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

Capital Gains Problems and Solutions
Income 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

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