Capital gains on sale of industrial property

it is not clear whether you have sold the business as a whole under slump sale or only land and building. presuming only land and building, the capital gain will be calculated by reducing indexed cost of land and tax wdv of building from sale consideration. you have to bifurcate sale consideration between land and building. capital gain on sale of land is long term and you can save tax by investing in capital gains bond or new residential house. for gain on sale of building, you have to pay tax. no deduction for loan rapid is available as the same has been factord into cost.

Dear Amit,

Rightly opined by Mr Vineet. Sale of Land and Building would attract Long Term Capital Gain and you are liabile to discharge your obligation under the Act. However certain exemptions are available under section 54EC, 54F subject to certain conditions laid down in these sections. It would be better if your consult your local Tax consultant.

But the important question is : What is the criteria for bifurcation of the Sale Value between Land and the Building. It is apparent that the sale is above the circle rates values and the property has been sold as a composite unit.. So on what basis will the SALE Value in EXCESS of  the combined Circle Rate Value of the land  & Buildiing be allocated between Land and building to arrive at LTCG and STCG.

a) Will the circle rate of the Land be considered as value of Land and the residual value allocated to the value of the Building ?

b) Will a valuation Report be required even though the sale is above the circle rates  ( not required under Sec 50 C ?

c) Will the bifurcation be made as per the ratios of the book values of the Land and Building or the ratios of the circle rates of the two respectively ?

d) Any other method of bifurcation.

Recently I am facing such an issue and , upon discussion, have found that many other people are confronted with a similar question. There seem to be no case laws that clearly define this criteria in a sale of composite property