-=a" f •a::J ilit (of -•'-'V-- ---..-, ,. . . . . : o" 11: '..

Se:
f'/Y 1/J?.I.
e..es~ a Hom:, tur of p~::n-: E ---~- _ 7JJ-.
fMV or. 1.4 2001 R" 41"1/MJ of - ,rr • ccs:l
0 r cp:'(j".er~flftll-<n)P...!o. 3UJr. ..21.
p,,s. I UJIXMYJfr, StUi~ tt;,,..---r_j.6 .. .. of CG bcwe
a:J 20,t.2U. Rf U.V.HJ,000, Ac%.;~ _ i f Gf er
p.,5 -:WlJ0,000, en 2001.-02 = l(irJ, 11'!,2..(Jl = U.6, 2[)2if,.21 - •
f!ffwas., B.um.., !tn,. 1"1/
• \M: 1.:rcc; Ra..l\!18,66,000; Exft:!P"'.ia crs S4: Rs t31JUJX(il
Hillt : If i.-"!' r:f., ewes w!H a.r...eerl P..:.s. 2 cm:-e. f::,-\ e-:..__~ r.z.n )e c:sed (rs::: CC.:=.!:.-""t:DO
of T~u ce"ii'lt""i°. ~1 &r..'1iis vT tfJi o r.. b:P~-s~ :;;~3 ~- m..:..."'Cle' ~:&.."'l
or Two !'ea."5 r~J:iP. . . ·1hdy
. lhr ur.r a:t:~f~ vf ttt- r , e s ~ cr.5e.
71. Ur.½ ovm z reside.rJ.id r.:0:.:.s.e .rt ta~w:; ftw.: the ful ~·--g i;:;3.r-Liid~
compute th~ Z.~i-Wn1 ()( (~~:w g,air_
Rs.
C-0£1 of ronsm.1.Ciion (dc:ir.~ 2fYJ4-05j ..!))O,-:(itl}I

Cost of a&iirion~ end improverr..e-.As (6:ing 2011-12) 2,00,0CIIO

Sate .consideration fSale ::1arle oo H).l(t20) 95,00,000
Ex~ on transfer 20,009
C-Ost of nev, house purc:>4-SeG in Hyderabad
{on 15.1.20) .( ~. 3.0lJ,rJO!; d...'1)0'5iteo in CGAS)
(House is, half finished) 5,00,000
Amount Invested in acquiring aootherr house 4,00,0QO
AIi amount of Rs. 3,00~000 withdrawn from capital gzin deposit scheme cm
12th May 2020 and utilised for i.¾e completion of house. en for 2004--05:
113. 20Jl-12 is 184 & 2020-21 is 301.
/Madras, B.Com.. fCSJ Nov. 20!J9/
[Ans: LTCG: Rs. 8-0,87,339; Exemption UIS 54 Rs 9.00,0001
!-tote: If the LTCG does not excttd 2 crore an as.s.essee caa Invest in Two
house,.
72. Mr. Kannan is the owner of a house property which he purchased in June
2006 for Rs. 90,000. He sold it for Rs. 60. I0,000 on l 5ih May 2020 and
incurred an expenditure of Rs. 10.000 for hrokerage. He bought a residential
house on I 5th January 2020 for a sum of Rs. 2,50,000 and sold this house
on l 5th March 202 I for a sum of Rs. 3,00,000 and paid a swn of Rs. 3,000
as commission.
Compute the capital gains chargeable to tax.
en : 2006-01 : 122; 2020.21 : Jot.
/Bhtuotltit/JtstUJy B.Com. April 2004/
 8.106 Income Tax Theory, Law & Practice :A. Y. 202 I-20
22
[Ans : Longterm capital 1ain : Rs. 5 7 ~
LTCG exempted u/s 54 : Rs. 2,50,ooo;'
Short term capital gain on sale of reildential house : Rs. 2,97,000]
Hillt: If the newly acquired house (purchased for exemption) is sold within 3 years,
exempted capital gain is reduced from cost of the asset to compute STCG
73 . Ms. Keerthana received a house from her father valued at Rs. 50,000 during
the year 1960. In 2004-05 she spent Rs. 30,000 on additions to that house.
The market value of house as on 1-4-200 I was R~. 1,40,000. She again spent
Rs. 20,000 during 2009-10 and remodelled the house. She sold the house for
a consideration of Rs. 50,00,000 on 15-10-2020 and paid Rs. 20,000 as commission.
She is not having any other house. In March 2021 she bought another house
for Rs. 10,00,000 and deposited Rs. 25,00,000 in a capital gain account scheme.
By 15-10-23 she had withdrawn and constructed another residential
unit in the house purchased in March 2021 for Rs. · 20,00,000. What is the
chargeable capital gain for the Assessment year 2_021-22 ~nd 2023-24?
CII: For 2001-02 = 100; 2004-05 = 113; 2009-10 = 148; 2020-21 = 301.

.
. [Madras, !J.Com. March
. 1995/
(Ans: Long-term Capital gain on sale of house = Rs. 44,38,013
Exempted under Sec. 54 for investment in a house = Rs. 10,00,000
Exempted under Sec. 54 for deposit in
Capital gain account scheme = Rs. 2S,00,000
Chargeable Capital gain during A. Y. 2021-22 = .Rs. 9,38,013
Chargeable Capital gain during 2023-2024 is = Rs. S,00,000]
74. X owns a residential house at Delhi since 1968. The house is sold by him
for Rs. 1,40,00,000 on May 10. 2020 [Cost of Acquisition; Rs. 4,50,000
F.M. V. on April 1 2001 Rs. 6, 10,000]. To claim exemption u/s 54 he purchases
a residential house property at. Ajmer on March 10, 2021 for Rs. 2,51,000
on July 3 J, 2021 being the due date for furnishing return of income for the
assessment year 2021-22; he deposits Rs. 6,00,000 in bank A/c specified for
the purpose of Section 54.
By withdrawing from the deposits Ale he constructs a residential unit at Ajmer
house on May 2022 for Rs. 3, 10,000 which is completed by May 9,
2022. Entire cost of construction of Rs. 1,80,000 is financed by withdrawing
from the deposit Ale. The unutiJised amount in the deposit Ale is withdrawn
by him after May l 0, 2023. Determine the amount of Capital gains chargeable
to tax. CH 2001-02 = 100 and for 2020-21 = 301. ·
{Madras, B.A. Corp. Sept. 1997/
[Ans: Long term Capital gain on sale of
house property is Rs. 1,21,63,900
Exemption under section 54 for

r
capita1 .::
G= ru· :----------=------:---::----=--:-:::
ns 8~.J07
:::
:.-:---- investment in a hoUAe : Rs. 2,51,000
.. Exemption under section 54 for
deposit in capital gain Account Rs. 6,00,000
Chargeable Capital gain for Assessment year 2021-22: Rs. 1,13,12,900
Chargeable Long term c1pit1I gain for A. Y. 2023-24 Rs. 1,10,000J
Hint: Amount not withdrawn within 3 years from the date of sale of original
house i.e., between May 10, 2020 to May I0, 2023 is taxed in the year
releva.nt to end of 3 years period i.e. , 2023-24, i.e., AY: 2024-25.
X(B) Sale of urban Agricultural Land and Investment in Agricultural Land
(Stc,54B)
75. Agricultural land situated in Agra purchased in 2003-04 for Rs. 46,400, sold
for Rs. 3,80,000 on 1.5.2020. The assessee purchased another piece of agricultural
la,nd on l .8~2020 for Rs. 70,000 and deposited Rs. 30,000 on 24.6.20 in capital
·gain amount scheme. ·
Find put the capital gain chargeable to tax for the AY2021-22. The cost inflation
i~dex in .2003:04 was I 09 and in 2020-2 I it was 30 I.
. '. .
/Madras, B.Com (G) and (A & FJ April 2011/'
(Ans: LTCG : Rs. 2,51,868
Exemption U/S 54 B : Rs. 1,00,000J
76. Compute the exempted and taxable capital gains of Mr. Suresh for the assessment
year 2021-22·arid other relevant assessment years.
I. Suresh-sold 'an urban agricultural land for Rs. 8,00,000 on 2-11-2020 .
.· This.land was acquired on l-10-2019atacostofRs. 5,00,000. He purchased
another agricultural. land on 2-6-202 l for Rs. 6,00,000.
2. Suresh sold another piece of urban agricultural land for Rs. l 0;00,000
on 1-4-2020. This land was acquired on 1-10-2008 for Rs. I0,000. Suresh
deposited Rs. 8,00,000 in a capital gain account scheme on 1-5-2020
for the purpose of investment in agricultural land. He has withdrawn
Rs. 7,00,000 by l-4-2022 and purchased another piece of urban agricultural
land. C.l.1. for 2008-09 : I 37, for 2020-21 :30 I.
(Ans: (1) Short-term Capital gain on Sale of
agricultural land : Rs. 3,00,000
Exempted capital gain under Section S4B;
For investment in an agricultural land : Rs. 3,00,000.
(2) Long-term capital gain on sale of
agricultural land : Rs. 9, 78,029 ;
Exemption under Sec. 54B for deposit in
capital gain Ale : Rs. 8,00,000;
Chargeable capital gain for A. Y. 2021-22 = Rs. 1,78,029;
Assessment year 2022-23
 8_108 Income Tax Theory, Law & Practice : A. Y. 2021. 2022
The amount deposited is to be withdrawn within 2 years from sale~
original land. Undrawn amount is taxable after expiry of 2 years.
I.e., 2023-24 Rs. 1,00,000.]
Hint: ( 1) When amount invested is more than capital gain, full capital gain is exempted.
(2) No indexing for short-term Capital Assets.
77. Thiru Mohan sold a fow of his properties during the year ended 3 Ist March
2021 as follows:
(a) Household furniture costing Rs. 8,000. Purchased in 1972, sold for
Rs. 20,000 in August 2020.
(b) One diamond necklace costing Rs. 1,00,000. Purchased in April 2001,
sold for Rs. 16,00,000 in May 2020.
(c) One house in Coimbatore bought in 2006-07 for Rs. 1,50,000; sold in
Jan. 2021 for Rs. 50,00,000; Expenses regarding the sale borne by him
Rs. 25,000. In 2008-09 he spent Rs. 50,000 for constructing the second
floor of the house.
(d) He sold his ambassador car at Rs. 40,000, purchased in 1971 for
Rs. 20,000.
-
(~) He sold a plot of urban agricultural land at Chidambaram in June 2020
for Rs. 7,50~000 and purchased another plot of agricultural land at Madurai
for Rs. 60,000 on the date of sale. The land sold was purchased in
June 2003 for Rs. 30,000.
Compute his taxable Capital gains. CII for 2001-02= I00, for 2006-07= 122,
for 2008-09=137, for 2003-04=109, for 2020-21=301.
/Madras, B. Com. March 1986}
(Ans : (a) Household furniture is exempted
(b) LTCG : Rs. 12,99,000;
(c) On sale of House property : LTCG : Rs. 44,95,064;
(d) Car held for personal purpose is exempted
(e) Long-term Capital gain on
sale of Land : Rs. 6,67,156;
Exempted under Sec. 54B for buying agricultural Land : Rs. 60,000]
X(C) Exemption of Capital gain on . compulsory acquisition of
Land and building u/s 54D.
78. One building (which was purchased in 2008) ofX Ltd., an industrial undertaking,
is compulsorily acquired by the Government of Uttar Pradesh. Its W.D. V.
on 1.4.20 was Rs. 3,50,000. The U.P. Government paid Rs. 6,00,000 on 25th
May 2020 as compensation. The company purchased another building for
industrial undertaking for Rs. 2,00,000 on 20th April 2021 . Determine the
amount exempt under Section 54D and taxable Capital gain for assessment
year 202 I-22.
/Madras, B.Com.(CS) Nov. 2006/
eapital Gains 8.109
(Ans : STCG : Rs. 1,50,000; Exemption u/s 54D : Rs. 1,00,000;
Taxable STCG : Rs. 50,000)
_ compute the Capital gains separately in each of the following cases for the
79
relevant assessment years.
Situation I
An assessee's land & building being used for industrial purpose was acquired
by government of Tamilnadu for Rs. 10,00,000 on 6-5-20. The cost of the
land and building constructed during 2005-06 was Rs. 5,00,000 the written
down value of the building on 1-4-20 was Rs. 3,00,000. Assessee acquired
another land & building on 8-8-21 for Rs. 5,00,000.
Situation 11
XYZ company's land and building used by it for industrial purpose was
acquired by govt. on 6-7-20 for Rs. 20,00,000. They were purchased on
1-6-201.0 for Rs. 6,00,000 and written down value on 1-4-20 was Rs. 5, 10,000.
The compensati<:>n was received on 2-11-2020. The company deposited
Rs. 15,C>0,000 lakhs on 30-6-2021 in a capital gain account scheme for investment
in new land and building.
(Ans: I : STCG chargeable to Tax : Rs. 2,00,000.
·STCG on acquisition Rs. 7,00,000; Exemption u/s 54D : Rs. 5,00,000.
II : STCG chargeable to Tax : Nil;
STCG on acquisition Rs. 14,90,000;
Exemption under section 54D : Rs. 14,90,000.)
X(D) Exemption .of Capital gain on Investment in notified bonds
(Sec. 54EC)
80. Miss. Saranya acquired property on 15.12.1999 for Rs. 5,00,000 which w,s
sold on 15.5.20 for Rs. 38,00,000. Expenses on transfer were Rs. 20,000.
She invests Rs. 6,00,000 in the bonds of NHAI of on 16. l 0.20 compute the
capital gain for the A. Y. 2021 -22.
[CH 2001-02: 100; 2020-21 : 301]
(Madras, B.Com(CS) Nov. 2009/
(Ans: LTCG : Rs. 22, 75,000
Exemption U/S 54 EC : Rs. 6,00,000)

81. Mr. David sold a Plot on 1.6.2020 (CU - 301) for Rs. 22,40,000. He spent
Rs. 40,000 for sale. The plot was received by him on death of his father on
22.3.2004 (CII = 109) His father had acquired it on 1.4. 1980 for Rs. 1,00,000
and its FMV on 1.4.2001 was Rs. 1,40,000. On 1.6.20 he invested Rs. 3,00,000
in National highway authority bonds.
/Madras, B.Com. Nov. 2005}
 8.11 O Income Tax 'fbeory, Law & Practice :A Y. 2021-2
022
IAns : LTCG : Rs. 1 7 ~
LTCG exemption u/s S4EC : Rs. 3,0o,ooo
Chargeable LTCG : Rs. 14,78,600)
82. Suraj sells his only residential hou se in Delhi on 241h August 2020 for
Rs. 15,20,000 and incurs an expenditure of Rs. 20,000 in connection with
transfer. Cost of acquisition of the house by him in 1975 was Rs. 18,000.
On I 0th January 2021 , he invests Rs. 5,00,000 in the bonds of Rural
Electrification Corporation of India. On 16th January 202 l he purchases a
residential flat in Delhi for Rs. 4,50,000 and deposits Rs. 1,50,000 in the
capital gains deposits scheme. Compute the taxable Capital gains in his hands.
Fair market value of house on 1-4-200 I is Rs. 50,000. CII for 2001-02 is
I00 and for 2020-21 is 30 I.
/Madras, B.Com. March 1991}
[Ans: Long-term capital gain on sale : Rs. 13,49tSOO
Exemption u/s 54 : Rs. 4,S0,000
u/s 54(2) : Rs. 1,50,000
u/s 54 EC : Rs. 5,00,000
Chargeable LTCG : Rs. 2,49,S00]
83. Mr. Raja sells a house property on 15-10-2020 for Rs. 42,00,000 (Cost of
acquisition on 23-12-2008 Rs. 1,80,000). On 14-2-202 l he invests. Rs. I0,50,000
in bonds of the National Highways Authority of India. On 16-2-202 l he
purchases a house property for Rs. 15,00,000 and he also invests Rs. 1,00,000
in bonds of National Highway authority of India on 16-6-2021 . Can he claim
exemption under section 54 as well as under Section 54EC ? Determine the
amount of capital gains chargeable to tax for the assessment year 2021-22.
CII for 2008-09 = 137, for 2020-21 = 30 I.
{Madras, B.Com. Sept. 1987}
(Ans : Long-term capital gain on
sale of house property : Rs. 38,04,525
Exempted capital gain under Sec. 54 : Rs. 15,00,000
Exempted under Section 54 EC : Rs. 10,50,000
Chargeable LTCG for AY. 2021-2022: Rs. 12,54,S25J
lllnt: To claim exemption under section 54EC the investment in specified bonds
is to be made within 6 months after sale of original house property.
The investment made on I 6.6.19 for 54EC is not within 6 months. Therefore
no exemption for this investment under 54EC.
X. (E) Capital gains from sale of Long term capital assets, other than house
property and exemption on investment in House property (Sec. S4F)
84. Rao sold Urban Land for Rs. 5,00,000 on 1. 10.20 which had been acq uired
by him on Oct. 2004, for Rs. 50,000. He wants to utilise the said amount of
sale consideration for purchase or construction of a new residential house.
copi~ . s.111
He h&S dep<>! lted R~.. 4,00,000 under the Capital gains deposit Ale scheme
with 11pcclf1ed bank on 30.4 .21. Ascertain the capital gaimi ta>Lable in Rao's
11
hands for the A,V. 2021 •22. CII for 2004 -05 and 2020-21 is t 13 and 301
respectively.
/Mudra,,, B. Com., C.S. Aprll 1006/
tAn• : LTCG : Rs. J,66,814; Charaeable caplttl a1in1 : Rs. 73,363;
Exemption u/1 54F : Rs. 2,93,451)
~ . Mr. z acquired u pl ot of la.nd on 30-6-2006 (CII : 122) for Rs. 3,20,000 and
5 spent Rs. l ,40,000 on its registration and brokerage etc . The plot was sold
for Rs. 40 takhs on 30-8-2020 (Cll : 30 I). He had purchased a house for Rs.
1S lokhs on 1.12.20 19. He had paid, Rs. 5,000 for ground rent of plot held
by him . Compute the amount of taxable capital gain for the assessment year
202 \-22. /Adapted C.A. Inter, May 1992/
(Ans: LTCG : lb, 28,65,082;

15 Lakhs)
Exemption UIS S4F : Rs. 28,65,082 ( 40 Lakhs =10,74,406

Chargeable LTCG : Rs. 17,90,676)

I/Int: Exemption under 54f can be availed against LTCG on sale of any L.T. Capital
osset other than house property, ifa house was purchased within the previous
12 months prior or within 2 years after sale.
86. f rom the detail s given below, compute taxable capital gain for the
A.Y. • 2021 -22.
Residential Jewellary
!'art icular.'i
House
-----------------+-----+----
4.7.20 16.12.20
l)ole of Snle 1.6.2012 12.12.2004
Ontc of Purchusc 55,00,000 18,05,000
Sale proceeds Rs. 5,000
Expenses on Sllh: Rs.
<.:ost of purchose Rs. 4,00,000 3,00,000
On 1.Wt;e purchased a house for Rs. 60,00,000. Cost of inflation index
201 2· I 3 • 200: 2004-0 5 = 113; and 2020-21 = 301.
/Blrarat#lldasan, B.Com., Nov. 2006/
tAns: LTCG: Residential House: Rs. 48,98,000;
Exemption UIS 54 : Rs. 48,98,000
Jewellery: Rs. 10,00,885
1.112

ILR.•·'
Euapdall VIS 54.F = 1h. lt.N.AS ( fl.111.00I ., = Rs. i..J1.• w

1:ans1.anJ ah 54f b : "M..Olt - &~OQII :::. n..r....-.1

ffiat; l.o,-cslCXm t.'l hocsc fo; '>4f · Rs 11.020£.(l t&J.C)J..000.- !~~~OYJ)
CNe, HP - LTCG °'~ sale of RH)
gJ . M:-_ ~\5 Cle i:JDaAing dJe Y.lid d:rq;; ::,:CO-: •

P:arti1:1dan Pia Gtx-:!

Selling price Rs. ~.00.0C(l 10.(~lOOJ 3.50.000
Selling e:.~--sa Rs. .:J.QOO

Cost of JrurCh.ile Rs. ::o.ooo ~S0..000 1.00.tt'.~)

Year of Purchase 2004-05 ?00: --03 ~006-0,
en 113 I05 LU.
He has pwchas,ed a howe for Rs.. 12..~000 on I 3.2{120. Cdlc!!.!£1: the a~
of capital gain jf en fur 2020-21 is }01.
[Blletdinsu. A C,Q,&, .Yov. JH7J
~.\m: (i) JMFellery: LTCG : Rs. l,46.. 716:

... 4!00~l.n} \
Fullv
.. exeapted
. from tu : Rs. l "~ n6·
)."""" ., ( 2. 46. 726 x: - - . I
• ·oo l\,,'VI. .vvu ;

[al Plor.LTCG: h 1,73.333; Exempti<m UIS 54 F : R_,.,_ 79.91~

L ..,.... ... ) X -
, ..,, .}.)_' -t 50,000
--
)
( 9, 76. 000
(10.00?000 - ~-UlOO)
Ta.:uble LTCG is Rs. 93.415:
(m) G<>ld: LTCG: Rs. 1,03,179;

3,50. 000)
Follv exempted from tu · Rs. 1 03 " 19 ( l, 03, 279 x
. '
.
3, 50.000
I

Exemption UIS 54 F is to be computed on tlte

basis of perc-e11tsge of LTCG o.n sa_le of usests,
Jewellery deriYe 87•t., Gold 3-0•;. 11d
plot 17•;. as capital oa sale roasidention.
Captial gain on Jewellery .a nd go,Jd is given priority ud
then plot is considered.I
Note: Investment for plot : Rs. 4,50,000: (l 2,00,000 - 4,00,000 - 3,S0,000)
p

(~ Gains . . . . &.I I)
subffllt.5 the fo11o-.,ng urfilm.latlOn about sale of uscts dwfng the proious

----
.,~ )'C21 2020--2 1. (C.l.t JOI)
Par1n lar1 Plot Ditrr1umtf3

()SlCof acq~sit~on 1. 10. 1970 l .4.2005 1.8.2009

c~ of ,cqu,sruoo Rs. 1,00.000 I 150.000 S0.000
•'-4V on 1)4.200 l Rs. I .SO,000
' IOO l 1l7 148
(JI. I
18.10.20 lS.2.21- 1.3.21
OSlt of Sale
$:Ile consid.ention 20.00,000 i
8,00,000 4.00,000
,~ Date of 1 Amount
acquisition I invested ,
R~idential House 4.12.20 I 28-.00,000
- eompute the Capital gain of Mr. X.
IAas : LTCG : S•le of Dia.oads : lb. 2'8,311;

E1.ecaptio• ,w.Js 54F: Rs. 2~11 (4,00,000)

4,80.,8UC). . i• RH)

Sale of jewellery : Rs. 4~14"102;

Enaptioa al• 541': Rs. 4,14,tfl ( : : : :) = l,07,051

LTCG oa ute of plot: h 15,48,500;

20,00,000)
sis 54F : RI. 15,48,500 ( 20,00,oeo . 1h. 15,~00; 1
Hbtt: Exemption u/s 54F is to be computed on the basis of percentage of LTCG
on sale of assets. Diamonds derive 74% and Jewellery 51 o/o as capital ga.in
on sale considera1ion and plot 77%. Capital gain on diamonds and plot is
given priority for exemption u/s 54F and then LTCG on sale of Jewellery is
considered for exemption u/s 54F {on the basis of percentage of capital gain).
89. Mr. Vignesh owns 2 acres of agricultural land in an urban area of Erode which
he sold on 30th November 2020 @ Rs. SO lakhs per acre.
{a) Cost of 2 acres of land purchased in 1977 Rs. 6 lakhs.
(b) F.M.V. as on 1.4.2001 Rs. 6.80 lakhs. (c) Selling expenses Rs. 1 lakh.
{d) He owns one residential house on 30.11.2020.
(e) Date of filing return of income is 31.07.2021.
(f) Mr. Vignesh purchased IO acres of agricultural land in rural area for
Rs. 10 lakhs on 10th June 2020.
{g) Mr. Vignesh purchased a piece of plot to construct a residential building
for Rs. 6 lakhs at Erode.
(i) Amount invested in bonds of national highway authority of India
Rs. 5 lakhs on 31.3.2021.
Compute the capital gain. CII 2001-02 = 100; 2020-21 = 301 .
{Madras, B. Com(CS), April 2009}
8.114 Income Tax Theory, Law & Practice : A. Y. 202 I
-2022
(Ana: LTCG : ~ J
' ,200
Exemption U/S 54F : Rs. 4
75 I 9St
Exemption UIS 54EC : Rs. s,oo,ooo
I

Exemption U/S 548 : Rs. Jo oo

, '00 O]
X(F) Shifting of an Industrial takJng from Urban area (Sec 54 G)
90. Mr. A owns an industrial undertaking, which _is situated in the urban area of
chennai. Mr. A shifted this industrial undertak1~g to a rural area near chennai,
For shifting purposes, he had to sell the following assets of the under-taking:
Plant & Machinery Furniture
Acquired
1996 1997
Net sale consideration (Rs.) 30,00,000 1,00,000
Date of Sale 15.9.2018 22.11.2018
Cost of acquisition U/S 50 (2) Rs. (WDV) I0,00,000 60,000
Cost of New assets Purchased (Rs.) 16,00,000 30,000
Date of Purchase 31.12.2020 28.2.2021
If the industrial undertaking is shifted to the rural area on 15.3.2021. Calculate
capital gains chargeable to tax for the AY: 2021-22.
/Madras, B.Com., Nov. 2007/
(Ans: STCG : Plant & Machinery 20,00,000;
Exemption 16,00,000;
Taxable STCG on Plant & Machinery: Rs. 4,00,000;
Furniture: Rs. 10,000J
Note: U/S 54 G new assets in the fonn of plant and machinery and building acquired
for industrial purpose ( due to shifting) are eligible for exemption furniture
is not eligible. However STCG on sale of furniture is Rs. 10,000.
(XI) Conversion of Asset into stock - in -Trade and subsequent sale
91. Mr. X Purchased shares of Various Companies worth Rs.1,00,000 during
2002-03 (CH - 105). On I.I 1.06 (CII - 122) he become dealer in shares and
securities and converted his shares into stock in trade. The FMV on the date
of Conversion was Rs. 3,00,000. These Shares were sold during 2020-21
(CII - 30 I) at Rs. 4,00,000. Compute his capital gain and business profit.
/Madras, B.Com(CS) Nov. 2010; B.Com., April 2010/
[Ans: TLTG on Conversion of shares into stock in trade : Rs 1,83,809

( 3, 00,000 -(I, OO, 000 x : :: ) ) Busiuess income Rs. 1,00,000(4,00,000-

3,00,000)I
capital Gains 8.115
., d .
• • Where an asset ts converte as business asset the difference between FM V
J{llf 1• f • • . l
on the date o conversion an.d indexed cost is the capital gain, but chargeable
when the converted asset 1s sold.
Difference between sale value and fair market value is business income
for the assessment year in which asset is sold.
. suraj converts his plot of land purchased in 1981-82 for Rs. 50,000 into
92 stock in trade on 31st March 2009. The FMV on 31st March 2009 is
Rs. 2,00,000. The stock in trade is sold for Rs. 2,20,000 in the month of
January 2021. Find out the taxable income if any and, if so, under which
'head of income' and for which 'Assessment year'? The cost inflation index
in 2001-02 was 100 and in 2008-09 it was 137; In 2020-21, it was 301.
/Madras, B.C.S April 2001/
(Ans: Long-term Capital gain on conversion of

Land into stock in trade ~Rs. 1,31,500 (2,00,000 - ( 50,000x !:))

Business income = Rs. 20,000 (2,20,000-2,00,000). J
Hint: Where an asset is converted as business asset, the difference between
FMV on the date of conversion and indexed cost is the capital gain, but
chargeable when the converted asset is sold.
Difference between sale value and fair market value is business income
for the assessment year in which asset is sold.
Multiple Choice Questions
Choose the correct answer to each ofthe following:
1. Capital gains, the fourth among the five major heads of Income, is assessable to tax
under:
(b) Section 25
(a) Section 5
(c) Section45 (d) Section65.
2. No. of kilometers beyond a municipality or contonement limits a land should be
situated, to be called Rural Agricultural Land for exemption from capital gains tax:
(a) 2 (b) 8
(c) 12 (d) 20
3. Income from sale of house hold furniture is:
(a) Taxable capital gain (b) Exempted capital gain
(c) Short term capital gain (d) Longterm capital gain
4. Income from sale of rural Agricultural land is
(a) Taxable capital gain (b) Exempted capital gain
(c) Taxable income (d) None of these