Tax Management

Exercise problems on Capital Gains

1. State whether the following is STCA or LTCA

X purchases a HP on March 10th 2010 and transfers it on June 6th, 2012 Y purchases shares in an Indian company on March 10th, 2010 and transfers it on June 6th , 2012 Z acquires units of MFs on July 7th, 2011 andhe transfers these units on July 10th, 2012 A acquires an agricultural land on 1st January, 2009 and transfers it on 15th December, 2013.

2. From the following details compute the taxable capital gain for AY 2011-12: Mr Manu purchased a house in Mysore for Rs.80000 in 1974. He added two rooms in 1980 at a cost of Rs.20000. He constructed upstairs at a cost of Rs. 50000 in 1988. He sold the house on 1st Sept., 2010 for Rs.2000000. Compute the taxable capital gain for the AY 2011-12 if the FMV on 1-4-81 is Rs.250000. (CII for 1981-82:100; 88-89:161;10-11:711)

Table showing computation of Capital Gains

Particulars Sale consideration/ proceeds (-) 1. Cost of Acquisition (Indexed): 250000 x 711 / 100 2. Cost of Improvement (Indexed): 50000x711/161 Long Term Capital Gains 1777500 220807 1998307 1693 Rs. Rs. 2000000

Note: FMV on 1-4-81 being COA here i.e. Rs.250000 (higher of FMV or Original price) Cost of improvement after 1.4.81 only to be considered. i.e. Rs.50000.

3. On 1-10-2006, Mr Saleem sold his house purchased in May 1991 for Rs.100000, for Rs 500000 to Anarkali. On 1-7-07 he purchased another house for Rs.380000. Assume that this house is sold on 15-4-2010 for Rs.400000, compute his capital gains for AY 2007-08 and 2011-12. (CII for 1991-92: 199; 2006-07:519)

4. From the following details compute the taxable capital gain for AY 2011-12: i. COA of RH in 1995-96 Rs.360000 ii. COI made in Jan 97 Rs.140000 iii. sale proceeds on 5-10-2010: Rs.2000000 iv. cost of construction of the new house by the due date of filing returns Rs.600000 (CII for 1995-96:281; 96-97:305; 2010-11:711) Also explain the treatment if Instead of constructing the new house the amount of Rs. 600000 was deposited under Capital Gain Account Scheme. The new house constructed for Rs.600000 is transferred within three years for Rs.800000

H.W problem
5. From the following information compute the taxable capital gains: a) i) Cost of Acquisition of Residential house in May 1999 Rs.200000 ii) Sale proceeds on 2-6-2010 Rs. 1000000 iii) Cost of new house purchased for residential purposes (including cost of site) Rs 500000 iv) Amount deposited as per the scheme Rs.100000 b) Would it make any difference if the assessee deposits Rs.500000 as per the scheme but does not utilise the amount for acquiring residential house before 2-62013(CII for 99-2000: 389; 2010-11:711)

6. Baalu was holding gold which was purchased by him for Rs.120000 in 1988-89. He sold the same on 5-8-2010 for Rs.1500000. On 10-92010 he invested Rs.500000 in a residential house at Delhi. On 5-8-2010 he owns a big house at Mumbai. Compute the taxable capital gains. The CII for 1988-89: 161; 201011:711.

7. Abhay sold the following properties: i) Jewellery costing Rs. 75000 in Jan 2008 sold for Rs. 200000 in Dec 2010. ii) House at Mangalore let out for residence, sold on 30-11-10 for Rs 1500000. It was inherited by him in 1974 and its FMV on 1-4-81 was Rs.160000. His father had acquired it for Rs. 100000 in 1970. He purchased another house in 2011 for Rs.300000. iii) Household furniture costing Rs.18000 in Oct 2010, sold for Rs. 25000 on Dec 2010. iv) Agricultural land in Mysore sold for Rs. 525000. It had cost him Rs. 85000 in Dec 1990. He purchased agricultural land for Rs.120000 in July 2011. Compute his taxable capital gains. CII for 1982-82: 100; 199091:182; 1998-99:351; 1999-2000:389; 2010-11:711.

8. Mr Mithal purchases a house property for Rs.76000 on June 30,1967. The following expenses are incurred by him : a. Cost of construction of first floor in 1975-76 Rs110000 b.Cost of construction of second floor in 1983-84 Rs 340000 c. Alteration of the property in 1992-93 Rs. 290000 FMV on Apr 1, 1981 is Rs.450000. The house property is sold by him on June 15, 2011 for Rs.6950000 (expenses incurred on transfer Rs. 10000). Compute his CG. CII 2011-12:785; 1983-84:116; 1992-93:223.

9. Mr Mallik sells the following capital assets during the PY 2011-12: Compute his capital gains. CII: 2011-12:785; 1992-93:223; 1985-86:133; 1991-92:199
Non listed shares Sale consideration Year of acquisition Cost of acquisition Cost of improvement incurred in 1991-92 2400000 1992-93 290000 House Property

680000 1985-86 18000 70000

10. An agricultural land situated in Dharwad District purchased in 1988-89 for Rs.500000 was sold on Sept 15th 2010 for Rs.2500000. Another piece of land purchased on 15th October, 2010 for Rs.200000 and on the same day, Rs.50000 was deposited in the Capital Gain Account Scheme o Post office. Calculate the taxable capital gains. (CII: 1988-89:161; 2010-11:711)

11. Mr Athul sells the following long term capital assets on Jan 11, 2012:
Residential HP Sale consideration Indexed cost of acquisition Expenses on transfer 390000 70000 10000 Gold 810000 115000 81000 Silver 296000 178000 6000 Diamonds 640200 430000 32000

The due date of filing return of income for the AY 2012-13 is July 31, 2012. For claiming exemption under sec 54 and 54EC, he purchases the following assets:
Assets Land (for constructing a RH) Bank Deposit (for constructing house) Bonds of REC (redeemable on Jul 5,2016) Date of purchase Apr 2,2012 Aug 5,2012 Jul 5,2012 Amount (Rs.) 100000 50000 750000

Bonds of NHAI (redeemable on Aug 10,2021)

Jul 10,2012

305000

Find out the amount of capital gain chargeable to tax for the AY 2012-13.