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RETAIL MODULE: - E
CHAPTER 21 MORTGAGE ADVICE

CAPITAL GAIN BASED CASE STUDY:-1

What is Called Capital gain ?
When we Transfer a property or sell a property then the profit
we get is called Capital gain.

 On purchase we call it acquisition & on sale we call it

transfer.
Example :-1 Ajay Purchase a house for Rs. 20 lakh and after
10 years sell it for Rs.50 Lakh then his capital gain will be 30
Lakh.
Example:-2 Vijay purchase 1000 shares for Rs.10 each in
2021 and sell these shares at Rs. 50 each in 2012 then his
capital gain will be 50,000 -10,000 = 40,000
 What is Called Capital Asset ?
Capital Asset means an asset or property which can be
movable or Immovable, tangible or intangible.
Example :-
1- Land sale and purchase
2- Preference share
3- Gov. Securities
4- Mutual funds
5- Zero coupon bond
What is not counted in Capital Asset ?
1- Stock in trade (not purchase yet)
2- Consumable Stores
3- Raw material
4- Agriculture land (situated outside municipal or notified
area)
5- if land is transferred from father to son, then we do not
consider it for capital gain
6-Personal effects like Jewelry, costly stones, and ornaments
made of silver, gold, platinum or any other precious metal,
archeological collections, drawings, paintings, sculptures or
any work of art.
Types of Capital Asset :- (Two Types)
1- Short Term Capital Asset:-
Capital asset held for not more than 36 months immediately
prior to the date of transfer (sale ) shall be deemed as short –
term capital assets :-
However, following assets held for not more than 12 months
shall be treated as short- term capital assets:
a) Equity or preferences shares in a company which are listed
in any recognized stock exchange in India .
b) Other listed securities
c) Units of UTI (Mutual Fund)
d) Units of equity-Oriented funds
e) Zero Coupon Bonds
Note :- Unlisted Shares and immovable property (being land
or buildings or both) held for not more than 24 months
immediately prior to the date of transfer (sale) shall be
treated as short – term asset.
2- Long Term Capital Asset :-
Capital Asset That held for more than 36 months or 24 months
or 12 months, as the case may be, immediately preceding the
date of transfer(sale) is treated as Long-Term Capital Asset.
Note :- Shares are Sold in FIFO Manner:-
Example:-
Ram buy 1000 share of Jio in 2012
Again buy 2000 shares of Jio in 2014
Again buy 5000 shares of Jio in 2015
Again buy 1500 shares of Jio in 2016
Now if he sells 4000 shares in 2020 then which shares will be
sold ?
1000 share of Jio in 2012 { First this will be sold 1000}
2000 share of Jio in 2014 {Second this 2000}
Again Buy 5000 Share of Jio in 2015 {then rest 1000 share
from these 5000 shares will be sold}
Cost inflation index (CII):-
This declared by Govt. each year
It inform about the inflation in that particular year.
Example :-
CII for 2017-18 is equal to 100
CII for 2018-19 is equal to 110
CII for 2019-20 is equal to 115
Ques:-1 If Ram Buy 1000 share on 24 April 2017 for Rs. 5 each
then which CII will be applicable and if he sells it on 6 May
2019 at Rs. 20 Each then which CII will be applicable. Also
calculate Index cost of acquisition in the year of sale .
CII for 2017-18 is equal to 100
CII for 2018-19 is equal to 110
CII for 2019-20 is equal to 115
Solution :-1
Given :-
Ram Buy 1000 share on 24 April 2017 for Rs. 5 each
CII of acquisition will be of 2017-18 (100)
{01-04-2017 to 31-03-2018}
Cost of acquisition = 5 × 1000 = 5000 Rs.
Given:-
He sells it on 6 May 2019 at Rs. 20 Each
CII of Transfer will be of 2019-20 (115)
{01-04-2019 to 31-03-2020}
Cost of Sale = 20 × 1000 = 20,000 Rs.

Index cost of acquisition in the year of sale =

𝟏𝟏𝟓
5000 × = Rs. 5227.27
𝟏𝟏𝟎
 CASE STUDY
Mr. Mohan had inherited a property of market value of Rs. 50
lakh from his grandfather on 28 December 2009.
His grandfather purchased this property on 01 September
2001 for Rs 12 Lakh
Mr. Mohan sold this property for Rs 70 Lakh on 10 January
2017 , Compute The Capital Gain/ Loss ?
Cost Inflation index for
2001-2002 :- 426
2009 – 2010 :- 632
2016-2017 :- 1125
Solution :-
Acquisition price of property = 12,00,000 {01 sep 2001}
Market value of inherited property = 50,00,000 {28 Dec 2009}
Sales consideration = 70,00,000 (Jan 2017)
CII – 426 (2001-02)
CII- 632 (2009-10)
CII- 1125 (2016-17)

𝟏𝟏𝟐𝟓
= 31,69,014
𝟒𝟐𝟔

Capital gain = 70,00,000 – 31,69,014 = 38,30,986