Long Term Capital Gain
Querist :
Anonymous
(Querist) 07 November 2009
This query is : Resolved
I have a top floor flat with rights of terrace since last 20 years.Last year, I bought TDR & built additional floor & sold it this year for more than 5 times my cost of TDR & construction.
Please tell me my tax implication?Will it be short term or long term gain?
adv. rajeev ( rajoo )
(Expert) 07 November 2009
Long term capital gain. Because u had acquired the asset 20 years back.
Chart for Comoputation of Capital Gain:
1. Full value of considertation received or accuring as result of tranfer of the capital asset.
2. Expenditure incurred wholly and exclusively in connection with such transfer
3. Cost of acquisition.
indexed cost of acquisition
4.Exemptions u/s 54B,54D,54G,54GA
Exemptions u/s 54,54EC,54ED 54F
5. total Long term gain/loss
Vineet
(Expert) 07 November 2009
Few clarifications required:
1. Have you sold the entire property or newly created asset only.
2. Have you paid any sum which could be approprited towards rights of terrace.
Subject to above clarifications, your case falls on thin line between capital gains and Business and Profession. Prima facie it appears to be an business adventure as by purchasing TDR and building an additional floor, you never improved the existing asset which continues with you, but created an entirely new asset with intention to earn profit from the same.
So depending upon what documentation you present before the ITO, he may treat this transaction as business or short term capital gain.
PS: I presume that the existing flat continues with you.
Raj Kumar Makkad
(Expert) 07 November 2009
It is definitely a short term capital gain say business adventure arisen by way of purchasing TDR and building an additional floor.
pkpworld..
(Expert) 07 November 2009
Capital assets held by an assessee for not more than 36 months immediately preceding the date of tranfer are treated as short-term capital assets.
The asset which is not a short-term capital asset is Long-term assets.
Capital gain arising from transfer of long term capital asset is LONG TERM CAPITAL GAIN.
capital gain arising from transfer of short term capital asset is called SHORT TERM CAPITAL GAIN.
Income tax chargeable on the above gains or profit. There are some specifica calsuclation procedure in the Income TAx Act.
Due to non availability of all detials particulars it is not possible to reply perfiectly.
