Capital Gain
Sri Vijayan.A
(Querist) 20 December 2010
This query is : Resolved
Father bought a property for Rs.1 Lac and after 5 FY, settled the same to his son in Dec 2010 (No cost involved).
Now, the son wants to sell the same for Rs.9 Lacs.
What will be the implication in view of capital gain in these transactions?
Thank u
R.Ramachandran
(Expert) 21 December 2010
I think, the cost of acquisition of the property in the hands of the Son would be taken as 'zero'. Based on this, whenever the son disposes of the property, the capital gain would be calculated applying the index. Anyway, I will confirm it to you during the course of the day.
A V Vishal
(Expert) 21 December 2010
In my opinion the cost of the previous owner will be the cost of acquisition for the son, since the situation is in one of the modes referred to in S.49(1) of the Income Tax Act, 1961.
R.Ramachandran
(Expert) 21 December 2010
Dear Mr. Vijay,
Yes. I stand corrected. Mr. Vishal is absolutely correct. [While writing to you, I also had a serious doubt. That is why I said that I will confirm to you during the course of the day.]
Sri Vijayan.A
(Querist) 21 December 2010
I thank both Mr. RR and AVV.
soumitra basu
(Expert) 22 December 2010
The asset has to be treated as long term capital assets. By using cost inflation index the asset should be valued based in the year 2005. The balance shall be treated as long term capital gain. For save of capital gain tax - The entire sale proceeds may be invested in new residential property. Investment may be made in Rural Electrification or Hiway Authority Bond (Only the gain portion.
