.

- -
: The Central Governm ent acquires a house property owned by Rahi
on 15.11.2004. This property was purchased on 15.2.1977 for t 85,000. The cost of
improvement incurred in• July, 1979 for? 30,000 and in August, 2003 t 40,000 and fair
market value of the property on April 1, 2001 was ? 1,80,000. The Government awarded
t 6,87,000 as compensation out of which~ 1,00,000 is received on 15.8.2020 and balance
is received on 15.4.2022. Expenditure incurred by Rabi for getting compensation· fixed .:
f 3,000. Being aggrieve d against the· award,. Rabi files~ appeal. The C_ourt, as per order
in August, 2022, enhance d the compensation to ~.8,50,000. Legal expenditure incurred in
Court's proceedi ngs : ? 15,000. Rabi receives .the · additional compensation (alongwith
interest oft 37,000 for delay in -payment) on April 15, 2023 . Compute the income under
the head 'Capital gains'. Does it make. ~Y difference if the additional compensation is
received by Rabi's son Ravi after the death of Rabi ? ·
Cost inflation index for. 2003-04 is 109, 2004-05 is 113 anr . ""''1-22 is 317.
1
.

Solution: Computation of Capital Gain of Mr. Rahl

ior the Assessment Year 2022-23
Particulars t
Sale Consideration (Compensation) t 6,87,000
Less : (i) Indexed cost of acquisition (1,80,000 x ~6~ ] 2,03,400
(ii) -~~dexed cost of improve ment [40,000 x :6~] 41,468
(iii) E~penses . 3,000 2,47,868
Taxable ~ong-term Cap.ital Gain 4,39, 132
 (ii) Expenses incurred on improvement prior to 1.4.2001 are not considered.
Con1putation of Capital Gain of Mr. Rabi "
for the. Assessment Year ·2024-25
- Particulars
..--Addition~l compensation (~, 8,50,000 - ~ 6,87,000)
Less : Cost of acquisition
~
Nil
'
1,6j,OO0

Cost of i_mprovement Nil"

1,63,000
Expenditure 15,000 x \ 12,225 12,225
2,00,000
•
Taxable Long-term Capital Gain 1,50,775
Working Notes :
(1) Rabi
. ~- received additional compensation ·of~ ·1,63,000 (i.e. f 8,50,000 - f 6,87,000)
'

and interest on delay o~ this payment of ? 37,000, total , . 2,00,000. The ~ourt
expenses of f 15,000 is -divid,ed in this ratio i.e. 1,63,QOO : 37,000. Interest on
additional compensation is ·ta~~ble in other sources head and he will get a deduction
of 50% of Interest i.e. , 18,500 u/s 57(iv) of the Income Tax Act.
(2) If additional c~mpensation is received _by son 'Ravi' on the death of 'Rabi' then .
Ravi is liable to pay the· 'tax on f 1,48,000.
 : Saligram purchased an urban land in Kora on· 30th June, 1996 for ~
f 2,00,000. un. April 25_, 2008 he gifted the property to his brother Chandrakant. The
.
details of improvement and others are as follows :
 ~
1 Expenditure on construction by Saligratn dur~lig 2000-01
1,70,000
Expenditure on consu11ction by Saligratn dunn g 2002-03
Expet1ditu re ·on construction ~y Chandrakant during 2<;)11-12 21,800
3,00,000
Fair mark value of l11e property on 1-4-2001
· Chandr nt entered into an agreement for sale of the prop erty 5'00,000
to Babu on
December, 20 0 and received t 40,000 as advance . Babu could -not
keep his promise and
the advanc f t 40,000 given ·by him was forfeited. Again on 10-4-
2917, he e_ntered into
a sale ag.- ement with Rrunu to sale the property at t 65,00,000. An adva
nce oft 1,00,000
is taken and agreement should be comple~ed by 30:-6-2017. This adva
nce ·was also forfeited
because of non-fulfilmet:tt of promise by Ramu. Chandrakant sold the
prop em, to Sunil for
t 90,00,000 on December 23, 2021. Expenses on transfer prud by Suni l were ~ ·t,50, 000.
Find out the Capital Gains of Chandrakant for the Assessment Year
2022-23, if 'the cost
inflation index for 2002-03 is 105; for 2008-09 is 137; for 2011
-12 is 184; and for
2012-13 is 200.
Solution : Com puta tion of Capital Gains. of Shri Chan drak ant
for tlie Assessment Year 2022-23
Particulars t ~
Sale Consideration 90,00,000
l.£ss : a Expenses on transfer Nil
b. Indexed _cost of acquisition '
- -
Fair mark et value on 1.4.2001
(5,00,000 ~ 40~·000) .= 4~60,,000 X 31 7 14,5 8,20 0
100
C. Index ed cost of impr ovem ent
(i) . 2002-03 (21,800 X n; ) , 65,8 15
i )
(ii) 2011-12 (3,00,_000 X . ~-~ 5,16 ,848 20,40,863
Taxa ble Lopg-ter:m Capi tal Gain 69,59,137
Wor king Note s : · · .
(i) Transfer expe nses paid by Sunil (Transferee) so it is not dedu
c;ted.
(ii) In case asset is acqu ired in gift
as cost to recipient.
[u/s 49(1))° the CQSt of prev ious owne r is c·onsidered
. , ·
(iii) If advance mone y is forfeited prior to 2014-15 prev ious year then
it will be deducted
from the cost but if it is forfe ited on 1-4-2 014 or after then it will
not be deducted
from the cost of assets but will be treat ed as an incom e and taxab
le under the head
"Income from Othe r Sour ces." · ·
, (iv) Cost of imp~ovement befor~ 1.4.2001 is not ·cons idere d.
(v) Asset acquired accordi_ng to Sec. 49(1) is treat ed :
: ihe l~olding perio d by pr~viot)s owne r is cons ideri ng to calcu
late LTCG. .
) ish! be~efit of Cost lnfl~tiou lnde.x will 'be prov ided from the
year in whi~b it
cqurred by the previ ous owne r. Ther efore inde x nwn ber for the pn;v1
200lfi-0 2 ous
'c·) yTebar·be
" . e ne
has been taken for comp ution o.' f Inde xed
· ll of Cost In fl au~n
· ·
cost of acquisition.
· sue b
Inde x ~s prov ided on impr ovem ent, when
unprovement took place. ..,, .
 -- - - - - - - ··---c, - -- -- ...- - -

Mr. 1vtanoh·ar Rawtani has been allotted ~00 shares by Colgate

Co. @ ~ 30 per share on 31.3.1975 . ~he company had issued bonus shares on 1st January,
1980 in ratio of 3 : 5 (3 bonus .shares for 5 shares held). On 1st April, 2001 the share price ·
was ~-120. ·
. On 1st August, 2005 tl1e company also issued bonus shares in the ratio of 1 : 1. On
1st April, 2008 the company again declared bonus shru:es in the ratio of 4: 5. The market
price of_share on 1.8.2005 and 1.4.2008 was t 180 and t 220 respectively.
. On I st January, 2022 Mr. Rawtani sold all shares @ t 500 each. Payment of shares
sold was received on 1st May"~ 2022. · ·
Compute taxable capital . gains of Mr. Rawtani for the assessment year 2022-23 by
assuming the fairmarket value of share on ~ 1-1-2018 .wast 300 per share and STT was imposed.
Solution : Computation of Capital Gain of Mr. Rawtanifor the A.Y. 2022-23
Particulars Amount
. Long-term Capital Gain : t ~ ~
(1) Sale of Original Shares :
Sal~ Conside.r ation (500 x 500) 2,50,000
Less: Cost of acquisition :·
Higher-~f (a) or (b) : -
(a) Actual (5QO x 120) '60,000
. (b) Lower of : (i) FMV (500 x 300)
.
-
1,50,000
~

- -Of
. (ii) Sale proceed (500 . x 500) 2,50,000 1,50,000 1,00,000
'(2) Sale ,f1Bonus Shares acquired on (1-1-1980)
Sale ,Consideration (300 x 500) 1,50,000
Less: Cost lof acquisition :
.
Higher of: ~

(a) Actual Cost (300 x 120) .

36~000 -
(b) Lower of : (i) FMV (300 x 300) 90,000'
' or ..
(ii) Sale ·proceed (300 x 500) 1,50,000 90,000 60,000
___________________ __ __ __ ___ _:__ ......,

' .f
(.,) Bonus Shares acquired on 1-8-2()9J; & 1-4-2008
Sale Consideration (800 + 1,280) x 500
10,40,000
u.1ss : Cost of acquisition :
·Higher of :
(a) Actual Cqst
Nil
(b) .Lower of : (i) F~V (800+ 1,280) x 300 6,24,000
or
(ii) Sales (2,080 x 500), 10,40,000 6,24,000 ·4,16,000 ·
Taxable LTCG 5, 76,000
Working Note s:
(i) The cost of bonqs s~e s acquired by .Rawtani before 1-4-2
001 will be the market
price of shares on 1.4. 2001.
·
(ii) The cost. of asset acquired before 1-4-2001 will be the actual cost
or market price
on 1-4-2001 whichever is more. · f
(iii) Total ·shar es-O rigin al Shares
500
Bonu s oµ 1-1-1980 (3 : 5)
300
800 ,
Bonus on 1-8-2005 (1 : 1) ·
800
1~600
Bonu s on 1-4-2008 (4 : 5)
1,280
2,880
(iv) The provisions of Section 112A is applicable on the sale of share
s acquired before
1-2-20i8. .
 : On 1st April, 2021, N!r· Ashok had 3<;)0 equity shares of Swadeshi
Limited. Out of these, 200 shares were purchased by him in 2002-03 @ ~ 175 per share
and 100 shares were received by -him as bonus share in _20()4-05. He paid ~ 200 as
br~kerage and other expenses in purchasing th~se ·shares1 On 1st October~ 2021 Swadeshi
Ltd. offered right shares at the rate of~ 100 per share. Accordingly Mr. Ashok got 200 right
shares. On 15th January, 2022 Mr. Ashok sol~ all the 500 shares @ t 400 per share.-T he
fair ~ket value of shares on 31-1-2018 waS! ~ 240 per share.
, ,

The cost inflation indices for 2002-03 .and 2004-05 are 105 and 113 respectively.
Compute the taxable income of Mr. Ashok under the head capital g~ for the ~sessme nt year
2022-23 by assuming the STT were imposed at the time of purchase and sale of such shares.
 Solution: Computation of Capital Gains of M~. Ashok
for the A. Y. 2022-23 .
Long-term Capital Gain :
(1) , Fro~ the Sale of Original Shares :
Sale proce~ds (200 x 400) 80,000
Less : Cost of acquisition :
Higher of (a) or (b)
(a) Actual cost of acquisition
[(200 x. 175) + 200) . 35,200
(b) Lower of: Fait·market value as on
I •

31-1-2018 (200 X 240) . 48,000

or
Sale proceed (200 x 400) ·. 80,000 48_,000 32,000
(2) From Sale of Bonus Shares :
Sale Proceeds (100 x 400) 40,000
Less : Cost of acquisition ·:
Higher of:
(a) Actual Cost 100 x Nil Nil
(b) Lower of: (i) FMV o~ 31-1-2018 (100 x 240) · 24,000· ;

or
, (ii) . Sale Consideration (100 x 400) 40.000 24,000 16,000
Taxable LTCG ------r-.-.4~8~,00~o"""""' ··
Short-term Capital Gain ,: · .
Fro1n sale of right shares
Sale Proceeds (2QO ·x .400) 80,000
Less : Cost of acquisition · (200 x ·lQO) 20~000 60,000
!axable. Jn~ome fr.om Capital Gain L08.000
 . , : Mrs. Savita bought 300 shares of Bajaj Auto Ltd. @ 250 on 1st .
April, 2004. On 1st August, 2006, the company offered 3 right shares for 5 shares held@
t 150. She accepted the · offer .and the company issued shares. On 1st January, 2022· the
company again issued right shares in ·the ratio of 1 : 1 @ t 200·. Savita renounced the offer
in favour of Jaya for a consideration _oft· 100 per share and on 1st Feb., 2022, she sold
her total holdings @ t 550 per share. Compute_taxable capital gain for the assessment year
· 2022-23 by assuming that fair market value of shares as on 31-1-2018 was.t 400 per share
and sales and purchases of shares was subject to · securities_transaction tax.
 ..
Cost inflation index for the financial year 2004-05 was 113 and for the financial
year 2006-07 it Was 122. · .
Solution:
Computation of Capital Gains of Mrs. Savita
for the Assessment Year 2022-23
Partlculars
Long -term Capital Gain
Sale of 300. Shares purchased on (1-4-2004)
Sale of Consideration (300 x 550) 1,65,000
Less :, Cost of acquisition :
Higher of (a) or (b) : f
(a) Actual Cost 300 x 250 = 75,000
(b) Lower of : (i) FMV (300 x 400) = 1,20,000
(ii) S~es (300 x 550) = 1,65,000 1,20,000 45,000
Sale .of Right Shares acquired on (1-8-2006)
Sale of Consideration (180 ·x 550)
. 99,000
Less : Cost of acquisition :
Higher of (a) or (b) :
(a) Actual Cost 180 x 150 = 21,·ooo
(b) Lower of : (i) FMV (180 x 400) = · ·12,000
(ii) Sales (180 x 550) = 99,000 ·72, 000 27,00 0
Taxable LTCG 72,000
. I
Short'."term Capit al Gain . .
Consideration received for renouncement
of the Right Shares on 1,.1.2021. (480 x 100) 48,00 0
Taxable 'Inco ~e -from Capita' Gain 1,20,000
 .
. , Ksbama invested t l,00,000 to acquire 5,000 shares of Alph
Private Ltd. on 1-6-2007. She holds the shares as an investment. She started the busine a
of shares on 1-12~ 009 and converted her investment into stock-in-trade. The markss
valu~ of these shares as on the date of conversion wast 75 _per share. These shares a:t
shown in tl1e business of Kshama as stock-in-trade. These shares are sold o~ 15.12.2oi;
at the rate t 180 per share. Calculate her capital gain and business profit. What would ·
be your answer if : ·
(i) She could not sell the shares till 31.3.2022.
(ii) She could.sell onl~ 75% of shares at the rate oft 180 per share upto 31.3.2022
Cost.inflation index for. the financial year 2007-08 was 129 and for 2009-10 was 148 ·
Solution: ·
The shares are converted in stock-in-trade on 1-12-2009 (2009-10 previous ye1tr).
On this date the capital gain will be calculate~ but will be taxe~ in 20~2-23 assessme·nt
year.
Computation of Capital Gain of Kshama for tlie Assessn,ent Year 2022-23
(a) If all the shares are sold :
Particulars
Income from Business & Profession :
Selling value o( Sbares (5,000 x 180) 9,00,000
Less : Market value on the day of conversion (5,000 x 75) 3,75,000 5,25,000
,·
Income from Capital Gain
Long-term Capital Gain : .
(Calculated during 2009-10 previous year)
Market price on co~version (Deemed consideration) - 3,75,000
. · . 1'48
Less : Inde~ed cost of acquisition (1,00,000 x 129 -) 1,14,729 2,60,271
Gross To~l Income 7,85,271
If all the shares are not. sold or .only 75% ~hares are sold :'
(i) If the shares are not sold up tQ 31.3.2022, th_en neither there will be capital gain nor
\
business ·profit. .
(ii) If 75% of shares are sold at the rate t 180 per share then 75% of deemed capital
gain (t 2,60,271x75% = , 1,95,203) will be taxed in the assessment year 2022-23.
Similarly 75% of business ·income (' 5,25;0bo x 75% = , 3,93,750) will be ·taxed.
 : Compute t11e amount of Capital Gain for the Assessment Year
2022-23 in tJ1e following situations :
(a) Ramesh started his business on 1-1-2020 and ~old to Satyam on 31.12.2021 and
received ~ 15,00,000 for goodwill. ·
(b)" What would-be your answer in above (a), if Ramesh is a Chartered Accountant?-
(c) What would be your answer in above (a), if Ramesh acquired _the goodwill from
Madhukar for ~ 4,00,000 ? ··
(d) What would be your answer in above (b ), if Ramesh acquired the goodwill from
Shyam for f 4,00,000
, ? • .

(e) Narendra acquired a tenancy right from Rajkumar during 1977 for ~ 5,00,000. .
He sold this ri~ht to Mohan for~ 8~,00,000 on 15-05-2021. The value of this
· right was f 11,00,000 as on 1.42001.
Solution: Computation of Capital Galo/or the. Assessment Year 2022-23·
(a) Sale of Goodwill by a Businessman: .
-.
Particulars - -.. f
Sale consideration . '15,00,000
Le~s : Cost of acquisition Nil
Taxable Short-term Capital Gain 15,00,000
(b) Sale of Goodwill by a Professional :. · · ~ . · .:.
. The goodwill or°professional is not treated as capital asset if self-generated. Hetife,
it is not taxable. ,,
(c) Acquired Goodwill sold by Businessman :
Particulars ?.
Sale consideration 15,00,000
Less~ Cost of acguisition
. 4,00,000
I )

.. Taxable Short-term Capital Gain 11,00,000

 uired Goodwill sold by Professional :
(d) .4,q Particulars t
consideration 15,00,000
sate . cost of acquisition 4,00,000
vss .
Taxable Short-term Capital Gain 11,00,000
le of Tenflncy Right :
(e) SB
Particulars t
consideration 80,00,000
1
Sae .
1,ess . Indexed cost of acquisition (5,00,000 x
3 17
100
) 15,85,000
../ Taxable Long-ter m Capital Gain 64,15,000
Note : The market price as on 1.4.2001 is not available for intangible asset if
,.-Pa J,P.fore 1.4.2001.
acguu..,

- : Vinod sells the rollowing capital assets during 2021-22 :

- House Shares Self- Persona l
Particula rs Property Generate d Car
~ ~ Goodwi ll? ?
~Sale
consideration 8,00,000 25,88,020· 15,00,060 - 1,80,000
year of acquisition 1983-84 2003-04 NIA 1995-96
I
Cost of acquisition 40,000 1_2,00,000 Nil 2,00,000
Cost of improvement during 1989-90 15,000. - - -
)
Market Price as on 1-4-2001 2,00,000 NIA - 2,40,000
Fair Market Value as on 31-1-2018 - - 18,00,000 - -
Business Established - - 1990-91 -
Calculate capital gain for the Assessment Y~ar 2022-23 by assuming the shares are
sold in the recognised stock exchange. ·
Solution : - Computa tion of Capital Gain
far the Assessment Year 2022-23
Particula rs t
Capital Gain :
(1) House Property '
'
Sale consideration 8,00,000
Less
. .· Indexed cost of acquisition
(2,00,00Q X i~ ) 6,34,000
Long-ter m Capital Gain ,
1,66,000
(2) Shares
Sale consideration 25,88,02 0
Less : Cost of Acquisition :

.
Higher of : (i) Actual cost
(ii) Lower of (a) or (b) :
.
'
12,00,000 ' .
(a) FMV as on 31-1-2018 18,00,000
(b) Sales consideration
, .. i •
25,88,02 0 18,00,000
- Long-ter m Capital Gain ' 7,88,020 J
j
r
. (3) Self-generated Goodwill
. Sale consideration 15,00,000
•,

Less : ,Cost of acqµisition Nil

' Long~term Capital Gain 15,00,000
(4) .Personal Car being personal use asset : Not taxable
Taxable Long-term Capital Gai~ 24,54,020
. Working Note: As the shares acquired be~ore 1-2-2018 and sold in recognised st~
exchange the provisions of Section 112A will be ~pplicable for the purpose of computation
of ~apital gain. ·
 - : Sandeep sold an urban agricultural land· on 3rd July, 2021 for
t 12,00,000. This land was being used from many years. for growing wheat by assessee
himself. The market value of .this .land on 1.4.2001 ·was , 1,50,000. -Sandeep has spent
t 5' 000 for the preparation of its sale deed. Compute Capital Gain in the following .
circumstances : .
(a) . If Sandeep purchases an agricultural land on 3rd March, 2022 for , 70,000 in
the urban area. · · ·
(b) If. Sandeep purC,hases an agricultural land on 3rd April, 2022 in the rural area
before submitting the return pf· income tax. . . . .
(c) If Sandeep deposits, 10,000 in. the C~pttal Gain Account Scheme on 3rd May,
2022. . . ·
. (d) If Sandeep does .not do anythil)g giyen in (a), (b) and (c) above.
(e) ·u land is compulsory acqpired by the ·state Government instead of sale ·then
what would be- capital gain ?
Solution:
Computation ·o f ·C apital_-Gain of Sandeep
for the·Asse_ssment Year 2022-23 ·
-
Particulars
(a) Sale ·Consideration -
- ~

'
12,00,000
Less : Expenses on. Tr~sfer · 5,000
Indexed . Cost of Acquisition· (1,50,000 _x i~) · . 4,75,500 4,80,500
.. .L·ong.:term Capital Gain 7,19,500
Less : Exemption u/s 54B 70,000
. ,. Taxable Loitg~term-Capital .Gain . 6,49,500
-
(b) If Sandeep •purchases agricultural land at rural area ,on 3rd· April, 2022 the .
capital gain will be the same because : · .
(i) Sec. 54B is avplicable; whether land is acquired at rural or ·urban area.
(ii) Land is acquired up to the date of submission of return of Income Tax.
 : One ilidustrial plot of land of Raunak & . Sons, an industrial
undertaking, is compulsorily acquired by the Government of Punjab on May 25, 2004. Its
cost of acquisition to tl1e assessee was, 1,50,000 in December, 1989: The fait market value
of which on 1-4-2001 was , 5,00,000. The Punjab Government paid "8,50,00 0 on 25th
May, 2021 as compensation. Raunak & Sons purchased another building for the industrial
undertaking for, 1,80,009 .on 18th March, 2022. Raunak & Sons sold the new building for
t 2,50,000 on 1st August, 2022. Determine the· amount of exemption_under Section 54D and
taXable capital gains for the, assessment year 2005-06, 2022-23 and 2023~24.
[The cost inflation index ·for the relevant previous - years are : 2004;-05 = 113,
2005-06 = 117 .]
Solution: Compu.tation of,Capit al Gain of Raunak & Sons
for the ·Assessm ent Year 2022-23
.

..
J>'articulars ·t
Sale Consideration (Compensation) 8,50,000
Less : Indexed cost of acquisiti od (5,00,000 .x 113 °) 5,65,000
1--00
• Long-ter m Capital Gain 2,85,000
Less : Exempti on u/s 54D for purchases of new industria l building 1,80,000
. '. . . ,,
Taxable Long-te rm Capital Gain 1,05,000
.' y ..
Comput ation ~f Capital G~in of Raunak & Sons
for 'the Asst!ssme 1J,t _fea_r 202_3- -24
, . \ ' '

..
.
Particullirs . ~ - ·,
Sale consideration of new building . -i,50,.000
Less : Cost of acquisition, (1,80,000 - 1,80,000) Nil
'
. · T~xable Sh~rt-te tm Capital Gain 2,50,000
W~rking Note : The ·land acquired by· the Govt. during 2004-05 but compens ation
is provided during 2021-22. Hence, the capital gain. will be calculate d during 2004-05
(P.Y.) or 2005-06 (A.Y:), but it will be ta~ed in .the year in which -such compensat_ion ·is
received actu~ly i.e. 2022-23 ·(A._Y.).· •
 : Rameshwar acquired a building for ? 3,00,000 on 18.9.2004,
which were sol_d on 15.1.2022 for f 80,00,000. Expenses on transfer were ( 11,600. He
invested ? 35,00,000 in the bonds of National Highway Authority of India on 28.2.2022
. and of ? 30,00,000 on 15-4-2022. Cost inflation index-for the year 2004-05 was 113.
(a) Compute the capital gain for assessment year 2022:-23. ,
(b) State the period for which such bonqs should be held by the assessee. What will
~ the consequences if he sells the bonds during the period?
(c) What will happen if he takes loan against security of bonds?
Solution : Computation of Capital Gain of _Ramesh for the A~ Y. 2022-i3
Particulars ~ (
(a) Sale Consideration. 80,00,000
Less : (1) Expenses on tran'sfer 11,600
317) 8,53,193
(2) Indexed cost of acquisition (3,00,000 x 113 8,41,593
Long-term Capital Gain 71,46,807
Less : Exemption u/s 54EC 50,00,000
•
Taxable L.~ng-term Capital Gain 21,46,807
(bY Assessee has to keep the bonds of NHAI upto 5 years from the date of
acquisition: If assessee sells,' then exempted amount ~ 50,00,000) of Capital
Gain will b.e retaxed as L TCG in the year of transfer of bonds.
(c) If asse~~ee takes loan by pledging bonds within 5 ·years of ~cquisition then
Capiuil, Gain of f 50,00,000 will be taxed as LTCG in the year in which bonds
are pl~qged. · .· · ·
Note : The amount of exemption u/s 54 · EC can nqt be exceed by ~ 50,00,000.
 . : On 10th Dec., 2021 Aman transferred a ~esidential house property
int 3,30,00,000 holding period.of which was 5 years. Cost of this house after giving benefit
of cost i~flation index (CII) was ~ ·95,00,000 ·and transfer expenses was ~ 5,00,000. He
purchased following assets to get exemption from long-term gain in diff~rent Section s:~
(i) A residential house property on 10th May,.'2022 · 90,00,000
(ii) Notified assets to avail exemption u/s 54EE :
(a) On 15th Jan., 2022 35,00,000
(b) On 1st.June, 2022 , 25,00,000
(iii) Capital Bonds of Rural Electrification Corporation (REC) : •
(a) On 18th April, 2022 25,00,000
· (b) On 20th Aug., 2022 20,00,000
Find taxabi~ long-term Capital Gain of Anian for the assessment year 2022-23.
Solution : , Computation of L TCG Qf Mr. Aman .
f'!r the Assessment Year 20i2-23 .
1,. _ _ _ _ _ _ _ _ ___.;..._ _ _ _ _ _
_ _ _ _ _ __,;,,...._ _- , - - - - - - - ,

Particulars ~
~- Sale Consideration 3,30,00,000
. Less : Cost of acquisition of asset : ~
:•.
-
'.
Cost after benefit of. indexing 95,00,000
'
1,
·.
t- ►
Tran sfer expenses 5,00,000 1,00,00,000
~- ' t·
C
· LTCG 2,30,00,000
~ '.Less : · Exemptions :
1
• -~ (i) Investment in New House Property (Sec.' 54) 90,00,000
V'. (ii) Investment in Bonds of REC within six months
1

(Sec. 54EC) 25,00,000

(iii) Investment in unfts of•specified fund (Sec. 54EE)

- ~"- _______________________
(Maximum)
Taxable Long-Term Capital Gain
50,00,000 1,65,00,000
___.__65,00,00
_ 0
 : Raunak purchased 1,000 shares of Swati Ltd. @ f 80 per share on
1.10.2004. During the year 2007-08 he received one bonus share fro1n the company for each
stiare held. On 15.6.2010 company allotted him 1,000 right shares @ f 100 per share. All
the above mentioned 3,000 shares were sold by.him on 29.5.2021 @ f 800 per share outside
the stock exchange·and
. ,; .
he· paid brokerage @ 2% on ~ale value. He purchased a plot of land
.

for ( 4,00,000 on 4·:1.2022 for construction of a residential house and on 15.6.2022 and
15.~ 22 del)?~l~ il ? 5,QO,oqG and ? 2,00,000 ~e~pectively in the Capital Gain Deposit
Scheme. He has only one own residential house as on the date of transfer of shares.
 Compute capital gain for tlle assessment year 2022-23. Cost inflation
index ·for the
year ~()()4-0~ was 113 while for the year 2010-11 ·it was ~
167. -- - · -
sotutlon:
•
Computation of Capital Gain of Raunak
for the A. Y. 2022-23
.-- - Particulars
~e Consideration of original s·1iares
iess : Transfer Expenses I
'
8,00,000
16,000'
Net sale consideration 7,84,000
t

Less : Indexe~ cost of acquisition (80,000 x ~g ) 2,24,42-5

Gro ssLT CG 5,59,575
Less : Exemption u/s 54F*- .·
Nil 5,59,575
Sale Consideration of Bonus Shares
8,00,000
Less :·Transfer Expenses
16,000
Net sale consideration 7,84,000
u~s :·Indexed cost of acquisition . . Nil
GrossLTCG 7,84,000
Less': Exemption u/s 54F* (7,84,000x
Sale consideration of right shares
r::~:) ., 7,84,000 Nil
8,00,000
Less : Transfer Expenses
16,000
Net sale consideration 7,84,000
Less : _Indexed cost of acquisition (1,00,oOO x ~!~ ) 1,89,820
- Gro ssLT CG 5-,94,180
.
Less : Exemption u/s 54F* (5,94,180 x · 1,16,000 )
7, 84, 000 87,914 5,06,266
Ta~ ble Long-term Capital Gain
10,(j5,841
Workin1 Notes : . . , .
( 1) *For obtaining the maximum benefit under Section 54(F
I
) the order of preference
of ~nvestment among the three option~ has been calculated as·
und er-
.
. Particulars· Original Shares Bon us~ es Ri&ht Shares
Net sale ·consideration (NSC). f 7,84,000 f 7,84,000 , . 7,84,000
Amount of Capital Gain as above f 5,59,575 f .7,84,000 f 5,94,180
% of Capital Gain to NSC 71.37%. 100%
I 75,79%
As _shares are SGld outside the ex.change,-security transaction ,tax
is not charged. So
~e provisions of Section 112A will not be applied and·capital gains
will be calculated
m routint: way. . .
.The assessee has invested f-11,00,000, but only·, 9,00,000 ·qualijy
First , 1,84,000 wauld be utilised in respect of bonus shares~The rema for,exeinption.
ining balance of ·
' 1,16,000 (i.e. f 9,00,000 - f 7,84,000) would be utilised for right
shares. f 2,00,000
deposited after 30-09-2022 does not qualify for exemption. .
.