INCOME TAX- II

CAPITAL GAINS
MODULE –3
ASSESSMENT YEAR: 2022-23

Compiled by :
Dr.Umakanth.S, Dr.Supriya Rai & Manisha.T

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 Table of Contents
Module – 3: CAPITAL GAINS ............................................................................. 1
3.1 Meaning [sec. 45] .......................................................................................................................1
3.2 Capital Gain is charged to tax u/s. 45, .........................................................................................1
3.3 CAPITAL ASSETS .........................................................................................................................1
3.3.1 However, the following items are excluded from the definition of "capital asset": ..............1
3.3.2 Types of Capital Assets .......................................................................................................2
3.3.3 Determine Long or Short-Term Capital Asset ......................................................................2
3.4 Cost of inflation Index (CII) .........................................................................................................2
3.5 Indexing at a glance u/s 48 (ii) ....................................................................................................3
3.6 Statement showing taxable capital gain .....................................................................................4
3.7 Tax on Short-Term and Long-Term Capital Gains ........................................................................4
3.8 Capital gain in case of Self-generated Assets ..............................................................................5
3.9 Cost Inflation Index (CII) .............................................................................................................5
3.10 Capital Gain Exemptions.............................................................................................................6
3.11 Problems on Capital Gains ........................................................................................................ 15

Acronyms
CII
Cost of Inflation Index
u/s
under section
UTI
Unit Trust of India
STT
Security Transaction Tax

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 Module – 3: CAPITAL GAIN(S)
3.1 Meaning [sec. 45]
Any profit or gain earned from the transfer/sale of a Capital Asset. Profit or gains arising from the
transfer of a capital asset during the previous year is taxable as "Capital Gains" under section
45(1) of the Income Tax Act.

3.2 Capital Gain is charged to tax u/s. 45,

Following conditions are necessary:
i. There must be a "capital asset".
ii. There must be a "transfer" ofcapital assets in the financial year.
iii. There must arise either profits/gains or loss out of such transfer.

3.3 CAPITAL ASSETS

Any asset/s held by an assessee, whether or not connected with the business or profession of the
assessee.
Capital assets include:
a) Asset/s held by an assessee, whether or not connected with business or profession.
b) Any securities held by an FII which has invested in such securities as per the regulations
made under the SEBI Act, 1992.
c) Jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art
or art-effects held by the assessee.

3.3.1 However, the following items are excluded from the definition of "capital asset":

 Any stock-in-trade, consumable stores, or raw materials held by a person for his business or
profession.
 Personal effects: being a movable property (excluding Jewellery, archaeological collections,
drawings, paintings, sculptures, or any work of art) like Furniture, Motor Car, A/C, wearing
apparel, Refrigerator, etc., held for the personal use of the Assessee or his family assets that
are movable including wearing apparels and furniture held for personal use.
 Agricultural Land situated in India,
 except those land situated Within the jurisdiction of the municipality, notified area
committee, town area committee, cantonment board have a population of 10,000 or
more;
 Within a range of the following distance measured aerially from the local limits of
any municipality or cantonment board:
 not being more than 2 KMs, if the population of such area is more than 10,000 but
not exceeding 1 lakh;
 not being more than 6 KMs, if the population of such area is more than 1 lakh but
not exceeding 10 lakhs; or

For Private Circulation only, JU - CMS

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 Not being more than 8 KMs, if the population of such an area is more than 10
lakhs.
 6% gold bonds, 1997 or 7% gold bonds 1980 or National defence gold bonds, 1980 issued
by the central government
 Special Bearer Bonds-1991,
 Gold deposit bonds issued under gold deposit scheme 1999
 Deposit certificates issued under gold monetization scheme 2015

3.3.2 Types of Capital Assets

i. Long Term Capital Assets (LTCA) and
ii. Short Term Capital Assets (STCA)
3.3.3 Determine Long or Short-Term Capital Asset
Short-term Capital Long-term
Asset
Asset Capital Asset
Listed Equity or bonds of a company, Units of Held for not more than held for more than 12
UTI/Equity oriented Mutual Funds & Zero- 12 months months
Coupon Bonds
Unlisted shares & Held for not more than held for more than 24
Immovable property being land and building 24 months. months
or both MF(other than equity oriented funds)
Unlisted Bonds &other Assets (other than Held for not more than Held for more than 36
above) 36 months. months.

3.4 Cost of Inflation Index (CII)

CII is applicable for long term capital assets and the base year is applicable from 2001 & 2002.
In the case of assets acquired before 2001-2002, the cost of acquisition shall be compared
between the actual cost of acquisition and fair market value as of 1-4-2001. Further, the higher
value out these two shall be selected as the cost of acquisition.

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3.5 Indexing at a glance u/s 48 (ii)

Sl No Situation Indexing Capital gain tax
1 Short term capital gain (STCG) No indexation benefit On financial assets (listed
shares & STT) tax rate is
15%. In case of other
financial assets will be taxed
at slab rates.
2 Repurchase of units acquired No indexation benefit
U/S 80 CCB
4 Long term capital asset Actual cost or FMV on 1-4-2001 Non-financial assets shall be
acquired before 1-4-2001 (WEH) x CII of the year of sale taxed at the rate of 20%
under gift, will, partition HUF ÷ CII of 2001-02 i.e 100
&inheritance i.e u/s 49(1)
5 Long term capital assets Actual cost x CII of the year of Non-financial assets shall be
acquired on or after 1-4-2001 sale ÷ CII of purchase taxed at the rate of 20%
6 Transfer of property in case of The cost of acquisition to the
a gift previous owner will be treated as
the cost of acquisition in the
hands of the receiver.
7 Long term financial assets (not Actual cost x CII of the year of the capital gain will be
subject to STT) (i.e. private sale ÷ CII of purchase taxed at 20%
company shares)
8 Bonus share If allotted before 1-4-2001 cost
of acquisition shall be = FMV as
on 1-4-2001
If allotted after 2001 cost of
acquisition of bonus shares will
be nil
9 Rights issue If allotted by the company cost
of acquisition shall be = actual
cost.If purchased in favour of
right share was renounced then
cost of acquisition = purchase
price paid to the company +
amount paid to original
shareholder.
10 Self-generated goodwill, The cost of acquisition will be
trademark, nil
11 Assets subjected to Cost of acquisition = WDV as on Short term capital gain = net
depreciation 1-04 consideration (sale price –
selling expenses) – (WDV
+ additions)

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3.6 Statement showing a taxable capital gain

Computation STCG Computation LTCG

Assessee: A Y: 2021– 2022 Assessee: AY: 2021 – 2022

PY:2020– 2021 PY:2020 - 2021
Particulars ` `
Particulars ` `
The full value of sale -- The full value of sale consideration --
consideration (FVSC) (FVSC)
Less: 1 expense on transfer -- Less: 1 expense on transfer --
2. cost of acquisition -- 2. Indexed cost of acquisition --
3. cost of improvement -- 3. Indexed cost of improvement --
STCG -- LTCG --
Less: Exemption u/s 54B, 54D, -- Less: Exemption u/s 54 – 54 GB --
54G, and 54GA Taxable LTCG --
Taxable STCG -- The formula for computing indexed cost is
Deemed Transfer INDEX FOR THE YEAR OF SALE
× COST
When an asset is converted into stock in trade, it is INDEX IN THE YEAR OF ACQUISITION
termed as a deemed transfer. The difference between Note: cost of acquisition in case of assets acquired
the cost price and the price at which converted into before 1.4.2001
stock in trade is capital gain. Cost of the asset (before 1.4.2001) or Fair market
value of the asset as of 1.4.2001), whichever is
higher. This shall not apply to the depreciable assets.
Index cost of improvement
INDEX FOR THE YEAR OF SALE
× COST
INDEX IN THE YEAR OF IMPROVEMENT

3.7 Tax on Short-Term and Long-Term Capital Gains

Tax Type Condition Tax applicable

Short-term capital gains tax When securities transaction Taxed according to his income
tax is not applicable tax slab.

Short-term capital gains tax When securities transaction

tax is applicable(STT) 15%

Long-term capital gains tax Except on sale of listed

equity shares/units of equity 20%(with index benefit)
oriented fund

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Long-term capital gains tax On the sale of listed Equity 10% over and above` 1 lakh and
shares/ units of equity
index benefit is not available
oriented fund

3.8 Capital gain in case of Self-generated Assets

Nature of capital Asset Goodwill of Business/ Tenancy Rights /Route
Manufacturing Rights Permits/Loom Hours
` `
Gross sale consideration
Less: Realization expenses
Net Sale Consideration
Less: Cost of Acquisition Nil Nil
Less: Cost of Improvement Nil Nil
Indexed Cost of Improvement Nil Actual Indexed Cost
Gross Capital Gain/Loss
Less: Exemptions
Net Capital Gain/Loss

Note: 1. If Goodwill of a business or manufacturing rights is purchased and later on sold, the
purchase price will be taken as cost of Acquisition and the Cost of improvement will be nil.

2. Self –Generated assets like goodwill of a Profession.

3.9 Cost Inflation Index (CII)

2001-
Financial 02 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Years (Base 03 04 05 06 07 08 09 10
year)
Cost
Inflation 100 105 109 113 117 122 129 137 148
Index (CII)

Financial
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Years
Cost Inflation
167 184 200 220 240 254
Index (CII)

Financial
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Years
Cost
Inflation 264 272 280 289 301 317
Index (CII)

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3.10 - Capital Gain Exemptions

Asset Transferred Immovable Property (Land & Building)
Nature of the Long Term Capital Asset
Asset

One Residential House Property or Two residential

house properties
New Asset to be
*Two residential house properties option can be
acquired
exercised by the taxpayer only once in his lifetime
provided the amount of long-term capital gain does not
exceed Rs. 2 crores. (W.e.f AY 2020-2021)
Amt to be invested Long Term Capital/ Gain on Transfer
in New Asset
Amount of Least (a) Amount invested in New
Exemption Residential House, or (b) Capital Gain
Sec. 54 (a) For Purchase: Within one year before or two years
Time Limit for
after the date of transfer
Individual/HUF LT Investment
(b) For Construction: Within three years after the date of
transfer.

(a) If the amount is not utilized before within the time

limit u/s 139, then the amount shall be kept in the
Capital Gain Account
Unutilized Amount (b) Scheme of a Nationalized Bank within the time limit
u/s 139(1). The amount should be utilized within the
prescribed period. The amount not utilized within the
prescribed period shall be treated as LTCG of the
previous year in which the prescribed period expires.

Holding Period of Two years from the date of acquisition or construction.

New Asset
Sale of New Asset Short Term Capital Gain computed as follows -Sale
within the holding Consideration of New Asset Less: Cost of Acquisition
period reduced by Capital Gains exempted u/s 54

Applicability Individual
Asset Transferred Urban Agricultural Land used for agriculture by him or by his
Sec. 54B parents for two years immediately before the date of transfer.
Individual
Nature of the Asset Long Term or Short Term Capital Asset

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New Asset to be Agricultural Land

acquired (maybe in the urban area or rural area)
Amt to be invested in Capital Gain on Transfer
New Asset
Amount of Exemption (a) Amount invested in New Agricultural Land,
or
LT/ST (b) Capital Gain W.E.L

Time Limit for Within Two Years from the date of transfer.
Sec. 54B Investment
Individual Unutilized Amount Ref Sec 54 unutilized amount
Holding Period of Three Years from the date of acquisition
New Asset
Sale of New Asset
within holding period Short Term Capital Gain computed as follows: Sale
Consideration of New Asset Less: Cost of Acquisition
reduced by Capital Gains exempted u/s 54B

Applicability All persons

Asset Transferred Such land or building forming part of the industrial
undertaking was used by the assessee for at least 2 years
before the date of compulsory acquisition (transfer)

Nature of the Asset Short term or long term capital asset

New Asset to be Land and Building for Industrial purpose
Sec. 54D
acquired
LT/ST
Amt to be invested in Capital Gain on Transfer
Any Person
New
Amount
Asset of Exemption (a) Amount invested in New Land or building, or (b) Capital
Gain W.E.L
Time Limit for Within Three Years from the date of transfer.
Investment
Unutilized Amount Same as above
Holding Period of Three Years from the date of acquisition
New Asset

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Sale of New Asset Short Term Capital Gain computed as follows: Sale
within the holding Consideration of New Asset Less: Cost of Acquisition
period reduced by Capital Gains exempted

Applicability All persons

Asset Transferred Any LTCAsset
Nature of the Asset Long term capital asset
New Asset to be The long term specified capital assets refers to
acquired investment in 1) National Highway Authority of India
(NHAI), 2) National Rural electrification corporation
(RECL)
3) Bonds issued by Power finance corporation Ltd
Amount to be Capital Gain on Transfer& Maximum amount
Sec. 54EC
invested in New `50,00,000
Asset
LT Amount of Least of (a) Amount invested in Bonds
Any Person Exemption or (b) Capital Gain

Time Limit for Within six months from the date of transfer.
Investment
Unutilized Amount Same as above
Holding Period of Three Years from the date of acquisition
New Asset

Sale of New Asset Short Term Capital Gain computed as follows: Sale
within the holding Consideration of New Asset Less: Cost of Acquisition
period reduced by Capital Gains exempted

Applicability All persons / any taxpayer

Asset Transferred Any LTCAsset
Sec. 54EE Nature of the Asset Long term capital asset
LT New Asset to be Unitsof such fund (Mutual Funds) may be notified by
Any Person acquired Central Government to finance start-ups.

Amount to be Capital Gain on Transfer& Maximum amount

invested in New `50,00,000
Asset

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Amount of Least of (a) Amount invested in units max 50,00,000

Exemption or (b) Capital Gain

Time Limit for Within six months from the date of transfer.
Investment
Unutilized Amount Same as above
Holding Period of Three Years from the date of acquisition
New Asset

Sale of New Asset Short Term Capital Gain computed as follows: Sale
within the holding Consideration of New Asset Less: Cost of Acquisition
period reduced by Capital Gains exempted

Asset Transferred Any LTC Asset other than Residential HP

Nature of the Asset Long term capital asset

Condition On the date of the transfer of LTCA, the assessee should not
own more than one residential house.
New Asset to be Residential house Property
acquired
Amt to be invested in Net consideration on the earlier asset transferred
New Asset
Sec. 54F
Amount of LTCG X amount invested in residential property
Individual/HUF LT Exemption Net consideration (NSC)

Time Limit for (a) For Purchase: Within one year before or two years after
Investment the date of transfer
(b) For Construction: Within three years after the date of
transfer.
Unutilized Amount a) Same as above
b) The taxable amount for non-utilization of the deposit
will be
c) Amount not utilized x LTCG
Net consideration

Holding Period of Three Years from the date of acquisition or construction

New Asset

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Sale of New Asset Short Term Capital Gain shall be tax separately
within the holding Long term Capital Gains exempted will be chargeable to tax
period as LTCG

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Applicability All persons

Asset Transferred Such land or building, P&M forming part of industrial
undertaking and shifting of such undertaking from
urban to a rural area
Nature of the Asset Short term or long term capital asset
New Asset to be Land and Building, New P&M for Industrial purpose
acquired in a rural area or to meet expenses of shifting.
Amt to be invested Capital Gain on Transfer
in New
Sec. 54G Asset
Amount of Least of (a) Amount invested in New Land & building
LT/ST Exemption or P&M,
Any Person Time Limit for Within one year
or (b) Capital before the date of transfer or within
Gain
Investment Three Years after the date of transfer.
Unutilized Amount a)Same as above
b) The amount should be utilized within a prescribed
period
c) The amount not utilized within the prescribed period
shall be treated as LTCG or STCG of the previous year
Holding Period of Three Years
in which the from the date
prescribed of acquisition
period expires.
New Asset
Sale of New Asset Short Term Capital Gain computed as follows:
within the holding Sale Consideration of New Asset
period Less: Cost of Acquisition reduced by Capital Gains
exempted

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LT/ST Applicability All persons

Land, building, plant or machinery used for an industrial
undertaking situated in an urban area.
Asset Transferred
Purchase or Construction: Land, Building plant or
machinery used for an industrial undertaking shifted from
urban area to any special economic zone.
Nature of the
Asset Short term or long term capital asset

New Asset to be Land and Building, New P&M for Industrial purpose in
acquired SEZ or as prescribed by the Central Govt. to meet expenses
of shifting can be claimed.
Amount to be
invested in New Capital Gain on Transfer
Asset

Amount of Least of (a) Amount invested in New Land & building or

Sec. 54GA Exemption New P&M and expenses incurred towards such transfer
or (b) Capital Gain
Any Person

Time Limit for

Within one year before the date of transfer or within Three
Investment
Years after the date of transfer.

a)Same as above
b) The amount should be utilized within the prescribed
Unutilized
period
Amount
c) The amount not utilized within the prescribed period shall
be treated as LTCG or STCG of the previous year in which
the prescribed period expires.

Holding Period of
New Asset Three Years from the date of acquisition

Sale of New Asset Short Term Capital Gain computed as follows:

within the holding Sale Consideration of New Asset
period Less: Cost of Acquisition reduced by Capital Gains
exempted

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Applicability Individual or HUF

Sec. 54GB
Asset Transferred Residential Property or Plot of land
Individual or LTCG
HUF Nature of the Asset LT

New Asset to be acquired Equity Shares of eligible companies

Amt to be invested in New Net consideration of Residential

Asset Property or Plot of land

1) If net consideration is
morethan the cost of a
new asset:
Amt of exemption:
Amount of Exemption 𝐋𝐓𝐂𝐆𝐱𝐂𝐨𝐬𝐭𝐨𝐟𝐧𝐞𝐰𝐚𝐬𝐬𝐞𝐭
𝐧𝐞𝐭𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧
2) If net consideration is Less or
equal to the cost of a new asset:
The whole amount of LTCG is
exempted
Three Years from the date of
Time Limit for Investment
acquisition

Includes new plant and machinery

New asset
which was not used before
Holding Period of New Asset 5 years from the date of new plant and
machinery acquired
The manufacturing sector (New SME
Applicability
at start-up stage)

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Cases in which the indexation of cost is not to be done while calculating long
term capital gain

1. Transfer of long term debentures or bonds other than capital indexed bonds issued by the
government

2. Transfer of soverign gold bond issued by RBI under the soverign gold bond scheme, 2015

3. Transfer of shares in or debentures of an Indian company by a non-resident assessee

4. Transfer of an undertaking or division (assets etc) in slump sale

5. Transfer of a long-term capital asset being an equity share in a company or a unit of an equity
oriented fund or a unit of a business trust

6. Transfer of units purchased in foreign currency

7. Global depository receipts (GDRs) or bonds purchased in foreign currency by a non-resident

8. Global depository receipts (GDRs) or bonds purchased in foreign currency by an resident

individual

9. Transfer of foreign exchange asset by a non-resident Indian

Indexing at a glance

Situation Indexing

1. Long term capital assets acquired before 1-4- Actual cost of FMV on 1-4-2001 (W.E is
2001 under gift, will, partition HUF, more) x CII of year of transfer / CII of 2001-
inheritance 2002 (i.e 100)

2. Cost of improvement incurred on or after 1- Cost of improvement x CII of the year of

4-2001 on above mentioned assets transfer / CII of the year of improvement

3. Long term capital assets acquired on or after Actual cost x CII of the year of transfer / CII of
1-4-2001 (not under any of the modes the year of acquisition
mentioned above)
cost of improvement incurred after 1-4-2001
Cost of improvement x CII of the year of
transfer / CII of the year of improvement

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1. Compute the taxable capital gain from particulars given below

a. Net consideration of a residential house Rs. 12,00,000 (02-06-2021) – CII - 317

b. Cost o acquisition of this house Rs. 2,10,000 (01-05-2007) – CII – 129

c. New house acquired on 01-09-2021 for Rs. 2,00,000

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2. Sri an owner of three houses sells a residential house in Chennai for Rs.
10,00,000 on May 23rd 2021. This house was purchased by him on 01-04-2002 for
Rs. 2,00,000. On May 30th 2021, he purchased a flat in Mumbai for Rs. 8,70,000 for
the purpose of the residence of his son-in-law. On march 1st 2022 Sri sells the house
in Mumbai for Rs. 12,10,000.

Compute the capital gain arising on the two transactions. Is Sri eligible for
exemption U/s 54 in respect of the second sale?

Cost inflation index for the financial year 2002-2003 and 2021-2022 are 105 & 317

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3.From the following two cases compute taxable capital gain

a. Mr.Yash sold an asset on 15-08-2021 (CII 317) for Rs. 3,50,000. The cost price
of the asset purchased on 11-02-1996 is Rs. 20,000. The fair market value of the
same on 01-04-2001 (CII-100) was Rs. 50,000. The income of Mr.Yash from other
sources during the previous year was Rs. 2,22,700

b. Mr.Suraj who inherited building properties consisting of a residential houses and

a shop worth Rs. 1,38,000. Sold on 01-11-2021 residential property for Rs.
10,10,000 (CII – 317). The fair market value of the property sold was Rs. 2,60,000
on 01-04-2001 (CII - 100). His income from all other sources was Rs. 1,12,000.

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4. Mr.Ankit purchased a residential house during the previous year 2001-2002 for
Rs. 40,00,000 & sold it for 2.10 crores during the previous year 2021-2022. He
purchased two houses worth Rs. 38,00,000 each on February 21 st 2022. Calculate
taxable capital gain U/s 54 for the assessment year 2022-2023

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5. Mr.Puneeth Raj sold a plot of land at jaipur on 01-06-2021 (CII=317) for Rs.
16,40,000. He paid Rs 40,000 as selling expenses. The plot was received by him on
the death of his father on 15-03-2005 (CII = 113). His father had acquired it on 01-
04-1990 for Rs. 1,00,000 and its FMV on 01-04-2001 was Rs. 3,10,000. On 01-10-
2021 he invested Rs. 3,00,000 in bonds issued by rural electrification corporation
limited notified U/S 54EC and Rs. 2,00,000 on 01-03-2022 in Bonds of National
Highway authority of India. Compute his taxable capital gain.

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6. Mr.Rajinikanth submits the following particulars about sale of assets during the
year 2021-2022

Particulars Jewellery Plot Gold

Sale price 6,00,000 21,74,000 3,50,000
Expenses on sale NIL 24,000 NIL
Cost of acquisition 1,50,000 7,00,000 80,000
Year of acquisition 2007-2008 2004-2005 2009-2010
CII 129 113 148
He has purchased a house for Rs. 12,00,000 on 01-03-2022. Calculate the amount
of taxable capital gain if CII for 2021-2022 is 317

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7. M/s Pankaj brothers running an industry unit were ordered by Municiptal

corporation to shift their concern from urban area. They shifted their concern during
2021-2022 previous year and in this process sold some of the assets whose details
are given below

Particulars P&M Land Building

2006-07 June 2003 2006-2007
Sale proceeds 11,00,000 11,90,000 13,00,000
WDV on 01-04-2020 4,40,000 Nil 7,32,500
Cost of acquisition 6,00,000 3,00,000 10,00,000
Amount invested during
December 2021 due to shifting 8,00,000 2,00,000 5,00,000
Compute the taxable capital gain for the assessment year 2022-2023 if CII for 2003-
2004 is 109, 2006-2007 is 122 and 2021-2022 is 317

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8. Mr.James is a film producer. During the previous year he sold a film projector of
Rs. 1,70,000 which had cost him Rs. 1,50,000 and in respect of which Rs. 40,000
had been allowed as depreciation during last two years. Besides, his total income
from business was Rs. 75,000. Expenses on sale amounts to Rs. 5,000. Compute the
taxable capital gain for the Assessment year 2022-2023.

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9. During the year ended 31st march 2022. Mr.David sold the following assets:

Particulars Sale proceeds

a. Shop purchased in 2005-06 (CII-117) for Rs. 48,000 2,80,000
b. Machinery purchased in 2003-04 (CII: 109) for Rs. 50,000 60,000
(WDV on 01-04-2021 Rs. 35,000)
c. Furniture purchased on 01-05-2021 for 1,000 1,300
d. Machinery purchased on 01-05-2021 for 10,000 12,000
e. agricultural land in Agra purchased in 1998-99 for Rs.40,000 3,50,000
(FMV on 01-04-2001 (CII : 100) being 72,000)
f. One residential house purchased in 2007-2008 (CII:129) 3,90,000
costing Rs. 80,000
During the year he bought a new house for his residence for Rs. 6,00,000. Work out
the amount of capital gains to be included in the gross total income and also
compute his total income, if his other business income during the year was Rs.
1,00,000. Cost inflation index for 2021-22 is 317.

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INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

10. Mr.X owns a residential house at bangalore. From the following informations,
compute the amount of capital gain

Particulars Rs.
a. Cost of construction (during 2004-05) 6,00,000
b. Cost of additions and improvements (during 2007-08) 2,40,000
c. Sale consideration (sale made on 10-10-2021) 32,00,000
d. Expenses on transfer 20,000
e. Cost of new house purchased in Hyderabad (on 15-01-2022) 4,00,000
(house in half finished)
Rs. 3,00,000 amount deposited in capital gain deposit scheme in SBI on 25-07-
2022. An amount of Rs. 2,00,000 withdrawn from capital gain deposit scheme on
12th May 2023 and utilized for the completion of the house. Cost inflation index for
2004-2005 is 113, for 2007-08 is 129 and for 2021-22 is 317.

28
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

29
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

11. Mr. X owns 2 acres of agricultural land in an urban area of Ludhiana which he
sold on 30th Nov 2021 at Rs. 54,00,000 per acre. Other particulars are

a. Cost of 2 acres of land purchased in 1997 Rs. 6,00,000

b. FMV as on 01-04-2001 Rs. 24,50,000

c. Selling expenses Rs. 1,00,000

d. He owns one residential house on 30-11-2021

e. Date of filing of return of income is 31st July, 2022

f. Mr.X Purchased 10 acres of agricultural land in a rural area for Rs. 8,00,000 lacs

on 10th June 2022

g. Mr.X purchased a piece of plot to construct a residential building for Rs.

6,00,000 lacs at Ludhiana.

h. He deposits Rs. 15 lacs in a schedule bank in a capital gain deposit account

scheme on 30th July 2022 to construct a residential house

i. Amount invested in bonds of National Highway Authority of India Rs. 8,00,000

lacs on 31st March 2022.

Assume that he actually withdraws Rs. 12,00,000 lacs from the deposit account to
complete his residential house

30
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

31
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

32
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

12. From the following particulars given by Suresh (Resident). Compute taxable
gain for the assessment year 2022-2023

Sl Name of the Date of Cost Date of Sale Expenses

No asset purchase sale price on sale

1 Government 1-10-2021 10,000 30-12-21 15,000 200

securities

2 Furniture 15-2-2021 5,000 20-02-22 3,000 Nil

(WDV on 01-
04-2021 is Rs
4,000)

33
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

34
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

13. Mr.Paakash purchased a residential flat on 02.05.2016 for Rs.10, 00,000. He

paid on the same day the stamp duty and registration charges of` 48,750 on
purchases of flat. He sold the said flat on 17.03.2022 for Rs.44,00,000.The cost
inflation index for FY 16-17 is 264 and FY 2021-2022 is 317. Compute his capital
gain for the Assessment Year 2022-2023.

35
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

14. Mr.Shanta Kumar owns a house property which he acquired in April 1986 for
2,50,000. The cost of improvement incurred for this property in August 2006 was
Rs.3, 80,000. He sold this property in October 2021 for Rs.98,00,000. He acquired a
new house property during January 2021 for Rs.3,00,000. Compute his taxable
capital gains for the AY 2020-21 on the assumption that the F.M.V of the property
on 1.4.2001 is Rs.27,00,000.CII 2001-02 = 100, 2006-07= 122, FY 2020-2021 =
317.

36
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

15. Ms.Vimla sold a residential building at Jodhpur for Rs.38,00,000 on 1-7-2021.

The building was acquired for Rs.3,50,000 on 01-6-2007. She paid brokerage
Rs.30,000 at the time of sale of the building. She invested 7 lakhs in the purchase of
a residential building in December 2019.CII: 2007-08 = 129 & 2021-2022 = 317.
Compute taxable capital gain.

37
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

16.. Agricultural land purchased by Mr Karan (resident) in 2004-05 for Rs.90,000.

Sold for Rs.18,00,000 on 1-6-2021. The assessee purchased another piece of
Agricultural land on 1-9-2021 for Rs.10,00,000 and deposited Rs.60,000 on 1-11-
2021 in the Capital Gains Account Scheme. Find out the Capital gain chargeable to
tax for the AY 2022-23.

38
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

17.Mr.Chandru transferred his residential house property on 28-10-2021 for

94,00,000 lakhs. The land was acquired for Rs.9,99,300 on 30-6-2010. He
deposited 50,00,000 lakhs in eligible bonds issued by Rural Electrification
Corporation (REC) on 20-03-2022. Again he deposited 20 lakhs in the National
Highways Authority of India (NHAI) bond on 26-03-2022. Compute Capital Gains
of Mr.Chandru for the AY 2022-23.

39
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

18. Mr.Ram Kumar provides the following particulars of assets transferring by him

during the PY 31-03-2022. Compute his capital gains for the AY 2022-23. A
residential house in Delhi was purchased on 11th November 2001 at a cost of Rs.
14,70,000 and was sold on 16th January 2022 for Rs.1,59,50,000. He incurred
transfer expenses of 56,000. He made the following investments out of capital gains
– Purchase of RECL Bonds for Rs.10,00,000 on 16th Feb.2022; Purchased a
residential flat on 26th March 2021 for Rs.75,00,000. CII 2001-02 = 100 & 2021-22
= 317.

40
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

19. Compute the taxable capital gain from particulars given below. The below
assets are sold in previous year 2021-2022

Particulars Gold Shares Unlisted

Rs. Rs.
Date of acquisition 10-06-2005 02-11-2005
FMV on the date of transfer 6,00,000 3,00,000
Selling price 7,90,000 9,50,000
Cost of acquisition 2,10,000 2,70,000
On 10thDecember 2021,completed the construction of a residential house for

which he spends Rs.10, 40,000.

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INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

20. Kumarswamy submits the following particulars of assets sold during the year
2021-2022
Particulars Gold Securities Plot
Sale proceeds 9,00,000 7,00,000 84,00,000
Brokerage paid on sale Nil Nil 2%
Cost of acquisition 60,000 40,000 1,40,000
Year of acquisition 1988-89 2013-14 1984-85
Cost Inflation index Nil 220 Nil
Date of sale 01-06-2021 01-01-2022 30-08-2021
Fair market value 1,00,000 Nil 10,00,000

He has purchased a residential house for` 27,00,000 on 25-3-2021 on

which date he did not own any other residential house. Whether
Kumarswamy is eligible to claim exemption capital gain for the
assessment year 2022-23. CII for the financial year 2001-02 was 100 &
2021-22 = 317.

42
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

43
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

21. Mr.Ghosh sold a house on 1-9-2021 for Rs.18,00,000. This house was inherited
by him during 2001-02 from his father who had constructed it in 1991-92 for
Rs.50,000. Mr.Ghosh spent Rs. 50,000 on the renovation of the house in 2006-
2007. The fair market value of the house as of 1-4-2001 was Rs.4,50,000. This
house was under negotiations for sale in May 2011 & he received Rs. 30,000 as
advance money. The contract could not materialize & the advance money was
forfeited. Compute the amount of capital gain assuming that he does not qualify for
an exemption. (CII for 2001-02=100, 2006-2007-122, 2010-11=167 & 2021-2022
=317)

[Hint: Any advance money received & forfeited during P.Y 2013-2014 or before,
shall be reduced from the cost of acquisition, WDV/FMV even if such capital asset is
sold/transferred during P.Y 2014-2015 or afterwards. Any advance received &
forfeited during the previous year 2014-2015 or afterwards (i.e, on or after 1-4-2014)
will be taxable as income from other sources in the year in which it is forfeited.]

44
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

45
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

22. Mr.Harish submits the following particulars about the sale of assets during the
year 2021-2022.
Particulars Jewellery Plot Gold
Rs. Rs. Rs.
Sale price 8,10,000 29,24,000 6,40,000
Expenses on sale 10,000 24,000 Nil
Cost of acquisition 2,50,000 8,00,000 80,000
Year of acquisition 2007-2008 2004-2005 2009-2010
CII 129 114 148

He has purchased a house for Rs.14,00,000 on 1-3-2022. Calculate the amount of

taxable capital gain if CII for 2021-22 is 317.

46
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

47
INCOME FROM CAPITAL GAINS [PY: 21-22 & AY: 22-23]

23.M/S.Brothers Ludhiana running an industrial unit was ordered by Municipal

Corporation, Ludhiana to shift their concern from an urban area of Ludhiana. They
shifted their concern during 2020-2021 & in this process sold some of the assets
whose details are given below:

P& M Land Building

Assets Acquired on 01-01-07 June 2003 12-12-2006
Sale proceeds 22,40,000 22,90,000 18,00,000
WDV on 1-4-2021 4,40,000 --- 7,32,500
Cost of acquisition 6,00,000 3,00,000 10,00,000
Amount invested in new asset due to 8,00,000 2,00,000 5,00,000
shift on Dec 30th -2021

Compute the taxable capital gain for the assessment year 2022-2023, if (CII for
2003-2004 is 109, 2006-2007 is 122 & 2021-22 is 317).

48