TaxTMI 
TaxTMI 
CAPITAL GAIN ON SALE OF SHADE TREES
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....APITAL GAIN ON SALE OF SHADE TREES<br> Query (Issue) Started By: - Dwarakanath sriknatiah Dated:- 4-4-2012 Last Reply Date:- 11-4-2012 Income Tax<br>Got 5 Replies<br>Income Tax<br>we have sold shade trees on our estates. we have arrived FMV as on 1.4.1981 and taking 70% of sale consideration as cost and 30% as capital gain We have indexed our cost FMV as on 1.4.1981 and reduced the amount from s....
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....ale consideration which resulted in capital loss. Pl let me know whether we are eligible for cost of indexation on FMV as on 1.4.1981 ie 70% of sale consideration? Dwarakanath Reply By GOPALJI AGRAWAL: The Reply: Presuming it is not agricultural income as per the querry, the FMV can not be presumed as percentage of sale consideration but it has to be valued by the competent approved valuers.....
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.... Of course the indexation would be available such value. Reply By Dwarakanath sriknatiah: The Reply: FMV as on 1.4.1981 @ 70% of sale consideration is taken on the basis of assessment order in our case for the year 1991/92. is there any supreme court or high court cases in this regard? Reply By SANJAY DAVE: The Reply: I agree that during 1991-92, assessments were done on that basis since both ....
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....Kerala & Karnataka ITAT's had given decisions accepting 70% of sale value as cost and taxing 30% of sale value as capital gains. But in similar decisions for 1994-95, ITATs have modified the same to 65% & 35% also in view of increased sale value. As law stands today indexation benefits has to be allowed. May be you voluntarily consider modifiying the ratio. Logic being there is no incremental cost....
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.... of the shade tree while there is increase in it's sale price. In such case it would be fair to reduce the cost as a %age of sale value in view of lapse of 20 years when 70:30 ratio was acceptable. The ratio may be decided based on the change in sale price in 1991 to now. Reply By Dwarakanath sriknatiah: The Reply: Dear Mr Sanjay Dave, You have referred decisions during 1994/95. Will u kindly ....
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....let me know the case details which will help me a lot? Dwarakanath Reply By SANJAY DAVE: The Reply: Mr. Dwarkanath I do not have the details off hand since I am out of country. It was a ITAT, Bangalore decision in case of Chembra Peak Estates Ltd v/s ITO, Bangalore. The basis was that for 1990-91 in case of same assessee the ratio of 70% cost & 30% gains and now sale value had increased so ef....
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....fectively cost will come down in terms of sale value. Hence decided that 65% cost & 35% gains. This was accepted by the company.<br> Discussion Forum - Knowledge Sharing ....