listed company, acquisition by non-resident as per FDI policy etc., may be exempt, which means others are liable to tax.

QUERY: A flat booked in 2013 and paid the amount in installments since then. First payment and registration done in 2017. Possession given in 2017 on registration though almost full payment was given on allotment in 2013 and subsequent installments paid between 2013 & 2016. What will be the date of acquisition for taxation of capital gains & indexation of payment?
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The Bombay High Court in CIT v. Mrs. Hill J. B. Wadia [216 ITR 376] has observed that “what we have to see is whether the assessee has acquired a right to a specific flat in such a building which is being constructed by the builders / society and whether he has made substantial investment within the prescribed period which will entitle him to obtain possession of the flat so constructed and in which he intends to reside. The material test in this connection is domain over the flat and investment in it”. So, on the basis of the fact that querist has invested substantial amount in 2013, though possession and registration was in 2017, the date of acquisition would be 2013 for taxation of capital gains.

QUERY: Assessee is a developer of housing complex. He intends to sell the all the flats in a building constructed. However latter on instead of selling flats assessee gave them on the rent. Under which head of income such rental income would be taxable? Further if sells such flats after 7/8 years to same tenants. Whether sale proceeds would be taxed as business income or capital gains?
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Though, the assessee being a developer and developed housing complex with intention to sell the flats. Due to circumstances, he could not sell the flats and therefore he has rented out the same. The income from renting outould be assessed under the head “Income from house property”.

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.

QUERY: ‘A’ has purchased a plot in March, 2010 for Rs. 10/- lakh and spent Rs. 5/- lakh for construction during F.Y. 2011-12, and Rs. 5/- lakh during the F. Y. 2012-13. He sold the entire house in December, 2014 for Rs. 50 /- lakh Whether it is long-term or short-term gain?
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Section 2(29A) defines “Long term capital asset” which means a capital asset which is not a short term capital asset. Section 2 (42A) defines “Short term capital asset” which means a capital asset held by an assessee for not more than thirty six months, other than listed shares. In that case, a period of not more than the twelve months to be considered for short term capital asset.

QUERY: An individual booked a flat in a building in April 2012, allotted flat no. A-1. Building is completed in March 2015 and possession given. The flat is resold in May 2016 whether it will be long term capital gain or short term capital gain
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It is a long term capital gain as per Punjab and Haryana High Court in Mrs. Madhu Kaul v. CIT [363 ITR 54]. In that case, the assessee was allotted a flat on June 07, 1986 conveyed on June 30, 1986. The assessee paid the first installment on July 04, 1986. The flat was later identified and delivery of possession was given on November 30, 1988.

QUERY: In case of a Partnership firm, the assets revalued and the amount was credited to the capital account of the partners. After few months, one of the partners retired and the firm paid the amount which was standing to the Capital Account (after revaluation) of the retiring partner. Mumbai ITAT in the case of Sudhaker M. Shetty has taken the view that amount received on retirement is taxable in the hands of partner. What is your view in this matter? There are various judgments wherein it is held that, amount received by partner on retirement is not liable to tax.

(i) Addl. CIT v. Mohanbhai Panabhai [165 ITR 166 (Guj.)(HC)]

(ii) Tribhovandas G. Patel v. CIT [236 ITR 515 (SC)]

(iii) Prasant S. Joshi v. ITO [324 ITR 154 (Bom)(HC)
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The manner of settlement of account may decide liability. In Sudhakar M. Shetty v. ACIT [130 ITD 197 (Mum)], the retirement deed conveyed interest in immovable property and after retirement he had no interest over the assets of the firm.

QUERY: Mr. Landlord gives its premise to tenant for first time charging premium of Rs. 50/- lakh and monthly rent of Rs. 10,000/- per month. Assessee’s contention is that since it continued to be owner premise, whether tax is payable on premium charged?
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The Supreme Court in A. R. Krishnamurthy & Another v. CIT [176 ITR 417] has held that “the grant of mining lease was transfer of ‘capital asset’ within the meaning of section 45 of the Income-tax Act, 1961. The cost of acquisition of the land would include