Capital gain tax
LONG TERM CAPITAL GAIN
Sale consideration received :
Less : Expenses on transfer :
Net consideration :
Less : Indexed cost of acquisition :
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(Interest paid on loan can be
Included in the indexed cost of improvement – Karnataka High Court Order in [2010] 188 TAXMAN 170 (KAR.))
Less : Indexed cost of improvement :
Answer : Once the interest paid is included as cost of improvement the capital gain will be reduced.
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Long Term Capital Gain :
2. (Question): Can the capital gain be adjusted against the losses accumulated by the Company ?
(Answer) Brought forward unabsorbed business loss cannot be set off against capital gains.
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(Answer) However, the current year business loss can be set off against capital gains - Sec. 71(2).
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3. (Question) The Capital gain tax should be paid by the buyer of land.
Answer:
There is a new law from this year on-wards that the buyer of the property should deduct tax and pay the the tax to government of India.
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. TDS on capital gain : As per section 194 IA of the I.T. Act, the buyer of the property shall deduct an amount equal to one per cent of the consideration as income tax (with effect from 1-6-2013). (applicable only if the consideration exceeds Rs. 50 lakhs).
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[2010] 188 TAXMAN 170 (KAR.)
HIGH COURT OF KARNATAKA
Commissioner of Income-tax
v.
Sri Hariram Hotels (P.) Ltd.*
K.L. MANJUNATH AND ARAVIND KUMAR, JJ.
IT APPEAL NO. 58 OF 2009†
DECEMBER 1, 2009
Section 48 of the Income-tax Act, 1961 - Capital gains - Computation of - Assessment year 2003-04 - Assessee-company borrowed loans from some of its directors - From said amount assessee purchased an immovable property in order to put up a hotel building - Project could not materialize on account of various reasons and ultimately assessee-company sold said property - While computing amount of capital gains, assessee claimed deduction in respect of interest paid to Directors on loans borrowed from them in order to purchase property in question - Assessing Officer as well as Commissioner (Appeals) disallowed assessee’s claim - Tribunal, however, allowed assessee’s claim - Whether since property had been purchased out of loans borrowed from Directors, any interest paid thereon was to be included while calculating cost of acquisition of asset - Held, yes - Whether, therefore, Tribunal was justified in allowing assessee’s claim - Held, yes