CAPITAL GAIN CALCULATION

[Haresh Raithatha]

One of our Client has purchased 1 property from Income tax Department Auction in the year 1998-98. The consideration paid for same was ₹ 5,00,000/-( Five Lacs) however Stamp duty of ₹ 2,45,000/-is paid as per Jantri value of the property as ₹ 50,00,000/-. (Fifty Lacs)

Now the property has been sold for ₹ 60,00,000/- however Stamp duty on sale has been paid as per jantri value i.e. for ₹ 70,00,000/-. At time of calculation capital gain on sale of property purchase value has been taken ₹ 5,00,000/-+245000/- i.e. consideration price plus Stamp Duty paid on acquisition and sale value was taken ₹ 60,00,000/-.

Now IT Department raised query regarding Sale value that the same should be taken as ₹ 70,00,000/- i.e. stamp duty paid value and not sale consideration received i.e. ₹ 60,00,000/-.

Can we apply the same criteria for purchase price consideration i.e. can we take purchase price (Cost of Acquisition) on basis of stamp duty value i.e. ₹ 50,00,000/- instead of ₹ 5,00,000/-?

AI Summary

Tax Department Challenges Property Sale Value; Actual Purchase Price, Not Jantri Value, Used for Capital Gains Calculation A client purchased a property at an auction in 1998 for 5,00,000, with a stamp duty of 2,45,000 based on a jantri value of 50,00,000. The property was later sold for 60,00,000, with a stamp duty paid on a jantri value of 70,00,000. The Income Tax Department questioned the sale value used for capital gains calculation, suggesting it should be 70,00,000. The client inquired if the purchase price could be based on the jantri value of 50,00,000. The response clarified that the purchase price must be the actual amount paid, 5,00,000, not the jantri value, but indexation benefits can be applied.