Cost of Acquisition in Gifted Property Explained

MCQ SELF CHALLENGE #0089

Cost Of Acquisition & Period Of Holding In The Case Of Gift

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Here is the Next post of #MCQ on concept-based practical knowledge on Cost of Acquisition and period of Holding in the case of Gift in a unique manner to be self-answered by participants. The detailed answers to these MCQs shall be posted the next day for the self-assessment of the participants.

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MCQ 89.1: Disha's Father purchased a property worth Rs 50 Lakhs in 1990. Her father had spent Rs 10 lakhs on improvement in the year 1998 At the time of the marriage of Disha, her father gifted that property to Disha in the year 2005 at which time the fair market value of the property was Rs 75 Lakhs. She had spent Rs 20 lakhs on improvement in the year 2008 The cost of acquisition & improvement for disha shall be?

A. Rs 50 Lakhs Rs 10 Lakhs

B. Rs 75 Lakhs & Rs 20 Lakhs

C. Rs 50Lakhs & Rs 30 Lakhs

D. Rs 75 Lakhs & Rs 30 Lakhs

MCQ 89.2: What will be the period of holding in the above case if the property is sold out in the year 2018

A. 1990-2018

B. 2005-2018

C. 2001-2018

D. None of the Above.

Answer MCQ Self Challenge #0089

This post of MCQ is on provisions relating to professional misconduct in relation to members generally,

Answer MCQ 89.1:

C) RS SOLakhs & Rs 30 Lakhs

Practical Analysis for MCQ 89.1:

• Section 49 of the Income Tax Act provides for cost value in reference to certain modes of acquisition
• Section 49(1)() provides for a cost where the capital asset became the property of the assessee under a gift or will
• The cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or bought by the previous owner or the assessee

Based on the above analysis. The correct answer to MCQ 89.1 C) Rs 50 Lakhs & Rs 30 Lakhs

Answer MCQ 89.2:

A) 1990-2018

Practical Analysis for MCQ 89.2:

• Point (b) of Explanation 1 of Section 2(42A) provides for a period of holding in the case of a capital asset that becomes the property of the assessee in the circumstances mentioned in sub-section (1) of Section 49that was discussed above in the first question, eg - Gift
• In this case, the period for which asset was held by the previous owner shall be included

Based on the above analysis Correct answer to MCQ 89.2 A) 1990-2018

(Disclaimer: The objective of the MCQ past is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as a professional opinion you can definitely have your own opinion.)

Sincere Regards!

CA Sanjay Kumar Agrawal

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