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Questions and Answers
What does 'COA' stand for in the context of capital gains?
What does 'COA' stand for in the context of capital gains?
- Cost of Acquisition (correct)
- Capital Output Amount
- Combined Operational Asset
- Cost of Allocation
What is the purpose of the Cost Inflation Index (CII) in calculating capital gains?
What is the purpose of the Cost Inflation Index (CII) in calculating capital gains?
- To account for currency exchange rates
- To calculate depreciation
- To adjust for inflation over time (correct)
- To adjust for market fluctuations
If advance money forfeited before 01/04/2014, what happens to it?
If advance money forfeited before 01/04/2014, what happens to it?
- Reduced from the cost of the asset (correct)
- Taxable under IFOS
- Added to the cost of acquisition.
- No effect in capital gains.
What happens to advance money forfeited after 01/04/2014?
What happens to advance money forfeited after 01/04/2014?
What does FVSC stand for?
What does FVSC stand for?
Under Section 47, which transaction is NOT regarded as a transfer for capital gains?
Under Section 47, which transaction is NOT regarded as a transfer for capital gains?
For determining the nature of capital gains, what is the Period of Holding (POH) considered to be?
For determining the nature of capital gains, what is the Period of Holding (POH) considered to be?
When calculating indexed cost of acquisition, which formula is applied?
When calculating indexed cost of acquisition, which formula is applied?
What is considered a 'transfer' under Section 2(47)?
What is considered a 'transfer' under Section 2(47)?
Which of the following is generally included in the meaning of 'transfer' under Section 2(47)?
Which of the following is generally included in the meaning of 'transfer' under Section 2(47)?
If an asset was acquired by a previous owner, how is the Cost of Acquisition (COA) treated for indexation?
If an asset was acquired by a previous owner, how is the Cost of Acquisition (COA) treated for indexation?
What represents consideration received or accruing as a result of the transfer of a capital asset?
What represents consideration received or accruing as a result of the transfer of a capital asset?
According to Section 47, which of the following is NOT considered a 'transfer'?
According to Section 47, which of the following is NOT considered a 'transfer'?
What is the effect on cost when raw money forfeited for a disease before 01.04.2014?
What is the effect on cost when raw money forfeited for a disease before 01.04.2014?
Which of the following is an example of 'transfer'?
Which of the following is an example of 'transfer'?
In calculating long-term capital gains, what is deducted from the full value of the consideration?
In calculating long-term capital gains, what is deducted from the full value of the consideration?
What is the treatment of brokerage costs when calculating capital gains?
What is the treatment of brokerage costs when calculating capital gains?
Which of the following is NOT a 'transfer'?
Which of the following is NOT a 'transfer'?
In which year is tax treatment done for advanced forfeited money?
In which year is tax treatment done for advanced forfeited money?
For assets acquired before April 1, 2001, what cost can be considered?
For assets acquired before April 1, 2001, what cost can be considered?
Flashcards
Meaning of Transfer
Meaning of Transfer
Includes exchange of assets and extinguishment of rights Ex: Destruction of shared assets, Insurance claim is not transfer
Not considered as Transfer
Not considered as Transfer
Gift, will or inheritance are not considered transfers under section 47
Section 47: Transactions
Section 47: Transactions
Transactions not regarded as transfer Ex: Distribution of assets in total or partial partition of HUF
Extinguishment of any right
Extinguishment of any right
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As per Manjula J. Shah case law
As per Manjula J. Shah case law
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Period of Holding
Period of Holding
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Indexation of Cost of Acquisition
Indexation of Cost of Acquisition
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Advance money forfeited
Advance money forfeited
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Advance money forfeited after 01.04.2024
Advance money forfeited after 01.04.2024
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Study Notes
- Sec 2(47): Meaning of Transfer
- Transfer includes sale, exchange of assets, extinguishment of asset, and relinquishment of asset.
- Destruction of Shared Firm Assets where insurance claim is received is not a transfer.
- Insurance claim is received of ₹5 Lakh.
- Way of P&L is STCL = ₹5 Lakh.
- Way of P&N is STCL = 2/3.
- Transactions not regarded as transfer:
- Distribution of assets in total or partial partition of HUF.
- Distribution of Assets: Client, House, and Jewellery of a Member.
- Gift, will, or inheritance are not transfers
- Conversion of debentures of prof. sh. of a company into shared prof. sh. of the same company
- Distribution of assets in the "Reverse Mortgage Scheme"
- Transfer of assets are an example.
- Example:
- Acquisition: 06-06
- COA: ₹10 Lakh
- CIIFA: 43-43
- PNV (Current): ₹20 Lakh
- Sale: 22-09 or 24-25
- LB: ₹60 Lakh
- ASC: ₹60 Lakh
- SDV: ₹65 Lakh
- Brokerage is @₹21 Lakh.
- Computation of Cost (CII for TIF and in Transactions):
- C is Cost of Acquisition (COA) : COA shall be indexed from P.Y. in which the asset was first held by the Assessee.
- Cost of Improvement (COI) is the COI incurred by previous owner
- COI is taxed unless proven
- Indexation of cost of acquisition = COA × CII for PY when COI was incurred or CII of PY of TIF
- As per Formula of Indexation: COA shall be indexed from P.Y. when asset was first held by assessee i.e. the year of CII asset will.
- Inductation of COI: COI × CII of PY when COI was incurred.
- Period of Holding (POH): Previous owner.
- As per Formula of Indication of COA shall be indexed from PV which asset was held by Assessee Bombay High Court
- COA would be indexed from PV in which asset was acquired by previous owner
- Solve ques as per formula; give a note as Manjula J Shah
- Calculate LTCG as per Manjula J Shah.
- LTCG is calculated as per Formula U/S 48.
- Sec 51 Advance Money forfeited by Assessee
When Advanced Forfeited before 01-04-2014
- Any Raw Money Forfeited for disallow
- Shall be reduced from Cost and Cost Shall be induced.
- No tax Treatment in the year of expenditure.
Advance Money Forfeited by Previous Owner
When Advances Forfeited after 01-04-2014
- No effect in cost of Capital gain.
- It will be Taxable with IFOS UIS 56(2) CISS in the year of forfeiture
- Adv. forfeited by previous owner before 01.04.24
- Taxable in hands of Previous owner.
- No Tax.
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