Capital Gain Tax on a Gift Property sale

Share This Thread
  1. srini4itil

    srini4itil New Member

    Following are my queries with regards to the below transaction on the sale of our Residential Apartment

    July 2008 – House was purchased by In-laws @ 26,65,000.00
    Oct 2012 – it was gifted by my In-laws to my wife (Gift Deed)
    Oct 2012 – on the same day it was gifted by my wife to me ( Gift Deed)
    Aug 2014 – I sold the property at 49,50,000.00

    Note: It has been gifted to my wife and then she gifted it to me.

    1. Who is liable for capital gain ( is myself / my spouse)
    2. Based on who is liable , what will be considered as acquisition cost.
    3. What would be the capital gain tax
  2. rudrabose

    rudrabose Active Member

    1. You have sold the property and therefore you are liable to pay the capital gains tax.
    2. The acquisition cost in this case would be 26,65,000
    Indexed Cost of Acquisition = 26,65,000* CII of year of sale/CII in which property was gifted to you
    = 26,65,000 * 1024/ 852 = 32,03,000

    Long Term Capital Gains = 49,50,000= 32,03,000 = 17,47,000

    You may also refer this link:
  3. srini4itil

    srini4itil New Member

    Thanks Rudrabose.

    Just wanted to check & confirm , can I use the option where in as per the judicial precedent in the case of DCIT vs. Manjula Shah (ITAT Mumbai Special Bench) Mumbai tribunal held that the indexation benefit has to be determined with reference to previous owner in this case 2008-09.

    =26,65,000*1024/582 = 46,88,934

    Long Term Capital Gains = 49,50,000-46,88,934 = 2,61,065

    Please advise
  4. rudrabose

    rudrabose Active Member

    The case mentioned by you is of Mumbai Tribunal and is only valid in Mumbai and not in any other state.

    Moreover, the income tax officer can still raise this issue again.

    Therefore, in my opinion- CII of the year in which the property gifted would be taken into account.

    Although logically the CII of year of acquisition by previous owner should be considered, but sadly the law does not work this way :(
Draft saved Draft deleted
Similar Threads Forum Date
long term capital gain Income Tax Monday at 2:45 PM
Capital Gain on Sale of Foreign Shares Income Tax Jul 22, 2018
Release of Funds from Capital gains account Income Tax Jun 7, 2018
Capital gain on property Income Tax Mar 21, 2018