Chartered Accountant’s advice under the Income-tax Act, 1961 as amended:
i) The sale value determined by the Sub-Registrar for Stamp Duty
purpose is Rs.27,699,782/- as per the sale deed executed between by you as co-owners and the buyer. Hence the sale consideration received by all the co-owners namely 8,000,000/- will not be considered for Income-tax purpose. Your taxable liability (you and your 3 sons) will be on 1/4th of Rs.27,699,782/- as the purchase consideration attributable to you and your 3 sons although, you have received only Rs.2,000,000/- as consideration amount on the Sale of the property.
ii) From the above value, cost of the property including the land and the structures thereon will be deducted to arrive at the capital gains (profits) made by you and your sons. For this purpose the cost of the above property has to be worked out on the basis of the value as on 1.4.1981, from which date the indexation process starts. For this purpose we have to appoint a Govt. valuer to determine the cost value as on above date and then work out the price as on the date of the sale viz. 26.12.2007 being the date of execution of the Sale Deed, after considering the indexation as prescribed by the Govt. and the depreciation
to be deducted taking into the account the age of the structure on the plot. There is one more complication arising due to the structures being occupied by the tenants. To what extent the value should be reduced is uncertain and purely at the discretion of the Income-tax Officer assessing the capital gains. The Income-tax officer may insist on the same sale value as determined by the Sub-Registrar i.e Rs.27,699,782/- or even higher value, assuming that the difference between this value and Rs.8,000,000/- received by you and all the other co-owners could be in cash. The above issues as determined by the Income-tax Officer may be challenged in appeal and another Govt. valuer may be appointed by the ITO/Appellate Commissioner for a fresh determination of the sale value of the property. That new value may be higher or lower than what has been determined by the ITO which cannot be again challenged by us. It is therefore risky to go through the above procedure of appeal. This would also cause a delay of three to five years.
iii) The better course therefore would be to deposit the sale consideration received by you in a Rupee NRO Account in India or in the USA but which amount cannot be converted in dollars. You may utilize the rupee amount for purchase of residential place in India out of the above amount received by you, within a period of two years or you may construct a new house, in India, for residential purpose within a period of three years. In that case there will be no tax liability
. For all the above courses, however, you will require to file the Income tax assessment returns
after 31.3.2008 but before 30.6.2008.