715 Capital Gain

NEERAJ GUPTA CA IPCC TAX CLASSES

CAPITAL GAINS

CHAPTER - 6 TAXATION OF CAPITAL GAINS IMPORTANT SECTIONS Sections

Particulars

45(1) 45(1)

Basis Basis of charge

45(1A) 45(1A)

Capital apital gains arising from insurance claims claims

45(2)

capital gain arising arising on conversion conversion of capital asset ass et into stock in trade

45(3)

Capital contribution by existing or new partners

45(4) 45(4)

Capital apital gain on distributi distribution on of assets ass ets on dissolution of firm/ firm/ AOP AOP

45(5)

Capital gain on transfer of an asset asset by way of compulsory acquisition acquisition

46

Capital apital gain on distribut distribution ion of assets ass ets by companies companies in liquidation liquidation [DISC [DISCUSS US SE D IN IFOS]

46A

Capital apital gains on purchase of own shares or securities

47

Transactions Transactions not treated treated as transfer transfer

48

Mode of computation computation of capital gain

49(1)

Cost ost to the previous owner

49(2)

Cost ost of shares shares of amalgamated amalgamated companies

49(2A) 49(2A)

Cost of acquisition in the the case of shares acquired on conversion of debentures

49(2AA 49(2AA))

Cost of acquisition of shares etc. under E SOP

49(2C 49(2C)

Cost of acquisition of shares in the resulting company company

49(2D)

Cost ost of acquisition acquisition of original share share of the demerged company

50B

Computation omputation of capital gain in case case of slum slump p sale sale

50C

Computation omputation of capital gains in real estat estate e transactions

50D 50D

FMV taken taken as FVOC in certain certain cases

51

Advance money forfeited

54

P rofit on sale of property property used for residence

54B

Capital gain on transfer of urban agricultural land

54D

Compulsory acquisition acquisition of land & building forming part of industrial undertaking

54EC

Bonds of NHAI NHA I etc against long term capital gains

54F

Investment Investment in residential houses of LTC LT CG through through other assets ass ets

54G

Shifting of industrial undertaking from urban to rural areas

54GA

Shifting hifting of industrial industrial undertaking undertaking from urban to SE Z’s

54GB

Reinvestment einvestment in new manufacturing anufacturing SME company company

54H

E xtension of time time limits limits in case case of compulsory acquisitions acquisitions

55A

Reference to Valuation Officer

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Assessment Year 2013-14

For sms only 9810139214

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CAPITAL GAINS

Other Other s ections 2(14) 2(14)

Capital apital asset asset defined

2(29A)

Long term capital asset ass et defined

2(29B)

Long term capital gain defined

2(42A)

Short term capital asset ass et defined

2(42B)

Short term capital gain defined

2(42C 2(42C)

Slump lump sale defined

2(47)

What is transfer ?

112

Computation omputation of tax on Long term Capital Gains Gains

111A 111A

STC TCG G Tax on securities securities subject to STT ST T

115 – F

E xempt xemption ion to NRI’s NR I’s

Question 1 : Explain the main charging section of capital gains. An s: Char geab il it y of o f Cap it al Gai ns : [Sect [ Sect io n 45(1)] Any profits or gains • arising from • the transfer • of capital of capital assets • effected during the previous year • is chargeable to income-tax • under the head ‘Capital gains’. • •

• • • • • •

Taxation of capital gains, thus, depends on two aspects - ‘capital asset’ and ‘transfer’. Transfers Resulti Resulti ng i n Capital Gains Gains Transfer basically means the act by which a person conveys property i.e. ownership to one or more persons. persons . It covers many transactions as per Section 2(47). Sale Sale is the most impo rtant example of the term ‘transfer’.

Transaction n ot deemed deemed as ‘Transfer’: [ Section Section 47] 47] – FEW FEW EXAMPLE EXAMPLES S Following transactions are not regarded as ‘transfer’ and are, therefore, exempt from capital gains tax:(1) Any transfer on account of gift of gift or will. (2)

Any transfer of a capital asset ass et by a company to its wholly owned subsidiary subs idiary company or vice versa provided the transferee company is an Indian company.

(3)

Any transfer of capital assets assets under a scheme scheme of amalgamation amalgamation to the amalgamated amalgamated company, which is an Indian company. Above are just few examples on Section 47, a detailed discussion will be later in ♦ the assignment.

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Question 2 : Explain the two types of Capital assets and resulting two types of Capital Gains. Ans: Capital Assets – Section 2(14) • 'Capital Assets' means property of any kind held by an assessee • including property of his business or profession, • butexcludes non -capital assets. • Some important examples of capital assets are house property, shares, debentures, jewellery, diamonds, lands etc. Non-capital Assets Properties, which are not capital assets, are1. Stock-in-trade, consumable stores or raw materials held for the purpose of business or profession. 2. Personal movable properties viz. furniture, motor vehicles, refrigerators, musical instruments etc. held for personal use of the assessee or his family. However, jewellery is a capital asset. As a result, any gains arising on sale of personal car or any other personal effect (other than jewellery) is not taxable. 

House property used by assessee for his residence, though a personal asset is not exempted and is a capital asset, as it is an immovable property.



From assessment year 2008-09, jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art will not be taken as “personal effects”. Consequently, on transfer of these assets, capital gain will be chargeable to tax from the assessment year 2008-09.

3. Rural A gricultural land: Agricultural land in India but excluding • agricultural land situated within the jurisdiction of a municipality or cantonment • board having population of 10,000 or more or • agricultural land situated within 8 kilometers from the local limits of above • mentioned municipality/cantonment board The above provisions simply means that agricultural land in rural area is not subject to capital gains tax but agricultural lands in urban areas are taxable. 4. Special Bearer Bonds, 1991. It is not necessary that the assessee should be the initial subscriber to the Special Bearer Bonds. 5. 6.5% Gold Bonds, 1977 or 7% Gold Bonds, 1980 or National Defence Bonds, 1980. It is not necessary that the assessee should be the initial subscriber to the Gold Bonds. 6. Gold deposit bonds issued under Gold Deposit Scheme, 1999.

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CAPITAL GAINS

Question 3. Whether following transactions will be considered for computation of capital gains ? (a)

Sale of personal car by assessee

(b)

Sale of car being used for business purpose

(c)

Sale of a car by car dealer [held as stock – in – trade ]

(d)

Gift of shares

(e)

Sale of land

(f)

Transfer of jewellery by way of ‘will’

(g)

Sale of house property by property dealer

(h)

Sale of rural agricultural land

(i)

Sale of household furniture

(j)

Sale of electronics goods and other household utensils

Type of Capital Assets Capital assets are of two types: • one short-term capital asset • • and long term capital asset. • •

All assets held upto three years before their transfer are treated as short-term capital assets [Section 2(42A)].

•

Thus all assets held for more than three years are known as long-term capital assets [Section 2(29A)].

But the above limit i s one year in case of followin g assets i.e. upto one year of holding they are known as short term capital assets and after one year they are known as long term capital assets. Such assets are: 1.

Shares (equity or preference) [May or may not be listed]

2.

Listed debentures, Listed bonds & Listed Govt. securities

3.

Units of UTI or a mutual fund. [May or may not be listed]

4.

Zero coupon bonds[May or may not be listed] Zero coupon bonds means notified bond issued by any infrastructure capital company or public sector company, in respect of which no benefit is receivable before maturity.

Type of Capital-Gains • • • •

There are two types of capital gains. On transfer of short-term capital asset, short-term capital gain arises [Section 2(42B)] and on transfer of long term capital asset, the long -term capital gain arises[Section 2(29B)].

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CAPITAL GAINS

Question 4 : Explain the computation of STCG & LTCG. Ans: Computation of Short term Capital Gains Full value of consideration (-) cost of acquisition of the capital asset (-) cost of improvement to the capital asset (-) transfer expenditure like brokerage, legal expenses, etc., ------------------------------------Short term capital gains ====================== Note: No deduction shall be allowed on account of securities transaction tax. Full value of consideration 

It is the consideration received at transfer of capital asset.



It may be in cash or in kind.



If it is received in kind, then fair market value of such assets is taken as FVOC.



FVOC does not mean the market value of asset.



While computing capital gain, we taken actual consideration ignoring the correct market price [subject to provisions of section 50C]



Even if the FVOC is not fully received i.e. to be received in installments, total consideration shall be considered for computing capital gains.



If, due to any reason, consideration is not determinable, the fair market value of the asset shall be taken into consideration [Section 50D, applicable from AY 2013-14]

Cost of Acquisition ♦

Where the asset is purchased, the cost of acquisition is the price paid.

♦

Brokerage and stamp duty paid at the time of purchase of asset is included in cost of acquisition.

♦

Where the asset is acquired by way of exchange for another asset, the cost of acquisition is the fair market value of that given asset as on the date of exchange. FVOC is the market value of asset received.

Cost of improvement Basically it refers to any expenditure incurred to improve the value or usage of the capital asset. For example construction of additional floor in an already acquired building. Costs of improvement incurred prior to 1.4.81 are ignored. It means they are not deductible. NOTE : If Asset is a Long Term Capital Asset then all improvements shall be indexed even done within 3 years before the date of transfer.

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CAPITAL GAINS

Expenditure on transfer Expenses on transfer include any expenditure incurred, for the purpose of transfer like advertisement expenses, brokerage, stamp duty, registration fees, legal expenses, travelling expenses incurred in connection with the transfer, amount paid to co-op society for securing NOC etc. Please note: Securities transaction tax shall not be part of cost when shares are being purchased and shall not treated like expenses on transfer when these are being sold. Question 5. Mr. A purchased 200 shares of NGPA LTD.[Non-listed] @ 340 per share [brokerage 1%] on 30.7.2011. He sold such shares on 24.5.2012 @ 470 per share [brokerage 1%]. Decide the type of capital gain and compute taxable income if his income from other source of the year is Rs. 80,000. Question 6. Mr. X purchased a plot of land in Sector 7 Rohini for Rs. 5,00,000 on 30.7.2010. He constructed a ground floor during J ul-Sep 2011 at a cost of Rs. 1,70,000. During Mar’ 2012 he constructed the first floor of the house at an expenditure of Rs. 58,000. The complete house is sold for Rs. 11,50,000 on 12.12.2012. Brokerage paid 2% both at time of purchase and at the time of sale. Compute his taxable income for the assessment year 2013-14 on the assumption that his house property income is Rs. 40,000. Computation o f Long term Capital Gains Full value of consideration (-) Indexed cost of acquisition of the capital asset (-) Indexed cost of improvement of the capital asset (-) transfer expenditure like brokerage, legal expenses, etc., __ ____ ________________ ______________ _____ Long term capital gain [LTCG] ==================================== Indexed cost of acquisition: COA X COST INFLATION INDEX OF YEAR OF TRANSFER COST INFLATION INDEX OF Y EAR IN WHICH ASSET WAS FIRST HELD BY ASSESSEE Indexed cost of improvement: COI X COST INFLATION INDEX OF YEAR OF TRANSFER COST INFLATION INDEX OF Y EAR OF IMPROVEMENT Cost inflation index Financial year : Cost of inflation index :

1981-82 100

1982-83 109

1983-84 116

1984-85 125

1985-86 133

1986-87 140

1987-88 150

Financial year : Cost of inflation index :

1988-89 161

1989-90 172

1990-91 182

1991-92 199

1992-93 223

1993-94 244

1994-95 259

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CAPITAL GAINS


1995-96 281

1996-97 305

1997-98 331

1998-99 351

99-2000 389

2000-01 406

2001-02 426


2002-03 447

2003-04 463

2004-05 480

2005-06 497

2006-07 519

2007-08 551

2008-09 582


2009-10 632

2010-11 711

2011-12 785

2012-13 852

Note :- The 'cost of acquisition' shall not be indexed in case of long-term capital assets being bonds or debentures. Other situations are discussed later in the chapter. Question 8: Explain rules relating to treatment of losses in the head Capital Gains An s: Rules o f set off & carr y for ward o f capi tal lo sses As per section 70, LTCL can be adjusted only against LTCG. While STCL can be • adjusted either against STCG or LTCG. As per section 71, the net capital loss, if any, cannot be adjusted against other heads of • income. As per section 74, the capital loss can be carried forward for next 8 assessment years. • Return of income (loss) must be submitted in time limits. In subsequent year also, if STCL is there it can be adjusted either against STCG OR • LTCG, but LTCL can be adjusted only against LTCG. Question 9. Mr. N purchases a plot for Rs. 60,000 in the month of J une 2001. He constructed ground floor and first floor of the house for Rs. 2,23,000 during financial year 2004-05. Second floor of the house is constructed during 2011-12 at a cost of Rs. 35,100. The house is sold for Rs 26,00,000 on 22.1.2013. Brokerage paid @ 1.5% at the time of sale. Compute taxable income for the assessment year 2013-2014 on the assumption that his business income is Rs. 1,70,000. Question 10. Compute taxable income for the assessment year 2013-14 with the help of following data: Non-listed debentures Land Shares[Non-listed] Date of purchase 12.12.2007 16.6.2010 16.6.2010 Cost of acquisition 30,000 6,00,000 7,50,000 Date of sale 21.9.2012 21.9.2012 21.9.2012 Selling consideration 50,000 8,00,000 7,12,000 His income from other source for the financial year 2012-13 is Rs. 1,20,000. Question 11. Mr. X purchased 300 shares of NGPA Ltd.[non-listed] @ Rs. 1,500 per share on 1.9.2007. He sold all the shares on 22.5.2012 for Rs. 9,12,000. On 1.9.2007 he also invested Rs. 2,30,000 in the shares of PQR Ltd.[non- listed]. These shares are sold for just Rs. 1,08,000 on 25.1.2013. Compute taxable income for the assessment year 2013-14 on the assumption that his income from house property [computed] is Rs. 2,00,000. www.ngpacollege.com



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CAPITAL GAINS

Question 12. X sells the following capital assets during the previous year 2012-13 : Shares (Rs.) House property (Rs.) Sale consideration 6,00,000 4,00,000 Year of acquisition 2001-2002 1992-93 Cost of acquisition 2,00,000 25,000 Cost of improvement incurred in 1998-99 -80,000 Question 13. N furnishes the following information about his incomes during previous year 2012-13 : (i) Sale of stock of steel utensils for Rs 12,00,000 purchased for Rs 10,80,000. (ii) Capital gain Rs. 10,000 from a house, which he occupied for two years before the date of sale 31.12.2012. (iii) Household furniture purchased in 2010 for Rs 35,000 is sold only for Rs 8,000. On 31-12-2012, he sold equity shares of NGPA Ltd., for Rs. 1,80,000, which were (iv) purchased by him on 1-5-1993 for Rs. 20,000. (v) He sold an agricultural land for Rs. 3,00,000 during the previous year. The land was owned by him for the last eight years, and was purchased for Rs. 16,000. The land is situated in a village with population of 9,000. Compute his taxable income from capital gain for assessment year 2013-14. Question 14 : How will you compute capital gain if property is acquired before 1.4.81. Ans: COMPUTATION OF CAPITAL GAIN IF PROPERTY ACQUIRED BEFORE 1981 Where capital asset became the property of the assessee before 1.4.1981, he has an option to adopt the fair market value of the asset as on 1.4.1981, as its cost of acquisition. Naturally, assessee will opt for this if it is higher. Thus, in very simple terms it can be expressed as “ the fair market value as on 1.4.81 or original cost whichever is high” can be taken as cost of acquisition. Cost of improvement incurred before 1.4.1981 is to be ignored. ♦ ♦

In such cases, while computing indexed cost of acquisition, base index shall be taken at 100.

Question 15. Compute total capital gain in the following situation: Gold

Date of purchase Cost of acquisition Improvement in 80-81 Improvement in 2k- 01 F.M.V. on 1.4. 81 Selling price [2012 – 13]

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14.7.79 1,00,000 ----96,000 6,80,000

Bonds House property

14.7.79 2,00,000 ---2,10,000 14,80,000


14.7.79 4,10,000 1,20,000 3,70,000 5,86,000 39,90,000


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CAPITAL GAINS

Question 16. X purchases a house property for Rs. 70,000 on J une 3, 1977. The following expenses are incurred by him for making addition / alteration to the house property: Rs. 1,00,000 3,00,000 2,00,000

a. cost of construction of first floor in 1978-79 b. cost of construction of the second floor in 1984-85 c. Alteration/ reconstruction of the property in 1995-96

Fair market value of the property on April 1, 1981 is Rs. 4,00,000. The house property is sold by X on J uly 10, 2012 for Rs. 40,00,000 (expenses incurred on transfer : Rs. 40,000). Question 17 : If the assessee acquired asset by way of Gift or will etc., how will you determine the cost of such asset. An s: Cost o f Acq ui si tion of Prev io us Own er [secti on 49(1)] If the asset is acquired by an assessee in the following circumstances the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it. Circumstances when cost of previous owner is taken Acquisition of asset: (a)

on any distribution of asset on the total or partial partition of a Hindu undivided family; or

(b)

under gift or Will; or

(c)

by succession, inheritance ; or

(d)

on any distribution of assets on the liquidation of a company; or

(e)

under a transfer to a revocable or an irrevocable trust; or

(f)

on transfer by a parent company to its Indian subsidiary company which is wholly owned by the parent company; or

(g)

on the transfer by a subsidiary company to its Indian holding company which owns the whole of the share capital of the subsidiary company; or

(h)

on the transfer of capital asset by the amalgamating company to the amalgamated company if the amalgamated company is an Indian company; or

(i)

when any of the members of a H.U.F. converts his self-acquired property into H.U.F. property. (The cost of the property to the H.U.F. will be taken as the cost of the property to the individual converting the property).

(j)

Under a scheme of conversion of private company/unlisted company into LLP.

(k)

On any transfer in the case of conversion of firm/sole proprietary concern into company

SPECIAL POINTS ABOUT CONCEPT OF PREVIOUS OWNER 

The previous owner of the asset means the last previous owner who acquired the asset by any means other than those stated from (a) to (k) above.



While deciding whether the asset is a short-term capital asset or a long-term capital asset, the period of holding of previous owner is also to be considered.

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

As per default law the base index shall be of the year in which the asset was first held by assessee. But Bombay High court has decided in CIT v Manjula J. Shah [2012] 204 taxman 691 that base index for indexation shall be taken to be the index of the year in which asset is acquired by previous owner. So it has been used in the illustrations.



For indexing the improvements, the index of the year of improvement shall be considered.



Improvements before 1.4.81 is to be ignored.

NOTE: As per section 55(3), where the cost for which the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner. Question 18. Mr. X purchased a piece of land in the month of Feb. 95 for Rs. 1,50,000 & constructed ground floor during May 95 [total expenditure Rs. 1,20,000]. House is gifted to his friend Mr. A during 2006-2007. The house is sold by him on 23.12.2012 for Rs. 18,90,000 [brokerage 1% at the time of sale]. Question 19. Mr. X purchased jewellery worth Rs. 1,00,000 in 1977. After his death in 1979 the jewellery is transferred to Mrs. X as per the will. F air market of jewellery on 1.4.81 is Rs. 1,80,000. Mrs. X sold jewellery on 14.6.2012 for Rs. 9,00,000. Compute the capital gains chargeable to tax. Question 20. X purchases a debenture in A Ltd. on J anuary 5, 2009 for Rs. 30,000. He gifts these debentures to his friend Y, on J une 12, 2009 (fair market value on J une 12, 2009 : Rs. 40,000). Y dies on March 10, 2010 and as per his will debentures are transferred to his son Z (fair market value on March 10, 2010 : Rs. 60,000). Z sells these debentures on November 19, 2012 for Rs. 80,000. Determine the amount of capital gain arising to X, Y and Z from the aforesaid transactions. Debentures are not listed in any recognized stock exchange in India. Question 21. A Ltd. purchases a plot of land for Rs. 20,000 on J une 8, 1977. The company spends Rs. 1,80,000 on construction of a residential building in 1977-78 on the plot of land. In 1979-80, the building is transferred to B Ltd. (a 100 percent Indian subsidiary company of A Ltd.) for a consideration of Rs. 3,50,000. Fair market value of the building on April 1, 1981 is Rs. 4,00,000. B Ltd. sells the building for Rs. 16,00,000 on May 18, 2012. Find out the capital gain chargeable to tax for the assessment year 2013-14. Question 22. X purchases the following assets on March 22, 2010: Cost Rs. 50,000 60,000

Listed debentures of A Ltd. Listed debentures of B Ltd.

On J uly 18, 2010, he gifts debentures of B Ltd. to his son Y. X dies on May 5, 2012 and as per his will debentures of A Ltd. are transferred to his son Y. On Feb 12, 2013, Y sells debentures of A Ltd. for Rs.90,000 (expenditure on transfer : Rs.1,000) and debentures of B Ltd. for Rs.70,000 (expenditure on transfer : R s.2,000). Find out the amount of capital gains chargeable to tax for the assessment year 2013-14.

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Question 23. X purchases a house property for Rs. 80,000 on May 18, 1967. He gets the first floor of the house constructed in 1967-68 by spending Rs. 50,000. He dies on November 10, 1979. The property is transferred to Mrs. X by his will. Mrs. X spends Rs. 40,000 and Rs. 65,000 during 1979-80 and 1987-88 respectively for renewals / reconstruction of the property. Mrs. X sells the house property for Rs.35,00,000 on March 10, 2013 (brokerage paid by Mrs. X is Rs. 35,000). The fair market value of the house on April 1, 1981 is Rs. 1,55,000. Question 24. A Ltd. owns the following assets : Units of UTI Rs. 1,30,000 March 12, 2010

Cost of acquisition Date of acquisition

House property Rs. 80,000 March 12, 2010

These capital assets are transferred by A Ltd. to its wholly-owned Indian subsidiary company – B Ltd. on April 2, 2011. On J uly 9, 2012, these assets are transferred by B Ltd. for a consideration of Rs. 5,00,000 (i.e., units : Rs. 2,00,000 house property : Rs. 3,00,000). Compute the capital gain chargeable to tax in the case of B Ltd. for the assessment year 201314. Question 25. X acquired the property in the previous year 1984 – 85 for Rs.6,00,000 and paid Rs.20,000 as registration charges. X died on 15-8-2002 and the property was transferred to his son Y through inheritance. The market value of the property as on 15-8-2002 is Rs. 9,00,000. Y sold this property on 31-7-2012 for Rs. 22,00,000. Compute the capital gain for the assessment year 2013-14. Question 26 : Explain the tax treatment of advance money forfeited in deals relating to capital assets. An s: TREATMENT OF ADVA NCE MONEY RECEIVED: [Secti on 51] Where at any time in the past, • a capital asset has been the subject of negotiations for transfer • and the assessee has received and retained any advance or other money • in respect of such negotiations, • such advance or other money is to be deducted from the cost • • for which the asset was acquired • or the written down value • or the fair market value, • • as the case may be, in computing the cost of acquisition of a capital asset • it is necessary to reduce any amount received by way of advance on any other earlier • occasion.  

Amou nt fo rfeit ed b y prev io us owner is to be ign or ed. That is not taxable both in the year of forfeiture, as well as in the year in which it is transferred to the assessee.

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NEERAJ GUPTA CA IPCC TAX CLASSES 

CAPITAL GAINS

Amou nt forf eited is hi gh er th an cost of acqui si tion: In this situation cost shall be taken as NIL. Excess of forfeited amount over cost of acquisition will not be taxable as it is a capital receipt. [Travancore rubber & Tea Co. Ltd. (SC)]

Question 27. Mr. A purchases a land in 1977 for Rs. 60,000. He constructed ground floor in 1977-78 [total expenditure : Rs. 30,000]. He enters into an agreement for sale of property, but, as the buyer could not pay the balance, Mr. A forfeited the advance of Rs. 20,000. He constructed first floor during 1984-85 [total expenditure : Rs. 40,000]. Later on due to his death, the property is transferred as per the will to his son Mr. B during 87-88. Mr. B also incurred Rs. 80,000 for construction of second floor of the building during 95-96. During financial year 98-99 Mr. B enters into an agreement to sell the property for Rs. 12,00,000 after receiving an advance of Rs. 120,000. But as the buyer could not pay the balance, the advance is ultimately forfeited by Mr. B. Finally the property is sold to Mr. C for Rs. 20,00,000 during 2012-13. Compute the capital gains for Mr. B on the assumption that fair market value of the property on 1.4.81 is Rs. 1,50,000. What shall be your answer if the amount forfeited by Mr. Y is Rs. 2,40,000 & not Rs. 1,20,000. Question 28. X purchases a house property on J uly 2, 1976 for Rs. 60,000 (brokerage paid : 5 per cent) for his own residence. On J une 14, 1986, he enters into an agreement to sell the house to A for Rs. 4,00,000 (after receiving an advance of Rs. 40,000). On A’s failure to pay the balance within the stipulated period of 60 days, X forfeits the advance money. X dies on December 10, 1987 and as per his will the property is given to Mrs. X. Mrs. X enters into an agreement on March 10, 1992 to sell the property to B after receiving an advance of Rs. 60,000 and on B’s failure to pay the balance within 2 months, as per the agreement, the advance money is forfeited by Mrs. X. Mrs. X ultimately sells the property to Y on November 20, 2012 for Rs. 30,00,000 (brokerage paid @ 1.5 per cent). Find out the chargeable capital gain for the assessment year 2013-14 on the assumption that fair market value of the property on April 1, 1981 is (a) Rs. 61,000 or (b) Rs. 1,50,000. Discuss whether advance money forfeited by X and Mrs. X is chargeable to tax. Question 29. X purchases a property on April 1, 1975 for Rs. 90,000. He enters into an agreement for sale of the property to A on December 5, 1982 and receives Rs. 20,000 as advance. A could not, however, keep his promise and advance of Rs. 20,000 given by him is forfeited by X. Later on he gifts the property to his friend Y on J une 15, 1987. The following expenses are incurred by X and Y for renewal of the property: Cost

Addition of two rooms by X during 1978-79 Addition of first floor by X during 1983-84 Addition of second floor by Y during 1992-93

Rs.

20,000 50,000 1,00,000

Fair market value of the property on April 1, 1981 is Rs. 1,02,000. Y enters into an agreement to sell the property for Rs. 8,00,000 to B on J une 1, 1998 after receiving an advance of Rs. 80,000. B could not pay the balance within the stipulated time of two months and Y forfeits the advance of Rs. 80,000 as per agreement with B. Y ultimately finds a buyer in C to whom property is transferred for Rs. 18,00,000 on J une 15, 2012. Compute the capital gain chargeable to tax in the hands of Y for the assessment year 2013-14.

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CAPITAL GAINS

Question 30: How will you find the cost of bonus shares. An s: COST OF ACQUISITION OF BONUS SHARES: (a)

Where bonus shares was received prior to 1st Apri l, 1981, the fair market value on 1st April, 1981 is taken as their cost of acquisition (Indexation facility available).

(b)

If received after this date then cost is taken as nil. ♦

Above provisions do not affect calculation of capital gains on original shares, which will be done as per normal provisions.

NOTE: The period of holding of bonus shares shall be determined from the date of allotment of bonus shares (and not from the date of acquisition of original shares). Note: The above rules are applicable in respect of shares, securities, debentures, bonds, units allotted without any payment on the basis of holding of any other financial assets. Question 31. Mr. A purchased 600 shares of NGPA Ltd. on 12.12.78 @ 60 per share [brokerage paid @ 1.5%]. During 1980 he received 300 bonus shares and during 98-99 he received 200 bonus shares. On 17.12.2012 he sold all the shares @ Rs. 800 per share [brokerage paid @ 1%]. Compute capital gains on the assumption that fair market value of shares as on 1.4.81 is Rs. 90 per share. What shall be your answer if fair market value of share is Rs. 50 as on 1.4.81? ♦ Question 32. On J uly 15, 2012, X holds the following shares in A Ltd. Shares

2,000 original shares 600 bonus shares I 700 bonus shares II 1100 bonus shares III

Date of acquisition

Total investment Rs.

April 17, 1972 May 16, 1978 October 15, 1995 J une 10, 2008

2,00,000 Nil Nil Nil

On J uly 15, 2012, X transfers the above-noted 4,400 @ Rs.500 per share (fair market value on April 1, 1981 is Rs. 70 per share) in the National Stock Exchange. Find out the capital gains chargeable to tax for the assessment year 2013-14. Question 33: How will you treat the right shares regarding computation of capital gains. Ans: COST OF ACQUISITION OF RIGHT SHARES: (a) On the basis of entitlement if the assessee subscribed to right issue – Amount actually paid to the company to acquire these shares will be taken as cost. (b) If the assessee renounced the right in favour of any other person – Nil. [For computation of capital gain for right holder] (c) If the assessee has purchased the right to subscribe for the additional shares – Purchase price paid to purchase the right plus the amount paid to the company for the acquiring the right shares.

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NEERAJ GUPTA CA IPCC TAX CLASSES 

CAPITAL GAINS

If such right shares are sold after one year, indexation facility is also available. The indexation shall start from the date of allotment of shares by the company & not from the date of offer.

NOTE: The amount realized by the original shareholder by selling his rights entitlement will be short term capital gain in his hands (as the cost is taken as NIL). The period of holding of the rights entitlement will be reckoned from the date of offer made by the company to the date of renouncement. Question 34 Mr. X purchased 500 shares of NEERAJ GUPTA (p) Ltd. @ Rs. 300 per share on 30.10.98. During 1999-2000 the company offered him a right to subscribe 400 shares @ Rs. 190 per share i.e. Rs. 10 as face value & Rs. 180 as share premium. Mr. X subscribed 300 shares and renounced his right in favour of Mr. Y for a consideration of Rs. 1,700 for the balance 100 shares on 3.4.2000. Mr. Y paid Rs. 19,000 to the company for the shares. Shares to both of them were allotted on 5.4.2000. Discuss the tax implications & financial year of taxation if Mr. X sells all the 800 shares @ Rs. 680 per share on 23.12.2012. Also compute capital gain for Mr. Y if he sells all his shares for Rs. 810 per share on ♦ 22.1.2013. Question 35. N purchased 1,000 listed equity shares of Rs. 10 each for Rs. 50 per share in 1989-90 and incurs an expenditure of Rs. 500 on brokerage. In J uly 1995 he receives 300 bonus shares. In September, 2003 he gets 200 rights share for Rs. 20 each. He sold 100 bonus shares in November, 2012 at Rs. 80 per share and 100 right shares @ 85 per share in December 2012. Find out the capital gains for the assessment year 2013-14. Question 36. A had purchased 2000 shares of Rs. 10 each of a company on 14-6-1997 for Rs. 50,000. Company declared a right issue in the ratio of 4 : 1 at a price of Rs. 40 per share in October, 2012. He sold the right for 300 shares against Rs. 25 per share and remaining 200 shares were purchased by him, which were allotted on 15-11-2012. He sold all the shares @ Rs. 80 each on 10-2-2013 through a recognised stock exchange. He paid brokerage @ 2% at the time of sale. Compute taxable capital gain. Question 37. A acquired 5,000 shares by way of gift in J une, 1977 from his mother when the market value of such shares was Rs. 80,000. The mother had acquired such shares in 1976 for Rs. 60,000. A was allotted 2,000 bonus shares in 1980 and 1000 bonus shares in 1990. The market value of the shares as on 1-4-1981 was Rs. 25 per share. In J une 1999 A was offered by the company to buy right shares @ Rs. 50 in the ratio of 2 : 1. A renounced 40% of the right to B for a sum of Rs. 32,000 and balance shares were purchased by him. All the shares were sold on 20-9-2012 @ Rs. 200 per share through a recognised stock exchange. Compute his taxable capital gains for the assessment year 2013-14.

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CAPITAL GAINS

Question 38 : Explain computation of capital gain if capital asset is converted into stock in trade. An s : CONVERSION OF CAPITAL ASSET INTO STOCK IN TRADE: Section 45(2)



•

Section 45(2) provides w.e.f. Assessment year 85-86 that,

•

the profits and gains

•

arising from the transfer

•

by way of conversion by the owner of a capital asset

•

into stock-in-trade

•

of a business carried on by him

•

shall be chargeable to tax

•

as his incom e of the previous year

•

in which

•

such stock i n trade is sold..

•

For computing the capital gains on such conversion,

•

the fair market value of the asset

•

on the date of conversion

•

shall be deemed to be

•

the full value of the consideration

•

received

•

as a result of the transfer of the capital asset.

•

Business gain

•

shall be the difference between the selling price and

•

the fair market value of the capital asset

•

on the date of conversion. Upto assessment year 84-85, (Conversion upto 31 March, 1984) –

Capital gain arising on such conversion is not taxable by virtue of a Supreme Court ruling [ CIT v Bai Shirinbai K.Kooka]. The effect of this judgement has now been nullified by the Taxation Laws (Amendment) Act, 1984 by amending section 2(47) and Section 45 with effect from assessment year 85-86. If the asset converted into stock in trade is a Long-term capital asset, its indexed cost shall be computed as under: Indexed cost of acquisition = Cost of Acquisition

CII of year of conversion ------------------------------------------------CII of year of acquisition by assessee Indexed cost of improvement shall also be calculated in the same way.

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CAPITAL GAINS

Benefit of Section 54EC – One can claim exemption under section 54EC if specified investment is made within 6 months from the date of transfer. For this purpose, the period of 6 months shall be computed from the date of sale of stock-in-trade – Circular 791, dated J une 2, 2000. But same benefit cannot be extended to other exemptions. Question 39. X purchased jewellery worth Rs 1,00,000 in financial year 86-87. During 99-2000 he converted his jewellery as a part of stock in trade. On the date of conversion the fair market value of jewellery is Rs 3,95,000. Later on during previous year 2012-13 he sold the same jewellery for Rs. 6,00,000. Compute the capital gain taxable, if any, and decide the assessment year of its taxation. Also compute the business income for current year. Question 40. Y purchased a scooter in the year 2007-08 for Rs 8000. In the previous year 0910 he started business of selling second hand scooters. He also converted his personal scooter into stock in trade [fair market value of scooter on date of conversion is Rs. 6,000]. This scooter is sold for just Rs 5,000 during 2012-13. Compute his capital/ business loss for the assessment year 2013-14. Question 41. X invested Rs. 20,000 to acquire 1000 shares of XY Z Ltd. on 14-10-2005. He holds the shares as investments. On 10-12-2008 he started a business of dealing in shares and converts his holding into his stock-in-trade. The market value of the shares as on the date of conversion was Rs. 90 per share. The shares were sold in the previous year 2012-13 for a sum of Rs. 96,000. Compute the capital gain and business income. Questio n 42. (a) A had acquired gold ornaments in 1975 for Rs. 1,50,000. The market value of gold ornaments as on 1-4-1981 was Rs. 2,00,000. The above gold was converted into stock-intrade, to start a business of gold ornaments on 10-6-2007, when the market value was Rs. 19,00,000. The above gold ornaments were sold on 15-6-2012 for Rs. 32,00,000. Compute capital gain and other income, taxable for the Assessment Year 2013-14. (b) Assume in above Question that the date of conversion is 10 th J une 1983. Question 43: If a person enters a partnership firm and introduces his capital asset as capital contribution, then whether any tax liability is attracted by such transaction. An s: TRANSFER OF ASSETS A S CAPITAL CONTRIBUTION: Sect io n 45(3) Section 45(3) provide that • the profits or gains arising • • from the transfer of a capital asset by a person • to a firm • • or • other AOP/ BOI in which • he is a partner • or becomes a partner or member, • by way of capital contribution, • shall be chargeable to tax • as his income of the previous year • in which such transfer takes place. • www.ngpacollege.com



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• • • • • • • •

 

CAPITAL GAINS

For computing the capital gains, the amount recorded in the books of account of the firm/ AOP/ BOI as the value of the capital asset shall be deemed to be the full value of the consideration received as a result of the transfer of the capital asset. Market value of asset on the date of transfer is not relevant. If non-capital asset like personal car is introduced, then capital gain shall not be computed.

Question 44. Mr. A purchased a house in the year 85-86 for Rs 8 lacs. He later on transferred this house to his son ‘B’ for Rs 11 lacs during 93-94. B joined a partnership firm in 2012-13 and brings this house as his capital contribution. Rs 65 lacs is recorded as his capital contribution though market value of the house on the date of contribution was Rs 69 lacs. Compute the capital gain arising from above transaction. Question 45. A and B formed a partnership firm during 2012-13. Soon after its formation, A brings the following assets as his capital contribution. Building Gold Rs. Rs. Fair market value on the date of transfer 14,00,000 38,00,000 Amount recorded in books 13,00,000 39,00,000 Actual cost 90,000 27,00,000 Year of acquisition 2008-09 2010-11 Compute the taxable capital gain of A. Question 46. A acquired a property by way of gift from his father in the previous year 1990-91 when its F MV was Rs. 5,00,000. The father had acquired the property in the previous year 1982-83 for Rs. 3,00,000. This property was introduced as capital contribution to a partnership firm in which A became a partner on 15-9-2012. The market value of the asset as on 15-9-2012 was Rs. 29,00,000, but it was recorded in the books of account of the firm at Rs. 28,00,000. Is there any capital gain chargeable in the hands of A? If yes, compute the amount. Question 47. What is capital gain rules when asset is distributed to partners at the time of its dissolution. An s: DISTRIBUTION OF ASSETS ON DISSOLUTION OF FIRM/ AOP/ B OI: Secti on 45(4) The profits or gains arising • • from the transfer of a capital asset by way of distribution of assets • on di ssolu tion o f a firm/ AOP/ BOI, • is chargeable as the income of the firm etc. • • of the previous year in which the transfer takes place • under section 45(4) of the Act. • www.ngpacollege.com



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CAPITAL GAINS



For computing the capital gains [in the hands of transferor firm] the fair market value of the asset on the date of transfer will be deemed to be the full value of the consideration received as a result of the transfer.



For computing gains in the hands of partnership firm, its fair market value, which is relevant, but for the partners it is the agreed value, which is relevant for computing capital gain in the future.



If a firm distributes a depreciable asset, the capital gain / loss shall always be short term capital gain / loss.



45(4) is not applicable for retirement. It means, in this case, if a partner is going out, then agreed value shall be taken as FVOC for the firm. Similarly, it shall be the COA for the outgoing partner, if he subsequently sells the asset.

Question 48. A firm consisting of two partners P & Q distributes its assets to them on 10th J anuary, 13. The details are as follows: Land (taken by P) Shares (taken by Q) Date of acquisition Cost of acquisition Fair market value as on 1.4.81 Fair market value on the date of distribution Agreed value between the partners and the firm

1.7.79 5,00,000 6,00,000 55,00,000

10.10.99 4,00,000 -48,00,000

56,00,000

47,00,000

Land and shares were sold by P & Q on 22.1.13 for Rs 58 lacs & Rs 49.5 lacs respectively. Compute capital gain taxable for the assessment year 2013-14 in the hands of partnership firm, P & Q. Question 49. Whether a case of retirement is covered by section 45(4) ? Question 50. A firm consists of 3 partners namely A, B and C. C retires from the firm on 10-102012. His capital balance and the profits till the date of retirement stood at Rs. 10,00,000. The firm transferred its land to C in settlement of his account. The market value of the land as on that date was Rs. 15,00,000. The land was acquired of by the firm on 1-6-1999 for Rs. 21,000. Compute capital gain in the hands of the firm. What is the COA for C if he subsequently sells the land. Question 51. How is compulsory acquisition compensation treated for the purpose of capital gains? Ans: COMPULSORY ACQUISITION: Sect io n 45(5) This sub – section covers a capital asset that is: (a) Transferred by way of compulsory acquisition under any law, or (b) Transferred in respect of which the consideration was determined or approved by the central Govt. or the RBI.

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CAPITAL GAINS

INITIAL COMPENSATION: As per section 45(5), • • the capital gain arising on transfer by way of compulsory acquisition of a capital asset • is chargeable to tax • as income of the previous year • • in which such compensation/ consideration or part thereof is first received. • Part there of is first received : For example, compensation is fixed at Rs 20 lacs out of which Rs 15 lacs is received in 2012-13 and balance is received in 2013-14. In this case total Rs 20 lacs shall be considered for capital gain computation in FY 2012-13 itself. If the asset compulsory acquired by govt is a long-term capital asset, its indexed value will be computed as under: Indexed COA = Cost of acquisition

×

CII of year of compulsory acquisition -----------------------------------------------CII of year of acquisition by assessee

ENHANCED COMPENSATION: • • • •

An y sub seq uen t enhan cement of the amount of compensation/ consideration will be deemed to be the income under the head ‘Capital gains’ of the previous year in which such amount is received by the assessee even if appeal is pending in any court or tribunal.



In both the cases, ‘Year of determination of compensation’ is not relevant. It is taxable on receipt basis.



In this case, cost of acquisition/ cost of improvement is taken as Nil, because they have already been claimed while calculating taxable initial compensation.



But litigation expenses and/or expenses on recovery of such compensation is deductible.



If the compensation (enhanced / original) is received by any other person because of death of the transferor, it is taxable as income of the recipient.

Recomp utation of capi tal gains in case of reduction in c ompensation [ Section 45(5)] Where such amount of the compensation • is subsequently reduced • by any court, Tribunal or other authority, • • the capital gain of that year, in which the compensation received was taxed, • shall be recomputed accordingly. [see 155(16)] • Special point: While recomputing, legal expenses of this fresh case is also deductible.

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CAPITAL GAINS

Question 52. The State Government compulsorily acquires a property on J uly 1, 2004. The property was owned by ABC Ltd. The company purchased it for Rs. 8 lakh on October 1, 1999. It incurred Rs. 2 lacs in making certain capital alterations to it during May, 2000. A compensation of Rs. 70 lakh is awarded to ABC Ltd., which it receives on August 1, 2009 to the extent of Rs 55 lacs. Balance is received on 2/4/2010. PQR Ltd. files an appeal against the State Government in respect of the amount of compensation. The High Court enhances the compensation by Rs. 15 lakh on March 12, 2012, which ABC Ltd. receives on J une 1, 2012. ABC Ltd. incurs Rs. 2 lakh as legal expenses in this connection. Compute the capital gain arising in this case. Also decide the various assessment years in which the taxation shall be attracted. Question 53. The Central Government acquires a house property owned by X on December 17, 1999. This property was purchased on April 10, 1977 for Rs. 70,000 (cost of improvement incurred during 1985-86 : Rs. 60,000 and fair market value of the property on April 1, 1981 was Rs. 1,30,000). The Government awards Rs. 22,00,000 as compensation out of which Rs.5,00,000 is received on J une 4, 2012 and Rs. 17,00,000 is received on April 10, 2013. Expenditure incurred by X for getting compensation fixed : Rs. 5,000. Being aggrieved against the award, X flies an appeal. The High court, as per order dated J uly 1, 2015, enhanced the compensation from Rs. 17,00,000 to Rs. 19,50,000 (legal expenditure incurred in court’s proceedings : Rs. 20,000). X receives the additional compensation of Rs. 2,50,000 on April 14, 2016. Compute the income under the head “Capital gains”. Question 54. How is cost of shares calculated which are received from coversion of debentures. An s: CONVERSION OF DEBENTURES INTO SHARES [SEC. 49(2A )] Any transfer by way of conversion of bonds, debentures, deposit certificates in any form, of a company into shares or debentures of that company is not treated a transfer [Section 47(x)]. Thus, no capital gain arises at the time of conversion. On the sale of shares or debentures received on such conversion, capital gain would arise. For computing capital gain, the cost of converted bonds/ shares/ debentures is taken at price paid for the acquisition of original bonds/ shares/ debentures or certificate etc. For example, X holds 300 convertible debentures of Rs 1000 each, purchased at Rs 1200 each. The debentures are converted into 100 equity shares of Rs 50 each but market value being Rs 3700 of each share. The cost of acquisition of shares will be taken at Rs 3,60,000.(i.e. @ 3600 each share). 

For computing whether the asset is a STCA or LTCA, the period of holding of original debentures/ deposit certificates is to be ignored i.e. the period will start from the date of allotment of shares.



Similarly indexation will start from the previous year of conversion.



Cost of Acquisition of shares will be of the cost of Debentures.

Question 55. Mr. A acquires certain debentures of B Ltd. on 10.7.2004 for Rs. 2,00,000. As per the conversion clause in the debenture deed, the debentures are converted into equity shares in B Ltd. on 18th Feb., 2011. Mr. A sells the shares during 2012-13 for Rs 9,00,000. Compute the capital gain arising from such transaction. www.ngpacollege.com



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CAPITAL GAINS

Question 56. X acquired 100 partly convertible debentures of Rs 1,000 each on 10.7.2003. 30% of each debenture was converted into 6 equity share of Rs 10 each on 2.11.2009. All the shares were sold on 3.3.13 @ 200 each. Brokerage is paid @ 2% at the time of sale. On 10 th march 2013, all debentures also sold @ 770 each. Compute the capital gain chargeable for the assessment year 2013-14. Question 57. X gets 1,000 partly convertible debentures (face value Rs. 100) of A Ltd. (cost being Rs. 150 per debenture) at the time of original allotment to him on May 10, 1993. As per terms of allotment A Ltd. converts 60 percent portion of each debenture into 3 equity shares of face value of Rs. 10 on J uly 18, 2002. On September 1, 2012, X transfers 1,800 equity shares in A Ltd. @ Rs. 250 per share and 1,000 (non convertible portion) debentures @ Rs. 98 per debenture. Find out the amount of capital gains chargeable to tax for the assessment year 2013-14. Question 58 : How to deal with shares received at the time of amalgamation for the purpose of capital gains ? An s : Cost of Ac quisi tion of sh ares in the Amalgamated Company [Sec. 49(2)] Where the shareholders of amalgamating company are issued shares in the amalgamated company, the cost of such shares in the amalgamating company is deemed to be the price paid for the acquisition of original shares in the amalgamated company. 

Above provision applicable only if Amalgamated Company is an Indian Company.



To find out whether or not shares in the amalgamated company are long-term capital asset, the period of holding shall be determined from the date of acquisition of shares in the amalgamating company.



The indexation will start from the date of allotment of shares in the amalgamating company.

Question 59. A Ltd., an Indian Company, takes over the business of B Ltd. in a scheme of Amalgamation of the two companies. Sumit has purchased 200 shares in B Ltd. in 2002-03 for Rs 50 per share. As per the scheme of amalgamation, he gets 80 shares in A Ltd. in 2007-08. Compute capital gain if 50 of such shares are sold in 2012-13 for Rs. 1,70,000. Question 60: Explain capital gains tax law if non residents invests in India with foreign exchange. An s : Capi tal gai n i n the case o f t ran sfer o f shar es/ d eben tures by no n-resi den ts (First p rovis o to Section 48 and rule 115A) • • • • •

In the case of an assessee who is a non-resident, Who acquires shares or debentures of Indian co. by utilising foreign currency, Any capital gain, whether short-term or long-term, Arising from the transfer of such shares/debentures of an Indian company, Shall be computed in the following manner and no indexation of cost will be done, even if it is a long-term capital asset:

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CAPITAL GAINS

Full value of consideration (converted into foreign currency at average TT buying and TT selling rate on date of sale) Less: (i) Expenses on transfer (converted into foreign currency at average TT buying and TT selling rate on date of sale) (ii) Cost of acquisition (converted into foreign currency at avg. TT buying and TT selling rate on date of acquisition) -----------------------------------------------------------------------------= Capital gain in foreign currency -----------------------------------------------------------------------------Capital gain in foreign currency, which may be long-term or short-term, shall be converted into Indian rupees at the TT buying rate only (not the average rate) on the date of transfer of the capital asset. 

No indexation of cost of acquisition even if the asset is a long-term capital asset.



The above provisions are applicable only for non-residents and that too only in case of shares or debentures of Indian Company. If a non-resident purchases another asset say a house property or jewellery, then normal provisions shall apply i.e. no conversion in foreign currency required, & indexation is also available.



The above provisions are applicable both for short term and long-term assets.



Above provisions also applicable in case of reinvestments of such capital.



Exchange rate of the date on which money is transferred is irrelevant.



Exchange rate of the date on which expenditure on transfer is incurred is irrelevant. In this case exchange rate of date of sale is to be considered.



Option of Market value as on 1.4.81 is available.

Question 61. X, a non-resident, remits US $ 60,000 to India on J une 9,1995. The amount is partly utilised on J une 17, 1995 for purchasing 5,000 shares in XYZ Ltd., an Indian company at the rate of Rs 60 per share. These shares are sold for Rs 760 per share on J uly, 10 2012. Find out the capital gains chargeable to tax for the assessment year 2013-14 on the assumption that telegraphic transfer buying and selling rate of US dollars adopted by the SBI is as follows: ----------------------------------------------------------Buying (1 US $) Selling (1 US $) Rs. Rs. ---------------------------------------------------------- J une 17,1995 21.00 23.00 J uly 10, 2012 42.00 43.00

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CAPITAL GAINS

Question 62. X, a non-resident remits US $ 90,000 to India on April 24, 1992. This amount is partly utilised in purchasing a house property worth Rs. 2,50,000 on 30.5.92, jewellery worth Rs. 2,00,000 on 01.6.92 & Rs. 1,00,000 is incurred in purchasing shares of an Indian company.on 02.6.92. X transfers these assets on J an 18, 2013 for total consideration of Rs. 55,00,000 (House property: Rs. 17,00,000; J ewellery for Rs. 18,00,000 & shares: Rs. 20,00,000). Find out the amount of capital gains chargeable to tax for the assessment year 2013-2014 on the assumption that telegraphic transfer buying / selling rate of US dollar adopted by SBI is as follows: ----------------------------------------------------------Buying (1 US $) Selling (1 US $) Rs. Rs. ---------------------------------------------------------- J une 2, 1992 15.00 16.00 J an 18, 2013 40.00 41.00

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715 Capital Gain

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