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Capital gain

Direct Taxation

(A) and (B) are relatives, (A) transfer immovable property to (B) for inadequate consideration for requirement of cash, (B) raised home loan from bank, Will It be tranfer under capital gains chapter? If yes what is taxable in hands of (A) ,received amount or stamp duty value? What is cost of acquisition in hands of (B)? If no under which section (A) is claiming exemption? What is cost of acquisition in hands of (B)? Hint:There is no family settlement agreement between A and B.

Vanga.Trinadha Reddy

CA Inter

★ 0

03-Feb-21 20:54

305

Answers (1)

(A) - transfer taxable under capital gains. Capital gain would be Valuation as per stamp valuation authority reduced by cost/indexed cost of acquisition. Exception - As per Sec 50C no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than ten percent of the sale consideration. (B)- stamp value taken as other income u/s 56(2)(x) and Cost of acquisition would be what is taken as sale consideration for A