Page 365 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes 7. Explain using an example the Computation of capital gains in respect of depreciable
assets.
8. What are ‘Capital Assets’? What items are not included in capital assets?

9. Differentiate between long-term capital and short-term capital gain.
10. Mr. X purchased a house property for ` 80,000 on July 31, 1970. The following expenses are
incurred by him for making addition to the house property:

(a) Cost of construction of first floor in 1975–76 ` 1,00,000
(b) Cost of construction of second floor in 1983–84 ` 2,40,000
For market value of the property on April 1, 1981 is ` 4, 00,000. X sells the house property
on August 20, 2004 for ` 30, 00,000 (expenses incurred on transfer: ` 10,000). Find out the
capital gain chargeable to tax.

Answers: Self Assessment

1. Capital gains 2. Section 45

3. Sold or transferred 4. Capital receipt
5. True 6. False
7. True 8. True
9. Transfer 10. Section 2(47)
11. Gift or inheritance 12. Section 281

13. True 14. False
15. True 16. True
17. Cost of acquisition 18. Fair market value

19. Cost of improvement 20. 20 per cent
21. True 22. True
23. False 24. True
25. Depreciation 26. Blocks
27. 180 days 28. LTCA

12.11 Further Readings

Books Aggarwal, K. Direct Tax Planning and Management. Atlantic Publications.
Ahuja, G. K. & Gupta, Ravi. Systematic Approach to Income Tax. Bharat Law House.
Lakhotia, R. N. Income Tax Planning Handbook. Vision Books.
Singhania, V. K. & Singhania, Kapil. Direct Taxes Law & Practice. Taxmann
Publications.
Srinivas E. A. Handbook of Corporate Tax Planning. Tata McGraw Hill.

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