# Capital Gains Problems and Solutions, Income Tax Solved Practical Problems AY 2022 - 23

## Capital Gains Problems and SolutionsIncome Tax Solved Practical Problems

1. Compute the taxable Capital Gains of Mrs. Geeta for the Assessment Year, 2020–21:  DU 2020

 Particulars Rs. Cost of Jewellery (purchased in the Financial Year, 2005-06) Sale price of Jewellery sold in January 2019 Expenses on transfer Residential house purchased in March 2019 1,82,000 17,50,000 17,000 15,00,000

Ans: Calculation of Total Taxable Capital Gain of Mrs. Geeta for the previous year 2019 – 20 (Assessment Year 2020 – 21)

 Particulars Jewellery Sale Consideration Less: Expenses on sale 17,50,000 17,000 Net Sale Consideration Less: Index Cost of Acquisition 17,33,000 4,49,556 (1,82,000*289/117) Tong Term Capital Gain Less: Exemption U/S 54F (12,83,444*15,00,000/17,33,000) 12,83,444 11,10,886 Taxable Long Term Capital Gain 1,72,558

2. Miss Priya sells agricultural land situated in an urban area for Rs. 11, 31,000 (brokerage paid @ 2%) on 31st March, 2020. (Cost of acquisition was Rs. 3, 82,000 on 1st March, 2006. It was used for agricultural purposes, from 2010 to date of sale.). On 31st March, 2020, she owns only one residential house property. On 6th April, 2020, she purchases the following assets:         DU 2020

(i) Agricultural land for Rs. 1, 20,000.

(ii) A residential house property for Rs. 5, 00,000.

Find out the capital gain chargeable to tax for the Assessment Year, 2020-21. CII for the Financial Year, 2005-06 is 117.

Ans: Calculation of Total Taxable Capital Gain of Miss Priya for the previous year 2019 – 20 (Assessment Year 2020 – 21)

 Particulars Jewellery Sale Consideration Less: Expenses on sale 11,31,000 22,620 Net Sale Consideration Less: Index Cost of Acquisition 11,08,380 9,43,573 (3,82,000*289/117) Tong Term Capital Gain Less: Exemption U/S 54B (Acquisition of Agricultural land) Balance of Long term capital gain Less: Exemption U/S 54F Amount invested in purchase of residential house property (1,64,807*5,00,000/11,08,380 = 74,346 but limited upto capital gain) 1,64,807 1,20,000 44,807   44,807 Taxable Long Term Capital Gain Nil

3. Mr. Arindam owns two houses at Jorhat and Dibrugarh. He transfers the following long-term capital assets during 2017-18:    DU 2019

 Particulars Residential House Property at Dibrugarh Gold Silver Date of sale Sale consideration (Rs.) Indexed cost of acquisition (Rs.) 19.04.2017 9,00,000 4,00,000 20.04.2017 8,00,000 6,00,000 21.04.2017 5,00,000 1,50,000

Mr. Arindam purchases the following assets:

 Particulars Date of purchase Amount invested (Rs.) Residential house at Guwahati Bonds of National Highway Authority of India (NHAI) for the purpose of Section 54EC 20.10.2017 19.10.2017 7,50,000 2,50,000

Ascertain the amount of capital gain chargeable to tax for the Assessment Year, 2018-19. Can Mr. Arindam claim exemptions under Sections 54, 54EC and 54F?

Ans: Calculation of Taxable Capital Gain

 Particulars Residential House Gold Silver Sale Consideration Less: Index Cost of Acquisition 9,00,000 4,00,000 8,00,000 6,00,000 5,00,000 1,50,000 Long term Capital Gain Exemption of U/S 54 (out of Rs. 7,50,000, Rs.5,00,000 is utilized for claiming exemption U/S 54) Exemption U/S 54 EC Bond of Nation Highway Authority of India 5,00,000 5,00,000     - 2,00,000       2,00,000 3,50,000       50,000 Exemption U/S 54 F [3,50,000*2,50,000/5,00,000] [Rs. 2.5 lacs being investment in residential house after deducting Rs.5 lacs as claimed us sec. 54] Nil - Nil 3,00,000 1,75,000 Tong Term Capital Gain Nil Nil 1,25,000

4. Mr. S submits the following particulars about the sale of assets during the year, 2014-15: DU 2018

 Jewellery (Rs.) Land (Rs.) Gold (Rs.) Sales Price Expenses on sales Cost of acquisition Year of acquisition CII 5,00,000 - 60,000 1987-88 150 18,50,000 50,000 2,10,000 1984-85 125 3,50,000 - 1,00,000 1999-2000 389

Calculate the amount of capital gain chargeable to tax for the assessment year 2015-16 if CII for 2014-15 is 1024.

Solution: Calculation of Long Term Capital Gain

 Particulars Jewellery Land Gold Sale Consideration Less: Expenses on sale 5,00,000 - 18,50,000 50,000 3,50,000 - Net Sale Consideration Less: Index Cost of Acquisition 5,00,000 4,09,600 (60,000*1024/150) 18,00,000 1,70,320 (2,10,000*1024/125) 3,50,000 2,63,239 (1,00,000*1024/389) Tong Term Capital Gain 90,400 79,680 86,761

5. Mr. Anurag owns two residential houses one at Jorhat and other at Dibrugarh. He submits the following information about sale of assets during previous year, 2015-16 (CII-1081)    DU 2017

 Assets Residential House Plot Jewelry Date of Acquisition Cost of Acquisition FMV as on 01.04.81 Date of Sale Sale Price 01.03.79 Rs. 1,40,000 Rs. 2,00,000 15.06.15 Rs. 24,00,000 01.11.90 Rs. 1,60,000 - 16.06.15 Rs. 11,20,000 03.04.2000 Rs. 80,000 - 17.06.15 Rs. 2,80,000 Investments Date of Acquisition Amount Invested (Rs.) Residential House Bonds of National Highway Authority of India 19.12.15 12.12.15 13,00,000 1,00,000

Cost Inflationary Index for

1990-91 – 182

2000-01 – 406

2001-02- - 426

2015-16 – 1081

You are required to compute taxable capital gain of Mr. Anurag for the Assessment year, 2016-17.

Solution: Computation of Capital Gains for the assessment year 2016-17

 Particulars House Plot Jewellery Sale Consideration Less: Index Cost of Acquisition 24,00,000 21,62,000 (2,00,000*1081/100) 11,20,000 9,50,330 (1,60,000*1081/182) 2,80,000 2,13,005 (80,000*1081/406) Long term Capital Gain   Exemption of U/S 54 (out of 13,00,000 paid for acquisition of residential house, 2,38,000 is utilized for closing exemption U/S 54)   Exemption U/S 54 EC Bond of NHAI 2,38,000   2,38,000         - 1,69,670             33,005 66,995             66,995 Exemption U/S 54 F Nil - 1,36,665 1,36,665 Nil - Tong Term Capital Gain Nil Nil Nil

Note: Exemption u/s 54F has been allowed out of capital gain of plot as there is no capital gain left from any other asset. If there had been capital gain from other assets as well the exemption u/s 54F shall be calculated in such a manner, which is most beneficial to the assessee.

Purchases Value of House = 13, 00,000

Exemption claimed u/s 54 = 2, 38,000

Exemption u/s 54 F = [(10, 62, 000/11, 20,000)*1, 69,670] = 1, 60,884 (Upto available income)

6. Mr. A transfer the following capital assets:        DU 2016

 Particulars House Property Gold Shares Date of acquisition Date of transfer Sale consideration (in Rs.) Cost of Acquisition (in Rs.) Cost of improvement incurred in 2012-13 Expenditure on transfer (in Rs.) 30.06.1984 31.01.2015 19,00,000 90,000 1,27,800 20,000 31.08.2013 28.02.2015 7,00,000 5,00,000 - 10,000 30.04.1987 15.03.2015 10,00,000 8,00,000 - 5,000

Determine the amount of capital gain chargeable to tax for the assessment year, 2015-16 considering CII of 1984-85, 2012-13 and 2014-15 at 125, 852 and 1024 respectively.

Solution: Calculation of Long Term Capital Gain

 Particulars House Property Gold Shares Sale Consideration Less: Expenses on sale 19,00,000 20,000 7,00,000 10,000 10,00,000 5,000 Net Sale Consideration Less: Indexed Cost of Acquisition   Less: Indexed cost of improvement 18,80,000 7,37,280 (90,000*1024/125) 1,53,600 (1,27,800*1024/852) 6,90,000 6,00,939 (5,00,000*1024/852) 9,95,000 8,00,000 Tong Term Capital Gain 9,89,120 89,061 1,95,000 (Exempted upto Rs. 1,00,000)

7. Following are the particulars of assets head by Vandana during the previous year, 2014 – 15:    DU 2015

 Assets Year of acquisition Cost of Acquisition CII FMV as on 1-4-81 Selling expenses Selling price Shop Jewellery Shares Shares Plant(Depreciable) Residential house 1980-81 1980-81 1990-91 1982-83 1982-83 1984-85 20,000 10,000 6,000 20,000 4,00,000(WDV) 60,000 100 100 182 109 109 125 40,000 50,000 ……….. ……….. ……….. ………… 10,000 ………. 1,000 2,000 ……… ……… 5,80,000 5,20,000 30,000 2,21,560 7,00,000 5,32,560

Calculate the taxable amount of capital gain if CII for 2014 – 15 is 1024. Security transaction tax on sale of shares has been paid.

Ans: Similar to Q.N. 8

8. During the year ended on 31st March, 2013, Mr. A sold the following assets:  DU 2014

a. Shop purchased in 1985 – 86 (cost inflation index 133) for Rs. 18,000 was sold for Rs. 1, 70,000.

b. Machinery purchased in 1983 – 84 (cost inflation index 125) for Rs. 50,000 (written down value on 1-4-12 Rs. 35,000) was sold for Rs. 60,000.

c. Furniture purchased on 1-5-2012 for Rs. 1,000 was sold for Rs. 1,300.

d. Machinery purchased on 1-5-2012 for Rs. 10,000 was sold for Rs. 12,000.

e. Agricultural land in Agra purchased in 1979 – 80 for Rs. 10,000 [(fair market value on 1-4-81 (cost inflation index 100) being Rs. 15,000] was sold for Rs. 1, 60,000.

f. One residential house purchased in 1987 – 88 (cost inflation index 150) costing Rs. 30,000 was sold for Rs. 2, 20,000.

During the year, he bought another house for his residence for Rs. 4, 00,000. Compute the amount of taxable capital gain for the assessment year 2013-14.

Computation of CG for the Assessment year 2013-14

Computation of STCG

 1. Furniture: Sale Consideration Less: WDV 1,300 1,000 STCG 300 2. MACHINERY Sale price (b) Sale price (d) 60,000 12,000 Less: WDV (10,000+35,000) 72,000 45,000 STCG 27,000 Total STCG (27,000 +300) 27,300

(Note: In case of depreciable asset, only WDV in the beginning is considered. No depreciation in the year of sale)

Calculation of Long term Capital Gain

 Particulars Shop Agricultural Residential Sale Consideration Less: Index cost of acquisition 1,70,000 1,01,504 (18,000 x 750/133) 1,60,000 1,12,500 (15000 x 750/100) 2,20,000 2,25,000 (30,000 x 750/100) Capital Gains Less: Exempted under Sec. 54F (Fully exempted as the sum invested in purchase of another house is Rs. 4,00,000 which is more than the sale consideration of shop and agricultural land (1,70,000+1,60,000 = 3,30,000) 68,496 68,496 47,500 47,500 Nil - Nil Nil Nil

Capital Gains:

STCG = 27,300

LTCG =    Nil

Total = 27,300