PK (n/a) 17 April 2012

Capital gain and construction destroyed

The goons destroyed the construction/building, hence if the seller sells just the land (because the construction was completely destroyed), then can cost of construction still be considered/subtracted from capital gain?

Also, if a property is disrupted by local goons and the seller has to sell it at below circle rate, then is there a way to avoid paying the tax on the circle rate amount that is much higer? Hiring a DVO may not help much, because the land's location etc. is excellent. It's just that due to the goons, it was sold below the fmv.

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2 Replies

BIHARILAL LIYA (abc) 20 April 2012

CONSTRUCTION COST CAN BE CONSIDERED WHILE CALCULATING CAPITAL GAINS EVEN IF THE CONSTRUCTION IS DEMOLISHED AND AN OPEN PLOT IS BEING SOLD.

AS FAR AS SALE BELOW CIRCLE RATE IS CONCERNED, IT'S A DEBATABLE ISSUE. HOWEVER, YOU MAY HAVE A CHANCE TO GET THE DECISION IN YOUR FAVOUR IF YOU ARE IN POSSESSION OF THE RELEVANT DOCUMENTS AND THE PROOFS AVAILABLE WITH YOU WHILE CONTESTING YOUR STAND BEFORE THE APPELLATE TRIBUNAL. HOWEVER, A STRONG CASE MUST BE FORMED FOR THIS ISSUE.

Vineet (Director) 02 May 2012

I beg to differ from opinion of Mr Biharilal.

What is being sold is only plot of land and for purposes of cost of acquisition, only cost of land shall be taken. Whatever was constructed and destroyed and as per facts nerrated does not form part of sold property cannot be included in cost.

If the property is defective, the same should be brought to notice of registrar to ascertain value for stamp. Once a value has been adopted, it will be difficult to challenge before IT authorities unless DVO values it at a lesser value.