1396186101_Capital Gains Questions

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capital gains

Text of 1396186101_Capital Gains Questions

  • 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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    2

    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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    3

    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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    4

    Income from Capital Gains FCA Ranjeet Kunwar

    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 Rams capit