TAXATION
CAPITAL GAIN
Ans1.
(1) Short term capital asset (since shares were held for 9 months 31-1-2013 to 30-10-2013). For shares held in a
company in liquidation, period of holding is considered till the date of liquidation instead of date on which
payment is received.
(2) Long term capital asset (holding period more than 3 years 30-12-2008 to 30-12-2013). In case of capital asset
acquired by way of sec. 49(1), period of holding of previous owner is also considered.
(3) Long term capital asset (holding period more than one year 28-2-2013 to 31-3-2014). Period of holding of
shares in amalgamating company is also considered.
(4) Long term capital asset (holding period more than one year 29-3-2013 to 30-3-2014). Period of Holding of
share in demerged company is also included.
Ans2.
Computation of Capital Gain
A.
B.
`
`
If the land is gifted on 1-6-1980:Sale consideration
20,00,000
Less: 1. Expenses on transfer
1,00,000
2. Indexed cost of acquisition 3,00,000 X 939/100 28,17,000 29,17,000
Long- term Capital Loss
9,17,000
If the land is gifted on 15-5-1998:Sale consideration
Less: 1. Expenses on transfer
2. Indexed cost of acquisition 3,00,000 X 939/351
Long-term Capital Gain
Ans3.
20,00,000
1,00,000
8,02,564
9,02,564
10,97,436
Computation of Capital Gain in the case of Maniram
Sale consideration
Less: Indexed cost of acquisition (Note 1)
Indexed cost of improvement (Note 2)
Long – term capital gain
Notes:
1. Indexed cost of acquisition is determined as under:
Cost of acquisition to the previous owner (a)
Fair market value on April 1, 1981 (b)
Cost of the previous owner or FMV on April 1,1981 [(a) or (b), Whichever is more]
Less: Advance money forfeited by Maniram (amount forfeited by the previous
owner shall not be considered)
Amount to be considered for indexation
CII for 1988-89 (i.e., the first year in which property Is held by the assessee)
CII for 2013-14
Indexed cost of acquisition (i.e., ` 65,000 x 939/161)
`
11,75,000
3,79,099
7,52,524
43,377
95,000
1,15,000
1,15,000
50,000
65,000
161
939
3,79,099
2. Indexed cost of improvement is determined as under:
Expenditure incurred prior to April 1, 1981 (it shall be ignored)
Expenditure incurred after April 1, 1981
- During 1986-87 (ICOI: ` 40,000 x 939/140)
AY 2014-15
1
Nil
2,68,286
CA. RAJ K AGRAWAL
TAXATION
CAPITAL GAIN
- During 1991-92 (indexed cost of improvement : ` 1,15,000 x 939/223)
Ans4.
(a)
Computation of Capital Gain (Assessment year 2014-15)
Particulars
Consideration price
Less: Indexed cost of acquisition – ` 4,00,000 x 939/100
Long – term Capital Loss
4,84,238
7,52,524
Amount (`
`)
30,00,000
37,56,000
7,56,000
(b)
(Assessment year 2014-15)
Although the asset was destroyed on 3-3-2013 i.e. in the P/Y 2012-13 but there will be no capital gain as the
compensation was received during the P/Y 2013-14.
(Assessment year 2014-15)
Particulars
Amount (`
`)
30,00,000
34,08,000
4,08,000
Consideration price
Less: ICOA – ` 4,00,000 x 852/100
Long – term Capital Loss
Note: The capital gain will arise in the P/Y 2013-14 but indexation will be done till the year of destruction i.e. P/Y
2012-13.
Ans5.
Computation of Capital Gain
Particulars
Full value of consideration
Less: ICOA – ` 2,00,000 x 939/259
Long term capital gain
1.
2.
Amount (`
`)
8,00,000
7,25,097
74,903
Full value of consideration is taken as the value at which it is recorded in firm’s books of accounts.
COA is taken as cost to the previous owner but indexation has been done from date it was first
held by the assessee.
Ans6.
Residential Securities (`
`)
house (`
`)
Particulars
Sale proceeds (being FMV on the date of transfer:
Agreed value is not relevant)
17,00,000
Less: ICOA
(` 3,00,000 x 939/ 100 : ` 5,000 x 939/ 259)
28,17,000
COA (i.e., WDV in case of car)
-Short-term capital gain
-Long-term capital gain/(Loss)
(11,17,000)
Car (`
`)
50,000
30,000
18,127
--31,873
-8,000
22,000
--
Ans7. A/Y 2014-15, i.e., relevant to the P/Y 2013-14 in which initial compensation (or part thereof) is received for the
first time
Amount (`
`)
Particulars
AY 2014-15
2
CA. RAJ K AGRAWAL
TAXATION
CAPITAL GAIN
Initial compensation
Less: ICOA (Note1)
ICOI (Note 2)
Expenditure
Long-term Capital Gain
5,67,000
3,70,920
69,814
2,000
4,42,734
1,24,266
`
Notes:
1.
ICOA is computed as follows:
` 1,32,000* X 281 / 100 = ` 3,70,920
*FMV on April 1, 1981.
2.
ICOI is computed as follows:
` 40,000* X 281** / 161*** = ` 69,814.
*COI
** CII of the year in which property is acquired (i.e., 1995-96).
***CII of the year in which improvement took place. (1988-89)
A/Y 2016-17 (i.e., relevant to the P/Y 2015-16 in which additional compensation is received)
Additional compensation
Less: Cost of acquisition
Cost of improvement
Expenditure
2,83,000
Nil
Nil
10,000
2,73,000
Long-term capital gain
Note: If the additional compensation is received by X’s son, it will be taxable in the hands of son.
Ans8.
Income under the head capital gain:
1. Shares
Sale Consideration
Less: indexed Cost of acquisition (1,20,000 x 939/259)
Long term capital Gain
6,00,000
4,35,058
1,64,942
2. Debenture
Sale Consideration
Less: Cost of acquisition (indexation not allowed in case of debenture)
Long term capital gain
3,10,000
80,000
2,30,000
Ans9.
`
Computation of Capital Gain
Particulars
(1) (a) Sales consideration
Less: ICOA (Self generated)
Long-term capital gain
Amount (`
`)
8,00,000
NIL
8,00,000
(b) Sale consideration
Less: ICOA (2,00,000 x 939/259)
Long-term capital gain
(2) Sale consideration
Less: ICOA (Self generated)
Long-term capital gain
8,00,000
7,25,096
74,904
5,00,000
NIL
5,00,000
AY 2014-15
3
CA. RAJ K AGRAWAL
TAXATION
CAPITAL GAIN
(3) Since the asset transferred is goodwill of a profession and not of business,
it is treated as self – generated asset and there is no capital gain on selfgenerated asset.
(4) Sale price
Less: ICOA (1,60,000 x 939/100)
Long-term capital gain
16,00,000
15,02,400
97,600
Note:- In case of tenancy right, the option to assume market value as on 1-4-1981 is not allowed.
Ans10.
(a) Sale proceeds of 1,000 original shares
Less: ICOA [` 15,000 X 852/ 100]
LTCG [it is not chargeable to tax if the transfer takes place in a stock
exchange in India; however STT will be payable]
1,45,000
1,40,850
_______
4,150
(b) Sale proceeds of 800 rights shares [` 130 x 800]
Less: COA [i.e., ` 60 x 800]
STCG [if the transaction is recorded in a recognized stock exchange,
STT is applicable and STCG will be taxable@ 15%]
1,16,000
48,000
______
68,000
4,800
NIL
4,800
(c) Sale proceeds of right entitlement of 1,200 shares
Less: Cost of acquisition
Short-term capital gain
Ans11.
(1) No Capital gain on sale of car (as it is a personal effect)
(2) Capital loss on forfeiture of shares:
-Consideration price
Nil
-Cost of shares purchased
25,000
Short term capital loss
25,000
(3) Sale of original shares:-Consideration price (2,500 x 200)
Less:- Indexed Cost of acquisition (1,00,000 x 939/389)
Brokerage
Long-term Capital Gain
Less: Deduction u/s 54EC
Taxable long-term capital gain
(4) Short-term capital gain on bonus shares:- Consideration price
Less: Expenses of transfer
2,000
Cost of Acquisition
NIL
Short-term capital gain
5,00,000
2,41,388
2,000
2,56,612
2,00,000
56,612
5,00,000
2,000
4,98,000
`
Sale consideration
15,00,000
Less1. Expenses on transfer
12,000
2. Indexed cost of acquisition – ` 1,20,000 x 939/100 11,26,800
11,38,800
Long term capital gain
3,61,200
The exemption u/s 54 from long-term capital under situation will be as under:(1) The exemption will be ` 3,00,000. Hence taxable capital gain will be ` 61,200
(2) The exemption will be ` 1,60,000 + ` 1,30,000 = ` 2,90,000. Hence taxable capital gain will be ` 71,200. No
deduction of ` 1,50,000 as it is deposited on 31.7.2015.
Ans12.
AY 2014-15
4
CA. RAJ K AGRAWAL
TAXATION
CAPITAL GAIN
(3) The exemption will be ` 3,15,000. Hence taxable capital gains will be ` 46,200.
(4) Exemption for A/Y 2014-15 will be ` 3,40,000 i.e. the amount deposited in the Capital Gains Accounts
Scheme before the due date of furnishing the return or the amount of capital gain, whichever is less. Hence
taxable capital gain for A/Y 2014-15 will be 21,200. However, as a sum of ` 3,25,000 only has been utilized
for purchase of the house, the balance amount of ` 15,000 remaining unutilized for which exemption was
claimed under section 54 shall be the taxable capital gain of the A/Y 2017-18 (P/Y 2016-17).
Ans13. A/Y 2010-11:- Although there is compulsory acquisition and thus transfer, but capital gain will arise in the
P/Y, in which full or part of the compensation is received.
Assessment Year 2014-15
`
Full value of consideration
8,40,000
Less-ICOA` 2,00,000 x 632/182
6,94,505
Long-term capital gain
1,45,495
Less – Exemption u/s 54D:Cost of land acquired but restricted to capital gain
1,45,495
Taxable long term capital gain
NIL
Assessment Year 2014-15
Enhanced compensation
1,00,000
Less- Cost of acquisition and improvement
NIL
Long-term capital gain
1,00,000
Less-Exemption u/s 54D
1,00,000
Capital Gain
NIL
As regards the amount of ` 1,00,000 deposited in the Capital Gain Deposit Scheme Account on 30-09-2014, the
exemption u/s 54D will be allowed, as the money has been deposited before the due data of filing of the return of
income relevant to P/Y 2014-15 i.e. the year in which the enhanced compensation is received.
`
15,00,000
Ans14.
(1) Sales consideration
less – (i) Expenses of transfer
(ii) ICOA-` 4,00,000 x 939/447
20,000
8,40,268
less- Exemption u/s 54EC
Taxable long-term capital gain
8,60,268
6,39,732
6,00,000
39,732
(2) R should not transfer or convert (otherwise then transfer) into money such bonds within 3 year from the
date of their acquisition.
If these bonds are transferred or converted into money within 3 years, capital gain of ` 6,00,000 exempt
earlier, will be LTCG of the PY in which such asset is transferred or converted into money
(3) If any loan is taken against the security of such bonds, it will be treated as if it is converted into money as
such capital gain exempt earlier on such bonds, shall be long term capital gain of the P/Y in which such loan
is taken against the security of such bonds.
Ans15.
Sale Consideration
Less- Expenses on transfer
Net sale consideration (a)
Less – ICOA
LTCG (b)
Exemption u/s 54 [Note 1] (c)
AY 2014-15
House Property
`
3,90,000
10,000
3,80,000
70,000
3,10,000
1,00,000
5
Gold
`
8,10,000
81,000
7,29,000
1,15,000
6,14,000
--
Silver
`
2,96,000
6,000
2,90,000
1,78,000
1,12,000
--
Diamonds
`
6,40,200
32,000
6,08,200
4,30,000
1,78,200
--
CA. RAJ K AGRAWAL
TAXATION
CAPITAL GAIN
Exemption u/s 54EC [Note 2] (d)
2,10,000
6,14,000
1,12,000
1,19,000
CG chargeable to tax [(b)-(c)-(d)]
Nil
Nil
Nil
59,200
1. Exemption u/s 54- since the due date of filing return of income is July 31, 2014, the deposit made on August
5, 2014 is not considered. Exemption u/s 54 is limited to amount utilized for constructing residential house
up to July 31, 2014 (i.e., ` 1,00,000).
2. Exemption u/s 54EC- The amount of exemption available u/s 54EC is ` 10,55,000(i.e., ` 7,50,000+ `
3,05,000).
Ans16.
Particulars
Full value of consideration
Less – ICOA ` 55,000 x 939/100
Capital gains
Ans17.
Goodwill
4,00,000
Tenancy Rights
6,00,000
Route Permit
5,00,000
Shares
5,50,000
Nil
4,00,000
Nil
6,00,000
Nil
5,00,000
5,16,450
33,550
Assessment Year 2014-15
`
`
25,50,000
18,78,000
6,72,000
Value of consideration
Less – Indexed cost of acquisition – ` 2,00,000 x 939/100
Less – Capital gain exempt
u/s 54B
u/s 54F (` 6,72,000 x 5,00,000/25,50,000)
Long-term Capital Gain
Assessment Year 2015-16
Sale price of house property
Less – Cost of acquisition
Short-term Capital Gain
2,50,000
1,31,765
3,81,765
2,90,235
6,00,000
5,00,000
1,00,000
Note: 1. There will be no capital gain on the transfer of rural agricultural land although sold within 3 years from the
date of its acquisition, as it is not a capital asset for capital gain purposes.
2. Capital Gain exempt earlier of ` 1,31,765 will now be taxable.
Ans18. Transfer of Gold and Buildings by Sopesh to the firm is treated as transfer Hence, Capital Gain has to be
calculated.
Computation of Capital Gain
`
`
Particulars
Gold ( Long-term Asset)
Sale consideration (Amount recorded in books)
3,30,000
Less- Indexed cost [50,000 x 939/150]
3,13,000
17,000
Buildings (Long-term Asset)
Sale price (price recorded in books)
8,10,000
Less: - Indexed cost [1,80,000 x 939/244]
6,92,705 1,17,295
Total LTCG
1,34,295
1,34,295
Less – Exemption u/s 54EC /Subject to Total LTCG
Nil
Taxable long-term Capital Gain
AY 2014-15
6
CA. RAJ K AGRAWAL
TAXATION
CAPITAL GAIN
Ans19. Exemption u/s 54 can be availed only when the house property is owned by an individual or HUF. In view of
this, firm cannot claim deduction u/s 54. Further, the partners of the firm also cannot claim the exemption u/s 54 as
the asset has been transferred by the firms and not by the partners.
Ans20.
Computation of Capital Gain for Santosh
(For the assessment year 2014 -15)
Particulars
Full Value of Sale Consideration
Less: ICOA (` 95,000 x 939/172)
Brokerage (2% of ` 10,31,000)
Long-term Capital Gain
Less: Exemption u/s 54B (cost of new land purchased within time limit)
Exemption u/s 54F
Long-term Capital Gain
`
5,18,634
20,620
1,50,000
2,43,347
`
10,31,000
5,39,254
4,91,746
3,93,347
98,399
Note:Exemption u/s 54F has been calculated as under:
(Capital gain x Investment in new asset)/Net sale consideration = (4,91,746 x 5,00,000)/ 10,10,380
= ` 2,43,347
Ans21. Income under the head capital gain:Particulars
(1) Sale consideration of Delhi house
Less: ICOA (11,00,000 x 939/199)
(2)
Less: Exempt u/s 54
Long-term capital gain
Sale consideration of DLF Qutab Enclave house
Less: Cost of acquisition
Short-term Capital Gain
Amt (`
`)
60,00,000
51,90,452
8,09,548
8,09,548
Nil
17,20,000
6,90,452
10,29,548
*COA should be ` 15,00,000- exemption availed u/s 54 i.e. ` 8,09,548
∴ COA For DLF Qutab enclave house
= 15,00,000 – 8,09,548
= 6,90,452
Ans22.
Amount `
7,00,000
Nil
Particulars
(1) (a) Sale of goodwill
Less: ICOA
(b) Sale of goodwill
Less: Indexed cost (1,00,000 x 939/331)
(2) Sale of route permit
Less: ICOA (50,000 x 939/133)
Indexed cost of improvement (20,000 x 939/259)
Long-term Capital Gain
(3) Sale of tenancy rights
Less: ICOA
ICOI (30,000 x 939/351)
Long Term Capital Gain
AY 2014-15
7
7,00,000
2,83,686
3,53,008
72,510
Nil
80,256
Amount `
7,00,000
4,16,314
6,00,000
4,25,518
1,74,482
5,00,000
80,256
4,19,744
CA. RAJ K AGRAWAL