17
GAAP BRIGHT; (gaapbright.com; 011-41404111; www.taxgururanjeetkunwar.com) 1 Income from Capital Gains FCA Ranjeet Kunwar Question 1: Mr. Shiv Subscribed 1,000 shares @ ` 120 each on 15-11-2007. One bonus share for every two shares held, are allotted on 20-08-2012. All shares are sold for ` 390 each on 15-07-2013. Brokerage paid 0.5%. Shares are non-listed. Answer: Computation of taxable capital gain Assesse: Mr. Shiv TY: 2013-2014 AY: 2014-2015 Capital asset: 1000 Original shares [Financial Asset] Period of Holding: 15-11-2007 to 15-07-2013 (LT) Particulars Amount (Rs) Sales consideration 3, 90,000 Less:-Indexed Cost of Acquisition (2,04,501) (120000/551*939) Less:-Indexed Cost of Improvement NIL Less:-Cost of Transfer (1,950) Long Term Capital Gain 1,83,549 Computation of taxable Capital Gain Assesse: Mr.Shiv TY: 2013-2014 AY: 2014-2015 Capital asset: 500 bonus shares [Financial Asset] Period of Holding: 20-08-2012 to 15-07-2013 (ST) Particulars Amount (`) Sales consideration 1, 95,000 Less: - Cost of Acquisition nil Less:-Cost of Transfer (975) STCG 1, 94,025 Question 2: Suppose shares are listed in NSE and STT is paid at the time of sale 0.1 % on transaction value. Answer: If shares are listed and STT is paid; then LTCG is exempt u/s 10(38); and STCG will be taxable @ 15% under section 111A. Question 3: Mr. Narayan acquired a Building for ` 1,20,000 on 05-01-1976. He paid Brokerage ` 5,000 and Stamp duty ` 30,000 at the time of purchased. The cost of improvements are incurred as under:

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Income from Capital Gains FCA Ranjeet Kunwar

Question 1: Mr. Shiv Subscribed 1,000 shares @ ` 120 each on 15-11-2007. One bonus share for every two shares held, are allotted on 20-08-2012. All shares are sold for ` 390 each on 15-07-2013. Brokerage paid 0.5%.

Shares are non-listed. Answer:

Computation of taxable capital gain

Assesse: Mr. Shiv TY: 2013-2014 AY: 2014-2015

Capital asset: 1000 Original shares [Financial Asset]

Period of Holding: 15-11-2007 to 15-07-2013 (LT)

Particulars Amount (Rs)

Sales consideration 3, 90,000

Less:-Indexed Cost of Acquisition (2,04,501)

(120000/551*939)

Less:-Indexed Cost of Improvement NIL

Less:-Cost of Transfer (1,950)

Long Term Capital Gain 1,83,549

Computation of taxable Capital Gain

Assesse: Mr.Shiv TY: 2013-2014 AY: 2014-2015

Capital asset: 500 bonus shares [Financial Asset]

Period of Holding: 20-08-2012 to 15-07-2013 (ST)

Particulars Amount (`)

Sales consideration 1, 95,000

Less: - Cost of Acquisition nil

Less:-Cost of Transfer (975)

STCG 1, 94,025

Question 2:

Suppose shares are listed in NSE and STT is paid at the time of sale 0.1 % on transaction value. Answer:

If shares are listed and STT is paid; then LTCG is exempt u/s 10(38); and STCG will be taxable @ 15% under section 111A.

Question 3:

Mr. Narayan acquired a Building for ` 1,20,000 on 05-01-1976. He paid Brokerage ` 5,000 and Stamp

duty ` 30,000 at the time of purchased. The cost of improvements are incurred as under:

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Income from Capital Gains FCA Ranjeet Kunwar

` 90,000 on 02-01-1980

` 1,50,000 on 23-12-1987 ` 2,40,000 on 01-07-1991.

On 12-12-2013, building is sold for ` 55,00,000. Brokerage paid ` 50,000 at the time of sale. Compute

taxable capital gains in the hand of Mr. Narayan. FMV as on 01-04-1981 ` 1,40,000

Answer: Computation of taxable Capital Gain

Assesse: Mr. Narayan TY: 2013-2014 AY: 2014-2015

Capital asset: Building [Non-Financial Asset]

Period of Holding: 05-01-1976 to 12-12-2013 [LT]

COA: [Asset acquired before 1-04-81]:-higher of actual cost (1, 55,000) or FMV as on 1-04-81 (1, 40,000) i.e. 1, 55,000

Particulars Amount (Rs)

Sales consideration 55, 00,000

Less:-Indexed Cost of Acquisition (14,55,450)

(155000 ÷100 X 939)

Less:-Indexed Cost of Improvement

Before 1-04-1981= ignored

During 87-88

(150000 ÷ 150 X 939) (9,39,000)

During 91-92

(2, 40,000 ÷ 199 X 939) (11,32,462)

Less:-Cost of Transfer (50, 000)

LTCG 19,23,088

Question 4:

Mr. Jay (non-resident) purchases shares of D Ltd. an Indian company by remitting US $.

Cost of acquisition (10,000 shares) ` 4,50,000

Date of acquisition 10-12-2007

6,000 shares are sold on 02-08-2013 for ` 80 each.

Brokerage paid ` 2/- per share at the time of transfer.

Compute taxable capital gain. Exchange rates are as under:

Date Bid rate Ask rate

On 10-12-2007 43.50/- 44.20/-

On 02-08-2013 49.60/- 50.90/-

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Income from Capital Gains FCA Ranjeet Kunwar

Answer: [By applying 1st proviso to section 48] Computation of Taxable Capital Gain

Assesse: Mr. Jay (NR) TY: 2013-2014 AY: 2014-2015

Capital Asset: - 6000 shares (FA)

POH: 10-12-2007 TO 02-08-2013 (LT)

Particulars Amount (`) Rate Amount($)

Sales consideration 4, 80,000 ÷ 50.25 9552.24

Less: - COA 2,70,000 ÷ 43.85 (6157.35)

Less: -COT 12,000 ÷ 50.25 (238.81)

LTCG in ($) 3156.08

LTCG in (Rs) = 3156.08 X 49.60 = Rs1,56,542

Question 5: Mr. Nath purchased route permits on 03-03-1978 for ` 50,000. The FMV of route permits on 01-04-1981 was ` 1,30,000. The same is sold by him on 02-11-2013 for ` 14,00,000. Compute taxable capital gains.

Answer:

Computation of taxable Capital Gain

Assesse: Mr. Nath TY: 2013-2014 AY: 2014-2015

Capital asset: route permits [Non-Financial Asset]

Period of Holding: 03-03-1978 to 02-11-2013 (LT)

Particulars Amount (Rs)

Sales consideration 14, 00,000

Less:-Indexed Cost of Acquisition (4, 69,500)

50,000 ×939

100

Less:-Indexed Cost of Improvement nil

Less:-Cost of Transfer nil

__________

LTCG 9,30,500

Question 6: Mr. Davidas acquired a building for ` 3,40,000 on 20-09-1988. Cost of improvement of ` 5,00,000 was

incurred during the year 2001-02. The building is destroyed by fire on 20-09-2010. Building was insured and therefore insurance compensation of ` 40 lacs is received by Devidas on 09-09-2013. Compute

taxable capital gains.

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Answer:

Computation of taxable Capital Gain on receipt of

Insurance compensation by virtue of section45 (1A)

Assesse: Mr. Devi Das TY: 10-11 AY: 2014-2015

Capital asset: Building [Non-Financial Asset]

Period of Holding: 20-09-1988 to 20-09-2010[LT]

Particulars Amount (`)

Sales consideration 40, 00,000

Less:-Indexed Cost of Acquisition (15,01,491)

3,40,000/161*711

Less:-Indexed Cost of Improvement (8,34,507)

500000/426*711

_________

LTCG 16,64,002

Question 7:

Mr. Ram and Gopi are the partners of M/S RG & Co. Mr. Ram transferred his personal building to Firm as his capital contribution on 12-12-2013. The FMV of Building at the time of transfer ` 30 lacs. However

Ram’s capital a/c is credited by ` 28 lacs. The building was acquired by Mr. Ram for ` 12,00,000 on 02-

02-2007. Compute taxable capital gains. Answer:

Computation of taxable Capital Gain

Assesse: Mr. Ram TY: 2013-2014 AY: 2014-2015

Capital asset: Building [Non-Financial Asset]

Period of Holding: 02-02-2007 to 12-12-2013 [LT]

Book Value of asset shall be taken as Sales Consideration [by virtue of section 45(3)]

Particulars Amount (Rs)

Sales consideration 28, 00,000

Less:-Indexed Cost of Acquisition

12,00,000 ×939

519 (21, 71,098)

Less:-Indexed Cost of Improvement nil

Less:-Cost of Transfer nil

LTCG 6, 28,902

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Income from Capital Gains FCA Ranjeet Kunwar

Question 8:

M/S RGM & Co. AOPs having three members R, G, and M. Mr. G is retired from AOPs on 12-11-13 and to settle his account balance a piece of land is transferred by AOPs. The FMV of Land at the time of transferred is Rs. 25,00,000. However G’s capital a/c is debited by Rs. 20,00,000. The Land was acquired by AOPs on 09-08-2001 for Rs. 8,00,000. Compute taxable capital gains. Answer:

Computation of taxable Capital Gain

Assesse: M/s RGM & Co (AOP) TY: 2013-2014 AY: 2014-2015

Capital asset: Land [Non-Financial Asset]

Period of Holding: 09-08-2001 to 12-11-2013 [LT]

FMV of asset shall be taken as Sale Consideration [by virtue of section 45(4)]

Particulars Amount (`)

Sales consideration 25, 00,000

Less:-Indexed Cost of Acquisition (17,63,380)

(800000/426*939)

Less:-Indexed Cost of Improvement NIL

Less:-Cost of Transfer NIL

LTCG 7,36,620

Question 9:

Mr. Surya sold his house for ` 49,00,000 on 20-12-2013 which was acquired by him by way of Gift from

his father on 09-10-2002 on the occasion of his 25th birthday. His father acquired the said house for `

12,00,000 on 02-09-1997. The costs of improvement on house are incurred as under:

` 2,00,000 by his father on 09-08-2001.

` 3,00,000 by him on 10-02-2008.

Brokerage of ` 40,000 was paid by his father at the time of purchased and ` 60,000 is paid by him at the time of sale. Compute taxable capital gains in the hand of Mr. Surya and his father. Answer: 1. No capital gain is required to compute in the hand of Surya’s father since the transaction of gift is not

treated as transfer u/s 47.

Computation of taxable Capital Gain

Assesse: Surya TY: 2013-2014 AY: 2014-2015

Capital asset: house [Non-Financial Asset]

Period of Holding: 2-09-1997 to 20-12-13 [LT]

COA u/s 49(1): COA for Surya = COA of previous owner i.e. 12, 40,000

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Particulars Amount (`)

Sales consideration 49, 00,000

Less:-Indexed Cost of Acquisition (35,17,704)

12,40,000/331*939

Less:-Indexed Cost of Improvement

During2001-2002

200000/426*939 (4,40,845)

During 2007-2008

300000/551*939 (5,11,252)

Less:-Cost of Transfer (60,000)

LTCG 3,70,199

Question 10:- Balance Sheets of Gopi Ltd. as on 31-03-2013

(Rs. in lakhs)

Paid up capital Reserves and surplus Liabilities division I division II division III

Rs. 2000 700

60

180 210

Fixed Assets Division I Division II Division III Other Assets Division I Division II Division III

Rs. 260 370 660

690 550 620

On 20-08-13 the Division III has been transferred by Gopi Ltd. under slump sale for Rs. 1200 lakhs. You are required to compute capital gains with the help of following additional information:-

(i) The value of fixed assets of Div. III includes a Land of Rs. 90 lakhs and balance is the WDV as per books of accounts. However WDV as per u/s 43(6) under the Income tax act is Rs. 520 lakhs.

(ii) The land which is included in the value of fixed assets is purchased at Rs. 50 lakhs in year 2000.

(Rs. 90 lakhs is revalued figure). (iii) Other assets of Division III represent Book Value of non-depreciable assets (i.e. Debtors, stock

cash etc.)

(iv) Division III is in existence since March 2009. Answer:

Computation of Taxable Capital Gains (By applying section 50B)

Assessee:- Gopi Ltd. (Company) Transfer Year: 2013-14 AY 2014-15 Capital Asset:- Division III (Non-financial Asset) POH :- March 2009 to 20-08-13 (LT)

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Income from Capital Gains FCA Ranjeet Kunwar

Particulars Amount (`)

Sale Consideration (Lump Sum) 1200 Lakhs

Less: Cost of Acquistion (W.N. 1) (980 Lakhs)

Long-term Capital gains 220 Lakhs

Working note 1: Calculation of Net-Worth

Value of Assets

Depreciable Fixed Asset 520 Lakhs

Non-Depreciable Asset (Land) 50 Lakhs

Other Assets 620 Lakhs Value of Total Asset 1190

Less: Value of Liabilities (210)

Net Worth 980 Lakhs

Question 11:

Mr. Rajveer sold a house to his friend Mr. Viraaj on 1st

November, 2013 for a consideration of ` 26,00,000. The Sub-Registrar refused to register the document for the said value, as according to him, stamp duty had to be paid on ` 54,00,000. Mr. Rajveer preferred an appeal to the Valuation Officer, who fixed the value of the house as ` 35,00,000 (` 20,00,000 for land and the balance for building portion). The differential stamp duty was paid, accepting the said value determined. Assuming that the fair market value is ` 40,00,000, what are the tax implications in the hands of Mr. Rajveer and Mr. Viraaj for the assessment year 2014-15? Mr. Rajveer had purchased the land on 1st June, 2010 for ` 5,20,000 and completed the construction of house on 1st October, 2011 for ` 12,00,000.

Answer:

Actual Sales Consideration 26 Lakhs Stamp Duty Value 54 Lakhs Valuation Officer’s Value 35 Lakhs As per section 50C, ` 35 Lakhs shall be taken as Sales Consideration.

For Land ` 20 Lakhs

For Building ` 15 Lakhs

In the hand of Rajveer

1. Capital Asset: Land (Non-financial asset)

Period of holding 01-06-10 to 01-11-13 (LT)

Particulars Amount (`) Sales Consideration under section 50C 20,00,000 Less: Indexed Cost of Acquisition (6,86,751)

Long-term Capital Gains 13,13,249

2. Capital Asset:- Building (Non- financial asset) Period of holding 01-10-11 to 01-11-13 (ST)

Particulars Amount (`)

Sales Consideration under section 50C 15,00,000 Less: Cost of Acquisition (12,00,000)

Short-term Capital Gains + 3,00,000

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Income from Capital Gains FCA Ranjeet Kunwar

In the hand of Viraaj

1. As per section 56(2)(vii), where any immovable property is acquired for the consideration below the Stamp Duty Value or Value assessed by Valuation Officer, as the case may be, the benefit upon acquisition will be taxable as IFOS, if it exceeds ` 50,000.

Value assessed by Valuation officer ` 35,00,000

Less: Purchase price of Immovable property (26,00,000)

Benefit upon acquisition (IFOS) 9,00,000

2. Further section 49(4) provides, where the benefit upon acquisition of immovable property is taxable as IFOS, the value as assessed

by Valuation officer will become the cost of acquisition in the hand of buyer.

3. Therefore ` 35,00,000 will be the cost of acquisition in the hand of Mr. Viraaj.

Question 12:

Mr. Mahesh sold his residential house on 10-09-2013 for ` 38,00,000. It was acquired by him on 08-04-2008 for ` 9,45,000. Brokerage is paid 0.50% at the time of sale. Stamp duty was paid at the time of acquisition ` 45,000. Mahesh purchases new residential house on 01-07-2014 for the purpose of availing exemption for ` 20,00,000 at Pune. Compute taxable capital gains.

Answer:

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Mahesh Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Residential House (Non-Financial Asset)

Period of holding: 08-04-2008 to 10-09-2013 (Long-term)

Particulars Amount (`)

Sales Consideration 38,00,000 Less: Indexed Cost of Acquisition

9,90,000 ×939

582

(15,97,268)

Less: Cost of Transfer (19,000) Income from LTCG 21,83,732

Less: Exemption u/s 54 Purchase of new Residential House

(20,00,000)

Taxable LTCG 1,83,732

Question 13:

Mr. Harish sold his residential house on 13-11-2013 for ` 65,00,000. However Valuation as per Stamp Duty Authority has been fixed ` 70,00,000. It was acquired by him by way of will from his father on 08-05-2008. His father had acquired the same for ` 5,45,000 on 05-06-1999. Brokerage is paid 0.50% by Harish at the time of sale. Mr. Harish deposits ` 52,00,000 in CGDS on 31-07-2014. (Due date for filing ITR is 31-07-2014). He acquires new residential house for ` 40,00,000 by withdrawing amount from CGDS on 20-09-2015. Compute taxable capital gains.

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Harish Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Residential House (Non-Financial Asset)

Period of holding (taken from previous owner): 05-06-1999 to 13-11-2013 (Long-term)

Cost of Acquisition by virtue of section 49(1) : Cost to the previous owner; ` 5,45,000

Sale Consideration by virtue of section 50C:- Higher of actual or Stamp Duty Value; ` 70,00,000

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Income from Capital Gains FCA Ranjeet Kunwar

Particulars Amount (`) Sales Consideration 70,00,000 Less: Indexed Cost of Acquisition

5,45,000 ×939

389

(13,15,566)

Less: Cost of Transfer (0.5% of actual sales consideration) (32,500) Income from LTCG 56,51,934

Less: Exemption u/s 54 Amount deposited in CGDS within due date of ITR

(52,00,000)

Taxable LTCG 4,51,934

CONSEQUENCE OF UNUSED AMOUNT OF CGDS Unutilized amount in CGDS will be taxable as LTCG for the year in which three years has been expired from the date of transfer. Assessment Year 2017-18 (next following the year in which 3 years expired)

Particulars Amount (`)

Amount Deposited in CGDS in respect of which exemption u/s 54 was claimed 52,00,000

Less: Amount utilized to acquired new residential house (40,00,000)

Taxable LTCG 12,00,000 Question 14: Mr. Ramesh sold his residential house on 16-12-2013 for ` 46,00,000. It was acquired by him on 28-06-2006 for ` 12,40,000. Cost of Improvement of ` 1,29,000 was incurred during the year 2007-08. Brokerage of ` 32,000 is paid at the time of sale. Mr. Ramesh deposits ` 25,00,000 in CGDS on 15-07-2014. (Due date for filing ITR is 31-07-2014). He acquires new residential house for ` 18,00,000 by withdrawing amount from CGDS on 20-09-2015. Further he constructs additional floor on newly acquired residential house for ` 2,50,000 on 01-05-2016.Compute taxable capital gains.

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Ramesh Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Residential House (Non-Financial Asset)

Period of holding: 28-06-2006 to 16-12-2013 (Long-term)

Particulars Amount (`) Sales Consideration 46,00,000 Less: Indexed Cost of Acquisition

12,40,000 ×939

519

(22,43,468)

Less: Indexed Cost of Improvement

1,29,000 ×939

551

(2,19,838)

Less: Cost of Transfer (32,000) Income from LTCG 21,04,694

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Income from Capital Gains FCA Ranjeet Kunwar

Less: Exemption u/s 54 Amount deposited in CGDS within due date of ITR

(restricted to amount of LTCG)

(21,04,694)

Taxable LTCG NIL

CONSEQUENCE OF UNUSED AMOUNT OF CGDS Unutilized amount in CGDS will be taxable as LTCG for the year in which three years has been expired from the date of transfer. Assessment Year 2017-18 (next following the year in which 3 years expired)

Particulars Amount (`)

Amount Deposited in CGDS in respect of which exemption u/s 54 was claimed 21,04,694

Less: Amount utilized to acquired new residential house

Less: Amount utilized in construction of additional floor

(18,00,000)

(2,50,000)

Taxable LTCG 1,04,694 Question 15: Mr. Kartik sold his residential house on 15-10-2013 for ` 42,85,000. It was acquired by him on 18-09-2008 for ` 5,55,000. Brokerage is paid 0.50% at the time of sale. Stamp duty was paid at the time of acquisition ` 45,000. Kartik purchases new residential house on 01-11-2012 for the purpose of availing exemption for ` 25,00,000 at Jaipur. However the new residential house is sold for ` 39,00,000 on 12-05-2015. Brokerage paid ` 12,000 at the time of such sale. Compute taxable capital gains for AY 2014-15 and AY 2016-17.

Answer:

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Kartik Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Residential House (Non-Financial Asset)

Period of holding: 18-09-2008 to 15-10-2013 (Long-term)

Particulars Amount (`) Sales Consideration 42,85,000 Less: Indexed Cost of Acquisition

6,00,000 ×939

582

(9,68,041)

Less: Cost of Transfer (21,425) Income from LTCG 32,95,534

Less: Exemption u/s 54 Purchase of new Residential House

(25,00,000)

Taxable LTCG 7,95,534

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Income from Capital Gains FCA Ranjeet Kunwar

CONSEQUENCE OF NEW RESIDENTIAL HOUSE SOLD WITHIN THREE YEARS

1. To continue exemption, assessee must promise that he will not sell new residential house within three years from the date of acquisition of new house.

2. If new house is sold within three years, while computing capital gains on such transfer, the cost of acquisition of

new residential house shall be reduced by the amount of exemption availed earlier. Assessment Year 2016-17 Capital Asset: New Residential house (NFA) Period of holding: 01-11-2012 to 12-05-2015 (Short-term)

Particulars Amount (`)

Sale Consideration of new residential house 39,00,000

Less: Cost of Acquisition

Actual Cost 25,00,000

Less: Amount of exemption availed earlier (25,00,000)

Less: Cost of Transfer

(NIL)

(12,000)

Taxable STCG 38,88,000 Question 16: Mr. Shivram sold his urban agricultural land on 20-06-2013 for ` 16,00,000. The land was acquired by him on 20-11-2010 for ` 9,06,000. Brokerage is paid 0.50% at the time of sale. Shivram purchases New agricultural Land in urban area on 15-11-2013 for the purpose of availing exemption for ` 11,26,000. However the New agricultural Land is sold for ` 19,00,000 on 12-05-2015. Brokerage paid ` 5,000 at the time of such sale. Compute taxable capital gains for AY 2014-15 and AY 2016-17.

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Shivram Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Urban Agricultural Land (Non-Financial Asset)

Period of holding: 20-11-2010 to 20-06-2013 (Short-term)

Particulars Amount (`) Sales Consideration 16,00,000 Less: Cost of Acquisition

(9,06,000)

Less: Cost of Transfer (8,000) Income from STCG 6,86,000

Less: Exemption u/s 54B Purchase of Urban Agricultural Land

(restricted to amount of Capital gains)

(6,86,000)

Taxable STCG NIL

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Income from Capital Gains FCA Ranjeet Kunwar

CONSEQUENCE OF NEW URBAN AGRICULTURAL LAND SOLD WITHIN THREE YEARS 1. To continue exemption, assessee must promise that he will not sell new Urban Agricultural Land within three years

from the date of acquisition. 2. If new capital asset is sold within three years, while computing capital gains on such transfer, the cost of acquisition of

urban agricultural land shall be reduced by the amount of exemption availed earlier. Assessment Year 2016-17 Capital Asset: Urban Agricultural Land (NFA) Period of holding: 15-11-2013 to 12-05-2015 (Short-term)

Particulars Amount (`)

Sale Consideration of Urban Agricultural Land 19,00,000

Less: Cost of Acquisition

Actual Cost 11,26,000

Less: Amount of exemption availed earlier (6,86,000)

Less: Cost of Transfer

(4,40,000)

(5,000)

Taxable STCG 14,55,000 Question 17: R&Co. Partnership Firm sold its Land for ` 89,00,000 on 12-12-13. However value assessable as per Stamp Duty Authority is ` 96,00,000. The Land was acquired by Firm on 10-09-2003 for ` 23,00,000. Brokerage of ` 43,000 is paid at the time of sale. Firm subscribed Bond of NHAI for ` 40,00,000 on 17-06-2014 to avail exemption u/s 54EC. Compute taxable capital gains.

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: R&Co. Firm Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Land (Non-Financial Asset)

Period of holding: 10-09-2003 to 12-12-13 (Long-term)

Sale Consideration by virtue of section 50C:- Higher of actual or Stamp Duty Value; ` 96,00,000

Particulars Amount (`) Sales Consideration 96,00,000 Less: Indexed Cost of Acquisition

23,00,000 ×939

463

(46,64,458)

Less: Cost of Transfer (43,000) Income from LTCG 48,92,542

Less: Exemption u/s 54EC (since it has been subscribed after 6 months)

Not allowed

Taxable LTCG 48,92,542

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Income from Capital Gains FCA Ranjeet Kunwar

Question 18: Suppose in previous example bonds are subscribed on 09-05-2014.

Particulars Amount (`) Sales Consideration 96,00,000 Less: Indexed Cost of Acquisition

23,00,000 ×939

463

(46,64,458)

Less: Cost of Transfer (43,000)

Income from LTCG 48,92,542

Less: Exemption u/s 54EC

(40,00,000)

Taxable LTCG 8,92,542 Question 19: Mr. Raghunath sold his residential house on 03-10-2013 for ` 64,00,000. It was acquired by him for ` 15,40,000 on 05-06-2002. Brokerage is paid 0.50% by at the time of sale. Mr. Raghunath subscribed debentures of RECL of ` 3,50,000 on 30-01-2014 and deposits ` 25,00,000 in CGDS on 01-07-2014. (Due date for filing ITR is 31-07-2014). He acquires new residential house for ` 21,00,000 by withdrawing amount from CGDS on 20-09-2015. Compute taxable capital gains. Answer:

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Harish Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Residential House (Non-Financial Asset)

Period of holding: 05-06-2002 to 03-10-2013 (Long-term)

Particulars Amount (`) Sales Consideration 64,00,000 Less: Indexed Cost of Acquisition

15,40,000 ×939

447

(32,35,034)

Less: Cost of Transfer (0.5% of actual sales consideration) (32,000) Income from LTCG 31,32,966

Less: Exemption u/s 54 Amount deposited in CGDS within due date of ITR

Less: Exemption u/s 54EC Amount of Debentures of RECL

(25,00,000)

(3,50,000)

Taxable LTCG 2,82,966

CONSEQUENCE OF UNUSED AMOUNT OF CGDS Unutilized amount in CGDS will be taxable as LTCG for the year in which three years has been expired from the date of transfer. Assessment Year 2017-18 (next following the year in which 3 years expired)

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Income from Capital Gains FCA Ranjeet Kunwar

Particulars Amount (`)

Amount Deposited in CGDS in respect of which exemption u/s 54 was claimed 25,00,000

Less: Amount utilized to acquired new residential house (21,00,000)

Taxable LTCG 4,00,000 Question 20: Mr. Harikishan sold his Urban Agricultural Land on 12-10-13 for ` 62,00,000, which was acquired by him for ` 12,00,000 on 14-05-1999. To avail exemption, he acquired two Agricultural Land. One is situated in rural area which is acquired for ` 5,00,000 on 12-07-2014 and another is situated in urban area which is acquired for ` 13,50,000 on 30-07-2014. The new Rural Agricultural Land is sold on 13-09-2015 for ` 6,90,000. Compute taxable capital gain for AY 2014-15 and AY 2016-17. Answer:

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Harikishan Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Urban Agricultural Land (Non-Financial Asset)

Period of holding: 14-05-1999 to 12-10-2013 (Long-term)

Particulars Amount (`) Sales Consideration 62,00,000 Less: Indexed Cost of Acquisition

12,00,000 ×939

389

(28,96,658)

Income from LTCG 33,03,342 Less: Exemption u/s 54B

Purchase of Rural Agricultural Land Purchase of Urban Agricultural Land

(5,00,000)

(13,50,000)

Taxable LTCG 14,53,342

CONSEQUENCE OF NEW URBAN AGRICULTURAL LAND SOLD WITHIN THREE YEARS 1. To continue exemption, assessee must promise that he will not sell new Urban Agricultural Land within three years

from the date of acquisition. 2. In the given question assessee has sold rural agricultural land, hence there is no default committed by assessee.

Taxable capital gains for Assessment Year 2016-17 Nil Question 21: Mrs. Ruchika Sold Jewellery for ` 42,00,000 on 12-02-2014. Jewellery was acquired by him on 14-12-2001 for `14,09,000. Cost of transfer is 0.25%. She deposits ` 25,00,000 into CGDS account on 15-06-2014 to avail exemption. Compute taxable capital gains for Assessment Year 2014-15.

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Income from Capital Gains FCA Ranjeet Kunwar

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mrs. Ruchika Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Jewellery (Non-Financial Asset)

Period of holding: 14-12-2001 to 12-02-2014 (Long-term)

Particulars Amount (`) Sales Consideration 42,00,000 Less: Indexed Cost of Acquisition

14,09,000 ×939

426

(31,05,754)

Less: Cost of Transfer (0.25% of Sales consideration) (10,500) Income from LTCG 10,83,746

Less: Exemption u/s 54F Investment amount = ` 25 lakhs deposited in CGDS

25,00,000 ×10,83,746

41,89,500

(6,46,704)

Taxable LTCG 4,37,042 Question 22: Mrs. Girija Sold commercial building for ` 83,00,000 on 16-01-2014. Building was acquired by him on 19-06-2001 for ` 29,10,000. Brokerage of ` 12,000 has been paid at the time of acquisition and @ 0.50% at the time sale. She purchase new residential house for ` 52,00,000 on 20-01-2013. She has already one residential house before newly purchase. She also subscribes bonds worth ` 2,50,000 of NHAI on 14-05-2014. Compute taxable capital gains for Assessment Year 2014-15.

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mrs. Girija Transfer Year: 2013-14 Assessment Year: 2014-15

Capital Asset: Commercial Building (Non-Financial Asset)

Period of holding: 19-06-2001 to 16-01-2014 (Long-term)

Particulars Amount (`) Sales Consideration 83,00,000 Less: Indexed Cost of Acquisition

29,22,000 ×939

426

(64,40,746)

Less: Cost of Transfer (0.50% of Sales consideration) (41,500)

Income from LTCG 18,17,754 Less: Exemption u/s 54F

Investment amount = ` 25 lakhs deposited in CGDS

52,00,000 ×18,17,754

82,58,500

Less: Exemption u/s 54EC Subscribed bond of NHAI

(11,44,557)

(2,50,000) Taxable LTCG 4,23,197

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Income from Capital Gains FCA Ranjeet Kunwar

Question 23: Mr. Ravikant sold following assets during the financial asset 2013-14:

Jewellery Residential House Sales consideration 12,00,000 25,00,000 Indexed Cost of Acquisition 3,60,000 18,25,568

Cost of transfer 0.50% 12,000 To avail exemption Mr. Ravikant acquires new residential house for ` 18,00,000 on 05-07-2014. Compute taxable Capital gains.

COMPUTATION OF TAXABLE CAPITAL GAINS

Assessee: Mr. Ravikant Transfer Year: 2013-14 Assessment Year: 2014-15

Particulars Jewellery Residential House

Nature of Capital gains Long-term Long-term

Sales consideration ` 12,00,000 ` 25,00,000

Less: Indexed Cost of Acquisition (3,60,000) (18,25,568)

Less: Cost of Transfer (6,000) (12,000)

Long-term Capital gains 8,34,000 6,62,432

Less: Exemption (regarding purchase of Residential house)

Exemption u/s 54

Exemption u/s 54F

11,37,568 ×8,34,000

11,94,000

N.A.

(7,94,583)

(6,62,432)

N.A.

Taxable LTCG 39,417 Nil

Allocation of Amount of Investment regarding Exemption Total amount of investment in Residential House ` 18,00,000 Less: Investment utilized under section 54 (to the extent LTCG) (6,62,432) Balance Investment to be utilized under section 54F 11,37,568

Question 24:

Mrs. Malini Hari shifted her industrial undertaking located in corporation limits of Faridabad, to a Special Economic Zone (SEZ) on 1.12.2013: The following particulars are available: `

(a) Land: Purchased on 20.01.2009 4,26,000 Sold for 22,00,000

(b) Building [Construction completed on 14.03.2011] WDV of building as on 01.04.2013 8,20,000 Sold for 11,39,000

(c) WDV of cars as on 01.04.2013 7,40,000 Sold for 6,00,000

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Income from Capital Gains FCA Ranjeet Kunwar

(d) Expenses on shifting the undertaking 1,15,000 (e) Assets acquired for the undertaking in the SEZ (on or before 25.06.2014):

(i) Land 3,00,000 (ii) Building 5,00,000 (iii) Computers 1,00,000 (iv) Car 4,20,000 (v) Machinery (Second hand) 2,00,000 (vi) Furniture 50,000

There is no intention of investing in any other asset in this undertaking.

Compute the exemption available under section 54GA for the assessment year 2014-15.

Answer:

54GA [urban to SEZ]

ST/LT for land/Building, plant and machinery.

Computation of Capital Gain

Capital Asset: Land

Sales consideration 22,00,000

Less: Indexed Cost of Acquisition 4,26,000X852/551 6,58,715

LTCG 15,41,285

Computation of capital gain

Capital Asset: Building

Sales consideration 11,39,000

Less: W.D.V 8,20,000

STCG 3,19,000

Computation of capital gain

Capital Asset: Plants Car

Sales consideration 6,00,000

Less: W.D.V 7,40,000

STCG (1,40,000)

Net STCG 1,79,000

LTCG 15,41,285

17,20,285

Exemption

Land 3,00,000

Building 5,00,000

Plant

Computer 1,00,000

Machine 4,20,000

Shifting expenses 1,15,000 16,35,000

Taxable 85,285

Furniture not allowed

There is no restriction regarding purchase of second hand machinery.