Capital gains from ancestral property

Hello Sir,

For an ancestral property, the period of holding is reckoned from the date of purchase of property by the owner who actually acquired the property otherwise than by inheritance or gift. As you propose to sell an ancestral property purchased in earlier years (assuming that the property was acquired by the original owner otherwise than by inheritance or gift), the resulting gains shall be classified as LTCG and you can avail indexation benefit.

In case of an inheritance, the cost of acquisition should be the cost for which the previous owner who has actually acquired the property otherwise than by inheritance or gift, as increased by cost of improvement made subsequently. Since the property has been acquired by the original owner prior to 1 April 1981, you have an option of taking the actual cost of acquisition if available or the fair market value of the property as on 1 April 1981.

You can contact me for further clarification.

you will get indexation benefit in the manner first lawyer suggests

yes you can get indexation benefit. the first lawyer was right

In your case, I guess indexation on value as on 01.04.1981 would be considered although it is transferred down the line by forefathers. I hope, its clear now because you're entering in sales transaction so any value before 01.04,1981 you have to take basis of 01.04.1981 only.

there has been a recent case where indexation benefit is available in case of ancestral properties. You are eligible for indexation.

Dear Sir,

You can very well claim Indexation Benefits on the value as per 1981 records.

Trust this clarifies your query.

Feel free to get back/ call back for any further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB - GEN, CERT. FAFP

Sir,

You can avail benefit of indexation.In your case cost of acquisition is of previous owner.if property purchased before 1981 you can take cost of acquisition fair market vale on 1981.

For more Detail refer

CIT vs. Manjula J. Shah (Bombay High Court)

In case of an inheritance, the cost of acquisition should be the cost for which the previous owner who has actually acquired the property otherwise than by inheritance or gift. Since in ur case the property has been acquired by the original owner prior to 1 April 1981, you can take the fair market value of the property as on 1 April 1981.

Indexation benefit will be available to you.

it will not make any difference if the property has been acquired by you fore-fathers.

You can contact us if you need further clarification.