Quiz for the week (20 May 2024):

Tarun a resident individual sold a vacant land for Rs.11 crore on 5th March,2024. The land was acquired on 30th January,2001 for Rs.25 lakhs. Mrs.Tarun sold a residential house at Thane for Rs.15 crore on 20th December,2023 when the stamp duty value of the property was Rs.16 crore. The residential building was acquired on 30th April, 2001 for Rs.50 lakhs. Both decided to buy a piece of land and construct a residential building for Rs.20 crores jointly with equal ownership and contribution. Determine the capital gain taxable in their hands assuming that they would follow the plan envisaged as above.

Answer :

The facts given in the question indicate that Tarun has sold vacant land and wants to reinvest for availing exemption under section 54F. The reinvestment is based on net sale consideration. On the other hand, Mrs.Tarun wants to transfer a residential building and construct another residential building jointly and she would be eligible for exemption under section 54.

The following table shows the computation of the taxable capital gain in their hands:

Note: The sale consideration in the case of Mrs.Tarun is Rs.15 crore and the stamp duty value of the property is Rs.16 crore. Since the difference is less than 10%, the apparent sale consideration is taken as deemed sale consideration for the purpose of computation of capital gain.