Q1. On 25-11-2023, A gave power of attorney and possession to B in respect of a vacant land acquired 10 years ago. The sale deed was executed in April, 2024. In which assessment year, the capital gain is chargeable to tax?[CA Final May 2010][4 Marks] Ans. in the previous year in which transfer took place.
47 inter alia
Explanation 2 to section 50C “assessable assessable
Q2. Can reference be made to the Valuation Officer u/s 55A where the A.O. is of the view that in the context of computation of capital gains, the value of asset as on 1-4-2001 adopted by the assessee is more than the FMV? [CA Final May 2010][4 Marks]
the value so claimed is at variance with the FMV of the asset.
variance
Q3. A sold a house to his friend B on 1-11-2023, for a consideration of ` 25,00,000. The Sub-Registrar refused to register the document for the said value, as according to him, Stamp Duty had to be paid of ` 45,00,000 which was the Government Guideline Value. Mr. A preferred an appeal to the Revenue Divisional Officer, who fixed the value of the house as ` 32,00,000 (` 22,00,000 for Land, balance for Building portion). The differential Stamp Duty was paid, accepting the said value determined. Assuming that the FMV is ` 32,00,000, what are the tax implications in the hands of Mr. A and Mr. B for the A.Y. 2024-25? Mr. A had purchased the Land on 1-6-2019 for ` 5,19,000 & completed the construction of house on 1-12-2021 for ` 14,00,000.
CII: FY 2018-19: 280, FY 2019-20: 289, FY 2021-22: 317, FY 2022-23: 331, FY 2023-24:348 [CA Final May 2010] [4 Marks]
Ans.
Computation of Capital Gains for A.Y. 2024-25Land (`)Building (`) ` 15,75,045 (4,00,000)
Note: i.e. ` ` `
Tax Implication:
Mr. A: ` ` `
Mr. B: i.e. ` x ` ` `
Q4. A resident woman (individual) sold a house property on 16-1-2024. On the said transaction, she earned a long-term capital gain of ` 1,01,50,000. She invested a sum of ` 50,00,000 in capital gains bonds specified in section 54EC on 5-3-2024. She further invested a sum of ` 50,00,000 in the same bonds on 5-5-2024. Her other income for the financial year 2023-24 was ` 56,000. Compute the tax payable by her for the A.Y. 2024-25 assuming that she has exercised the option of shifting out of the default tax regime u/s 115BAC.
[CA Final Nov. 2010] [6 Marks]
Ans.
Q5. Hari has acquired a residential house property in Delhi on 1st April, 2011 for ` 10,00,000 and decided to sell the same on 3rd May, 2013 to Ms. Pari and an advance of ` 25,000 was taken from her. The balance money was not paid by Ms. Pari and Hari has forfeited the entire advance sum. On 3rd June, 2023, he sold this house to Mr. Suri for ` 35,00,000. In the meantime, on 4th April, 2023, he had purchased a residential house in Delhi for ` 8,00,000, where he was staying with his family on rent for the last 5 years and paid the full amount as per the purchase agreement. However, Hari does not possess any legal title till 31st March, 2024, as such transfer was not registered with the registration authority.
Hari has purchased another old house in Surat on 14th October, 2023 from Mr. X, an Indian resident, by paying ` 5,00,000 and the purchase was registered with the appropriate authority.
Determine the taxable capital gain arising from above transactions in the hands of Hari for A.Y. 2024-25. [CA Final Nov. 2010] [5 Marks]
Ans. Computation of taxable capital gain of Mr. Hari for the A.Y. 2024-25
Notes:
two residential house properties
for the purpose of claiming exemption under section 54, holding of legal title is not necessary.
Q6. “Any transfer of a capital asset or intangible asset by a private company or unlisted public company to a LLP or any transfer of share or shares held in a company by a shareholder on conversion of a company into a LLP in accordance with section 56 and section 57 of the Limited Liability Partnership Act, 2008, shall not be regarded as a transfer for the purposes of levy of capital gains tax under section 45 subject to fulfilment of certain conditions”. Explain in the context of the provisions contained in the Act. [CA Final May 2011] [6 Marks]
Q7. Mr. X transferred his residential house to Y for ` 11 lakh on 1st April, 2023. The value of the said house as per Stamp Valuation Authority was ` 16 lakh. Mr. Y is a childhood friend of Mr. X.
Mr. X gifted a plot of land (purchased by him on 1st August, 2020) to Mr. Y on 1st July, 2023. The value as per Stamp Valuation Authority is ` 8 lakh. Mr. Y sold the land on 1st March, 2024 at ` 14 lakh.
Compute the income of Mr. Y chargeable under the heads “Capital Gains” and “Income from other sources” for Assessment Year 2024-25. [CA Final Nov 2011] [5 Marks]
Ans. Computation of income of Mr. Y for A.Y. 2024-25
Total Income19,00,000
Notes:
5,00,000 i.e. ` ` chargeable to tax
Q8. What are the consequences if the amount deposited in Capital Gains Account Scheme to avail exemption from capital gains is not utilised within the stipulated time? Is there any difference in the tax treatment in the event of death of the assessee before the stipulated time? [CA Final May 2012] [3 Marks]
Ans. i.e., unutilized amount shall be chargeable as capital gain in the previous year in which the specified period of two years or three years, as the case may be, expires. The nature of the capital gain shall be same
No.743 dated 6-5-1996
Q9. State the cases where the benefit of indexation of cost is not available for determination of capital gains. [CA Final May 2012] [7 Marks] Ans.
23D
Q10. PQR Ltd. has two units–one engaged in manufacture of Computer Hardware and the other involved in developing Software. As a restructuring drive, the Company has decided to sell its Software Unit as a going concern by way of slump sale for ` 385 Lakhs to a new Company called S Ltd., in which it holds 74% Equity Shares. The FMV of the capital assets of the unit on the date of transfer calculated as per Rule 11UAE is ` 400 lakhs. The Balance Sheet of PQR Ltd. as on 31st March 2024, being the date on which software unit has been transferred, is as under:
(
Following additional information are furnished by the Management:
(i) The Software Unit is in existence since May, 2020.
(
ii) Fixed Assets of Software Unit includes land which was purchased at ` 40 Lakhs in the year 2017 and revalued at ` 60 Lakhs as on March 31, 2024.
iii) Fixed Assets of Software Unit mirrored at ` 140 Lakhs (` 200 Lakhs minus land value ` 60 Lakhs) is Written Down Value of Depreciable Assets as per books of account. However, the Written Down Value of these Assets u/s 43(6) of the Income-tax Act is ` 90 Lakhs.
Required:
(a) Ascertain the tax liability, which would arise from slump sale to PQR Ltd.
(b) What would be your advice as a Tax Consultant to make the restructuring plan to the Company more tax savvy, without changing the amount of sale consideration? [CA Final Nov. 2012, May 2011] [10 Marks]
Ans. (a) minus minus as appearing in the books of account.
revaluation of assets shall be ignored
Computation of Tax Liability arising on Slump Sale
in Lakhs
Note: 1. Net Worth of Software Unit:
in Lakhs Total Assets Less: Liabilities 2. (b) Modification in the Restructuring Plan Option 1: S Ltd - 100% Subsidiary
Conditions:
a
b
Result: iv
not attract Capital Gains.
Option 2: S Ltd - Demerger
Result: not a transfer vib
Q11. Mr. Shakti purchased a residential house in March, 2012 for ` 22 lakhs. He sold the house on 1st December, 2023 for ` 100 lakhs. He paid brokerage at 2% on sale price. He invested ` 80 lakhs in April, 2024 in equity shares of Shakti Private Limited, an eligible start-up. Mr. Shakti holds 80% of share capital of the company.
The company utilised the sum of ` 80 lakhs in the following manner:
(i) Purchase of new machinery during April, 2024 ` 70 lakhs (including ` 10 lakhs for purchase of computers).
(ii) Deposit in specified bank on 25th September, 2024 ` 6 lakhs.
(iii) Remaining ` 4 lakhs was held as Cash balance.
The due date for filing return of income for Mr. Shakti for A.Y. 2024-25 is 31st October, 2024. Assume that he files return on 28.10.2024.
Compute the taxable capital gain arising from the above transaction for Assessment Year 2024-25. [CA Final May 2013] [6 Marks]
Ans. Computation of taxable capital gains of Mr. Shakti for A.Y. 2024-25
Less:
Less: ` ×
Less: ` × ` `
Deemed cost of new plant and machinery for exemption u/s 54GB: `
Note: i ii iii
Q12. Tani purchased a land at a cost of ` 34 lakhs in the financial year 2011-12 and held the same as her capital asset till 31st March, 2020. Tani started her real estate business on 1st April, 2020 and converted the said land into stock-in-trade of her business on the said date, when the fair market value of the land was ` 150 lakhs.
She constructed 20 flats of equal size, quality and dimension. Cost of construction of each flat is ` 8 lakhs. Construction was completed in December, 2023. She sold 15 flats at ` 20 lakhs per flat between Jan., 2024 and March, 2024. Remaining 5 flats were held in stock as on 31-03-2024.
She invested ` 50 lakhs in bonds issued by Rural Electrification Corporation Ltd. on 31st March, 2024.
Compute the amount of chargeable capital gain and business income in the hands of Tani arising from the above transactions for Assessment Year 2024-25 indicating clearly the reasons for treatment for each item. Cost Inflation Index: FY 2011-12: 184; FY 2020-21: 301; FY 2023-24: 348. [CA Final May 2013] [10 Marks]
