CAPITAL GAIN ON SALE OF SHADE TREES

[Dwarakanath sriknatiah]

we have sold shade trees  on our estates.

we have arrived FMV as on 1.4.1981 and taking 70% of sale consideration as cost and 30% as capital gain

We have indexed our cost FMV as on 1.4.1981 and reduced the amount from sale consideration which

resulted in capital loss.

Pl let me know

whether we are eligible for cost of indexation on FMV as on 1.4.1981 ie 70% of sale consideration?

Dwarakanath

AI Summary

Capital gain treatment on sale of shade trees: indexation of historical FMV allowed, valuation must be by approved valuers.
Taxpayers claiming historical FMV as a percentage of sale proceeds for shade trees must support that FMV with valuation by an approved valuer; once determined, that FMV is eligible for indexation. Tribunal practice that previously accepted fixed cost-to-gain ratios has been adjusted where market appreciation has altered the sale to historic value relationship, leading tribunals to modify the percentage allocation between cost and capital gain.