cost of acquisition

[Guest]

To,

 Dear all,

 My colleagues have done following transaction.

1)First transaction :” X” was purchased 62R agriculture land(Outside Municipal limit) in April 1998 for Rs 2.5 Lakhs.

2) Second transaction : “X” has entered into agreement with Yin July 2009  by way of exchange i.e. X sold his agriculture land(62R) to Y and purchased his agreeculture(62R)urban land(within Municipal limit)  for the actual consideration recorded in agreement to Rs 7.50Lakhs (Rural)and 7.85Lakhs(urban) where as Fair market value was 2.7 lakhs (Rural) and 32 lakhs (Urban). Stamp duty paid on Market value Rs 36lakhs i.e.whichever is higher .

3) Third transaction :” X” again entered into agreement sold  his newly purchased urban  land (62R)to “Z “in Dec2010 for actual consideration to Rs 21 lakhs ,Where as the  market value recorded 33 lakhs.

4)Fourth transaction :  Reinvested in another agriculture land outside municipal limit for Rs 25 lakhs.

 In above case what will be the short term gain/long term gain? Please quote  some law references. of similar cases and advice.

  Thanks,

[CAGOPALJI AGRAWAL]

Dear Arun Ji,

These discussion forum are meant for discusion of law point of view primarily. The case studies need the documents for right opinion.

[Guest]

Thank you sir for response my querry . Which document you required ? I will give you reply for your specific question .

Thanks .

AI Summary

Cost of acquisition affects capital gains classification after successive land exchanges, transfers and reinvestment in agricultural land. A taxpayer bought rural agricultural land, later exchanged it for urban land with differing recorded consideration and higher declared market values (on which stamp duty was paid), subsequently sold the urban land for a lower recorded consideration than the declared market value, and reinvested in agricultural land; the primary question is which cost of acquisition applies for computing short-term or long-term capital gains given the sequence of exchanges, disparities between actual and market values, and the stamp-duty-based valuation.