Capital Gains Illustration

Q.1) Mr. Gavaskar purchased a residential house on 01/06/1979 for Rs.1,00,000.
He incurred
expenses of Rs.50,000 towards cost of improvement on 02/07/1983. The fair market value of
the house on 01/04/1981 was Rs.1,50,000. He sold the house on 10/10/2015 for Rs.30,00,000.
The cost inflation index for F.Y. 1981-82 is 100, for F.Y. 1983-84 IS 116 and for F.Y. 2015-16 is
1081.
You are required to compute his Capital Gain for Assessment Year 2016-17.
Solution:
Name of Assessee : Mr. Gavaskar
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from Capital Gain
Particulars Rs. Rs.
House Property (LTCA):

Full Value of Sale Consideration 30,00,000
Less: Index Cost of Acquisition (1,50,000 x 1081/100) 16,21,500
Less: Index Cost of Improvement (50,000 x 1081/116) 4,65,948
Long Term Capital Gain 9,12,552
Q.2) Mr. A purchased a house in December, 1975 for Rs.50,000. This property was gifted to his
friend Mr. B in July, 1985. The following expenses were incurred by Mr. A and Mr. B on
additions to the house.
1. Addition of one room by Mr. A in 1978-79 Rs.45,000.
2. Addition of two rooms by Mr. A in 1982-83 Rs.1,00,000.
3. Addition of three rooms by Mr. B in 1990-91 Rs.2,00,000.
Fair Market Value of the house on 1st April, 1981 was Rs.1,00,000. The property was sold for
Rs.40,00,000 in November, 2015.
Compute the taxable Capital Gains in the hands of Mr. B for the Assessment Year 2016-17.
Cost Inflation Index is as follows:
F.Y. 2015-16: 1081, F.Y. 1982-83: 109, F.Y. 1985-86: 133, F.Y. 1990-91: 182.
Solution:
Name of Assessee : Mr. A
Status : Individual
Pan No : _________
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Particulars Rs. Rs.

Less: Index Cost of Improvement -
● 1982-83 (1,00,000 X 1081/109)
● 1990-91 (2,00,000 X 1081/182) 21,79,655
Note: Expenditure before April 1, 1981 Rs. 45,000 (to be ignored).
Q.3) Mr. Kamlesh purchased a house property for Rs.1,00,000 on 27 August, 1978. He made
the following additions/ alterations to the house property.
1. Cost of construction of 1st floor in Financial Year 1983-84 - Rs.3,00,000
2. Cost of construction of 2nd floor in Financial Year 1990-91 - Rs.4,00,000
Fair Market Value of the property on 01/04/1981 was Rs.5,00,000. He sold the property on 20th
October, 2015 for Rs. 1,95,00,000. He paid the brokerage of Rs.55,000 for the sale transaction.
The Cost Inflation Index for F.Y.1981-82 is 100, F.Y.1983-84 is 116, F.Y.1990-91 is 182 and for
Financial Year 2015-16 is 1081.
Compute the Capital Gain of Mr. Kamlesh chargeable to tax for the Assessment Year 2016-17.
Solution:
Name of Assessee : Mr. Kamlesh
Status : Individual
Pan No : _________
Particulars Rs. Rs.

Full Value of Sale Consideration 1,95,00,000
Less: Expenses on Transfer (Brokerage) 55,000
Less: Index Cost of Improvement -
● 1983-84 (3,00,000 X 1081/116) 27,95,690
● 1990-91 (4,00,000 X 1081/182) 23,75,824 51,71,514
Q.4) Mr. Parag purchased a residential flat on 02/05/2014 for Rs.10,00,000. He paid on the
same day the stamp duty and registration charges of Rs.48,750 on purchase of flat. He sold the

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said flat on 17/03/2016 for Rs.12,00,000. The Cost Inflation Index for F.Y.2013-14 is 939 and for
F.Y. 2015-16 is 1081. Compute his Capital Gain Chargeable to tax for assessment year
2016-17.
Solution:
Name of Assessee : Mr. Parag
Status : Individual
Pan No : _________
Particulars Rs. Rs.
House Property (STCA):

Less: Expenses on Transfer (Stamp Duty & Registration) 48,750
Less: Purchase Price 10,00,000
Short Term Capital Gain 1,51,250
Note: Since the capital asset is held for less than 36 months, it is short term capital asset hence
cost inflation index is not applicable.
Q.5) Mr. Dinesh Kamble purchased a house property for Rs.1,25,000 on 16 August 1971. He
made the following addition to the house property. Cost of construction of 1st floor in financial
year 1985-86 is Rs.2,25,000.The fair market value of the property on 01/04/1981 was
Rs.3,50,000. He sold the property on 15 September 2015 for Rs.85,00,000. He paid brokerage
of Rs.25,000 for the sale transaction.The cost inflation index for Financial Year 1981-82 is 100,
for Financial Year 1985-86 is 133 and Financial Year 2015-16 is 1081.
Compute the capital gains Mr. Dinesh Kamble chargeable to tax for Assessment Year 2016-17.
Solution:
Name of Assessee : Mr. Dinesh Kamble
Status : Individual
Pan No : _________
Particulars Rs. Rs.

Less: Indexed Cost of Acquisition (3,50,000 x 1081/100) 37,83,500
Less: Indexed Cost of Improvement (2,25,000 x 1081/133) 18,28,759

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Q.6) Ramesh purchased a vacant site for Rs.3,00,000 in April 1990. He constructed a
residential building during the year 2004-05 in the said site for Rs.15,00,000. He carried out
some further extension of a construction in the year 2007-08 for Rs.5,00,000. Dinesh sold the
residential building for Rs.65,00,000 in January 2016. Compute his long term capital gain, for
the assessment year 2016-17 based on the above information. The cost inflation index are as
follows:
Financial Year Cost Inflation Index
1990-91 182
2002-03 447
2004-05 480
2007-08 551
2015-16 1081
Solution:
Name of Assessee : Mr. Ramesh
Status : Individual
Pan No : _________
Particulars Rs. Rs.
Residential Building (LTCA):

Less: Indexed Cost of Improvement
● 2004-05 (15,00,000 x 1081/480) 33,78,125
● 2007-08 (5,00,000 x 1081/551) 9,80,944 43,59,069
Q.7) Mr. Rakesh purchased a house property on 14 April, 1979 for Rs.50,000. Later on, he
gifted the house property to his friend Mr. A on 15th June, 1986. Following renovations were
carried out by Mr. Rakesh and Mr. A to the house property.
1. By Mr. Rakesh during F.Y. 1979-80 Rs.10,000
2. By Mr. Rakesh during F.Y. 1983-84 Rs.50,000
3. By Mr. A during F.Y. 1993-94 Rs.1,90,000
The fair market value of the property as on 01/04/1981 is Rs.70,000. The house was sold by Mr.
A to Mr. Sanjay on 2nd January, 2016 for a consideration of Rs.25,00,000. Compute the capital
gains of Mr. A for the assessment year 2016-17. Cost Inflation Indices are as under:
1981-81 100

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1983-84 116
1986-87 140
1993-94 244
2015-16 1081
Solution:
Name of Assessee : Mr. Rakesh
Status : Individual
Pan No : _________
Particulars Rs. Rs.

Less: Indexed Cost of Acquisition (70,000 x 1081/140) 5,40,500
● 1983-84 (50,000 x 1081/116) 4,65,948
● 1993-94 (1,90,000 x 1081/244) 8,41,762 13,07,710
Q.8) Mr. Thomas inherited a house in Jaipur under will of his father in May, 2003. The house
was purchased by his father in January, 1981 for Rs.2,50,000. He invested an amount of
Rs.7,00,000 in construction of one more floor in this house in June, 2005. The house was sold
by him in November, 2015 for Rs.47,25,000. Brokerage Rs.37,500 was paid by Mr. Thomas to
Mr. Sunil. The market value of house as on 01/04/1981 was Rs.2,70,000.
You are required to compute the amount of capital gain chargeable to tax for A.Y.2016-17 with
the help of given information and by taking CII for F.Y.2015-16 as 1081, F.Y.2003-04 as 463
and for F.Y.2005-06 as 497.
Solution:
Name of Assessee : Mr. Thomas
Status : Individual
Pan No : _________
Particulars Rs. Rs.


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Note: The house was inherited by Mr. Thomas under the will of his father and therefore the cost
incurred by the previous owner shall be taken as the cost. Value as on 01/04/1981 accordingly
shall be adopted as the cost of acquisition of the house property.
Q.9) M Ltd. has a residential property in Navi Mumbai (Cost of acquisition in 1982-83 is
Rs.1,00,000). This is compulsorily acquired by the Government of Maharashtra on December
15, 1989. The State Government of Maharashtra pays Rs.5,00,000 on March 23, 2016 as
compensation under an award. Determine the amount of capital gains chargeable to tax.
Solution:
Name of Assessee : Mr. M
Status : Individual
Pan No : _________
Particulars Rs. Rs.

Compensation from the Government (received on 23/03/2016) 5,00,000
Q.10) The Central Government acquires the property of Mr. Jayakishan on 1/6/1998. It was
purchased by him on 1/1/1992 for Rs.3,98,000. He had incurred expenses of Rs.99,500 on
making capital alterations to it during May 1997.
A compensation of Rs.10,00,000 was awarded to Mr. Jayakishan, which he received on
1/6/1998. He filed a suit against the Government for increasing the amount of compensation.
The High Court increased the compensation by Rs.2,00,000 on 01/01/2001 which was actually
received by Mr. Jayakishan on 1/1/2016. He had incurred Rs.10,000 as legal expenses in this
connection.
Calculate the amount of taxable capital gains.
Cost Inflation Index; 1991-92:199, 1997-98: 331, 1998-99: 351, 1999-2000: 389, 2000-01: 406,
and 2015-16: 1081).
Solution:
Name of Assessee : Mr. Jayakishan

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Status : Individual
Pan No : _________

Particulars Rs. Rs.
Compulsory Acquisition:
Initial Compensation (received on 01/06/1998) 10,00,000
Less: Indexed Cost of Improvement (99,500 x 351/331) 1,05,512
Name of Assessee : Mr. Jayakishan

Status : Individual
Pan No : _________
Particulars Rs. Rs.
Compulsory Acquisition:
Enhanced Compensation (received on 01/01/2016) 2,00,000
Less: Expenses incurred for obtaining enhanced compensation 10,000
Less: Cost of Acquisition NIL
Less: Cost of Improvement NIL
_______
Q.11) Shri Ram Narayan owns a residential house which he purchased on 25/06/1978 for
Rs.1,50,000. He incurred expenses of Rs.50,000 towards Cost of Improvement on 20/08/1983
on this residential house. The fair market value of the house on 01/04/1981 was Rs.2,00,000.
He sold this house on 12/12/2015 for Rs.95,00,000. He purchased a new residential house for
Rs.25,00,000 on 20/03/2016.
The Cost Inflation Index for financial year 1981-82 is 100, for financial year 1983-84 is 116 and
for financial year 2015-16 is 1081.
You are required to compute the Taxable Capital Gain for the Assessment Year 2016-17.
Solution:
Name of Assessee : Shri Ram Narayan
Status : Individual

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Pan No : _________

Particulars Rs. Rs.

Full Value of Consideration 95,00,000
68,72,052
Less: Exemption u/s 54 for purchase of new residential house 25,00,000
Q.12) Mr. Shanti Bhushan owns a house property which he acquired in April 1976 for Rs.
2,50,000. The cost of improvement incurred for this property in August 1996 was Rs.2,80,000.
He sold this property in October 2015 for Rs.94,00,000. He acquired a new house property
during January 2016 for Rs.5,00,000.
Compute the taxable Capital Gain for the Assessment Year 2016-17 on the assumption that the
fair market value of the property as on 01/04/1981 was Rs.7,00,000.
The cost inflation index of financial year 1981-82 is 100 for financial year 1996-97 is 305 and
financial year 2015-16 is 1081.
Solution:
Name of Assessee : Mr. Shanti Bhushan
Status : Individual
Pan No : _________
Particulars Rs. Rs.

8,40,607
Less: Exemption u/s 54 for purchase of new house 5,00,000
Q.13) Mr. Prakash Shetya purchased a house property for Rs.15,00,000 on 5th October, 1972.
He constructed a first floor during the financial year 1986-87 for Rs.5,50,000. He made further

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improvement in the financial year 1992-93 for Rs.8,00,000. He constructed 2nd floor during the
financial year 2003-04 for Rs.12,00,000. He sold the property on 01/02/2016 for Rs.350 lakhs.
He paid brokerage of Rs.50,000 for the sale transaction. Fair market value of property as on
01/04/1981 was 16,00,000. Investment in new house property was Rs.25 lakhs on 10/03/2016.
Compute his capital Gain for the Assessment year 2016-17.
Relevant cost inflation indices are as follows:
1981-82 100
1986-87 140
1992-93 223
2003-04 463
2015-16 1081
Solution:
Name of Assessee : Mr. Prakash Shetya
Status : Individual
Pan No : _________
Particulars Rs. Rs.

Full Value of Consideration 3,50,00,000
Less: Indexed Cost of Acquisition (16,00,000 x 1081/100) 1,72,96,000
● 1986-87 (5,50,000 x 1081/140) 42,46,786
● 1992-93 (8,00,000 x 1081/223) 38,78,027
● 2003-04 (12,00,000 x 1081/463) 28,01,728 2,82,72,540
67,27,460
Q.14) Ms. Vimla sold a residential building at Jodhpur for Rs.35,00,000 on 01/07/2015. The
building was acquired for Rs.1,50,000 on 01/06/1996. She paid brokerage Rs.30,000 at the time
of sale of the building. She invested Rs.7 lakhs in purchase of a residential building in
December 2015. Compute her taxable Capital Gain.
Solution:
Name of Assessee : Ms. Vimla

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Status : Individual
Pan No : _________

Particulars Rs. Rs.
Residential Building (LTCA):

29,38,361
Less: Exemption u/s 54 for purchase of new residential building 7,00,000
Q.15) Mr. Sunder furnishes the following particulars for the previous year ending 31/03/2016
and requests you to compute the taxable capital gain:
1. He had a residential house, inherited from father in March 1990, the fair market value of
which as on 01/04/1981 is Rs.5 lakhs. It was acquired by his father in 1970.
2. In the year 1992-93, further construction and improvements cost Rs.6 lakhs.
3. On 10/05/2015 the house was sold for Rs.90 lakhs. Expenditure in connection with
transfer Rs.50,000.
4. On 20/12/2015, he purchased a residential house for Rs.15 lakhs.
Cost Inflation Index:
1981-81: 100
1989-90: 172
1992-93: 223
2015-16: 1081
Solution:
Name of Assessee : Mr. Sunder
Status : Individual
Pan No : _________
Particulars Rs. Rs.


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28,99,038
Q.16) Mr. Vinod Mohite purchased a residential house on 01/06/1979 for Rs.1,00,000. He
incurred expenses of Rs.50,000 towards cost of improvement on 02/07/1983 on this house. The
fair market value of the house on 01/04/1981 was Rs.1,50,000. He sold the house on
10/10/2015 for Rs.70,00,000. He purchased a new residential house for Rs. 20,00,000 on
15/03/2016.
The cost inflation index for financial year 1981-82 is 100, for financial year 1983-84 is 116 and
for financial year 2015-16 is 1081.
You are required to compute his income from Capital Gain for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. Vinod
Status : Individual
Pan No : _________
Particulars Rs. Rs.

49,12,552
Q.17) Mr. Selvan, acquired a residential house in January, 2000 for Rs.10,00,000 and made
some improvements by way of additional construction to the house, incurring expenditure of
2,00,000 in October, 2004. He sold the house property in October, 2015 for Rs.80,00,000. He
acquired a residential house in January, 2016 for Rs.25,00,000. Compute the capital gain
chargeable to tax for the assessment year 2016-17.
Cost Inflation Index: financial year 1999-00 = 389, financial year 2004-05 = 480, financial year
2010-11 = 711, financial year 2015-16 = 1081.
Solution:
Name of Assessee : Mr. Selvan
Status : Individual

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Pan No : _________
Particulars Rs. Rs.

47,70,663
Q.18) Mr. Chandru transferred his residential house property on 28/10/2015 for Rs.100 lakhs.
The site was acquired for Rs.9,99,300 on 30/06/2000. He deposited Rs.50 lakhs in eligible
bonds issued by Rural Electrification Corporation (REC) on 20/03/2016. Again, he deposited
Rs.20 lakhs in eligible bonds issued by National Highways Authority of India (NHAI) on
16/04/2016. Compute Capital Gains of Mr. Chandru for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. Chandru
Status : Individual
Pan No : _________
Particulars Rs. Rs.

73,39,002
Less: Exemption u/s 54 EC
● RECL Bonds 50,00,000
● NHAI Bonds (Not Allowed) NIL 50,00,000
Note:
1. In order to claim exemption u/s 54 EC, Mr. Chandru has to invest in specified bonds of
RECL or NHAI within a period of 6 months from the date of transfer of the asset.
2. However, investment made in such bonds by an assessee during this and the next
financial year cannot exceed Rs.50 lakhs.
3. In this case, Mr. Chandru has invested Rs. 50 lakhs in RECL bonds in the financial year
2015-16 and Rs. 20 lakhs in NHAI bonds in the financial year 2016-17.

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4. He is eligible to claim exemption of only Rs.50 lakhs u/s 54 EC.
Q.19) Mr. Ram, working as a CEO with ABC Ltd., furnishes the following particulars of assets
transferred by him during the P.Y. 2015-16.
Particulars Date of Rs.

Transfer
1. A residential house in Bangalore which he had

purchased in February, 2000 at a cost of Rs.15,56,000. 13/01/2016 1,45,00,000
2. Listed shares of Indian companies purchased in May
2012 at a cost of Rs.1 lakh. 14/02/2016 2,00,000
3. Unlisted shares purchased in May 2012 at a cost of
Rs.50,000. 14/02/2016 75,000
4. Units of Equity oriented fund purchased in May 2015 at
a cost of Rs.30,000. 14/02/2016 65,000
5. Units of debt oriented fund purchased in January 2010
at a cost of Rs.31,600. 14/02/2016 75,000
Mr. Ram made the following investment, out of the capital gains arising on sale of residential
house.
1. Purchased a residential flat in Pune on 21/05/2016 Rs.35,00,000.
2. Purchased a residential flat in Madurai on 14/07/2016 Rs.25,00,000.
3. 3 year bonds of NHAI on 20/03/2016 Rs.40,00,000.
4. 3 year bonds of RECL on 15/05/2016 Rs.30,00,000.
Compute the capital gains chargeable to tax of Mr. Ram for A.Y. 2016-17.
Cost inflation index of financial year 1999-2000: 389, financial year 2009-10: 632, financial year
2012-13: 852, financial year 2015-16: 1081.
Solution:
Name of Assessee : Mr. Ram
Status : Individual
Pan No : _________
Particulars Rs. Rs. Rs.

Less: Indexed Cost of Acquisition (15,56,000 x
1081/389) 43,24,000
1,01,76,000
Less: Exemption u/s 54
● Investment in one residential house (it is

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more beneficial to claim exemption in respect
of investment in residential flat at Pune) 35,00,00
● Investment in bonds of NHAI/RECL 0
(aggregate investment to be restricted to
Rs.50 lakh) 85,00,000
Long Term Capital Gain 50,00,00 16,76,000
0
Unlisted Shares (STCA):
Full Value of Consideration 75,000
Less: Cost of Acquisition 50,000
Short Term Capital Gain 25,000
Units of Debt-oriented Fund (LTCA):

Full Value of Consideration 75,000
Less: Indexed Cost of Acquisition(31,600 x 54,050
1081/632) 20,950
Long Term Capital Gain
Note: Capital gain on sale of listed equity shares and units of equity oriented fund held for more
than 12 months is long term capital gain and hence exempt u/s 10(38).
Q.20) Mr. Martin sold his residential house property on 08/06/2015 for Rs.80 lakhs which was
purchased by him for Rs.20 lakhs on 05/05/2005. He paid Rs.1 lakh as brokerage for the sale of
said property. He bought another House Property on 25/12/2015 for Rs.25 lakhs. He deposited
Rs.10 lakhs on 10/11/2015 in the Capital Gain Bond of National Highway Authority of India
(NHAI).
Compute Income under the head “Capital Gain: for assessment year 2016-17 as per Income
Tax Act 1961. Cost Inflation Index for financial year 2005-06 = 497 and 2015-16 = 1081.
Solution:
Name of Assessee : Mr. Martin
Status : Individual
Pan No : _________
Particulars Rs. Rs.

Less: Expenses on Transfer 1,00,000
35,49,900
Less: Exemption u/s 54 (Purchase of New House) 25,00,000
Less: Exemption u/s 54EC (Investment in NHAI bond, is

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eligible as made within 6 months from date of transfer) 10,00,000 35,00,000
Long Term Capital Gain 49,900

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Q.1)​ Mr. Gavaskar purchased a residential house on 01/06/1979 for Rs.1,00,000.

House Property (LTCA):

Tripathi Online Educare

House Property (LTCA):

House Property (LTCA):

Tripathi Online Educare

House Property (STCA):

House Property (LTCA):

Tripathi Online Educare

Residential Building (LTCA):

Tripathi Online Educare

House Property (LTCA):

House Property (LTCA):

Tripathi Online Educare

House Property (LTCA):

Tripathi Online Educare

Computation of Income from Capital Gain

Name of Assessee : Mr. Jayakishan

Tripathi Online Educare

Computation of Income from Capital Gain

House Property (LTCA):

House Property (LTCA):

Tripathi Online Educare

House Property (LTCA):

Tripathi Online Educare

Computation of Income from Capital Gain

Residential Building (LTCA):

House Property (LTCA):

Tripathi Online Educare

House Property (LTCA):

Tripathi Online Educare

House Property (LTCA):

House Property (LTCA):

Tripathi Online Educare

Particulars Date of Rs.

1. A residential house in Bangalore which he had

House Property (LTCA):

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Units of Debt-oriented Fund (LTCA):

House Property (LTCA):

Tripathi Online Educare

Tripathi Online Educare

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Q.1) Mr. Gavaskar purchased a residential house on 01/06/1979 for Rs.1,00,000.