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Old 13th April 2018, 11:04   #256
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Originally Posted by 2500cc View Post
Requesting Opinion from Lawyers:

Am planning to buy agriculture land in Karnataka, the property I have shortlisted is given to the seller (lady) by her mom (mom's ancestral property). The seller has 3 sisters with whom she says the monetary settlement has been done.

My Question: Will the other 3 sisters have rights to claim the share in future after me buying this land ?

Insist on a registered release deed / settlement deed from all the siblings. If possible get them to sign your sale deed as confirming parties. Reflect all details of the release / settlement between them in your sale deed.
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Old 13th April 2018, 11:04   #257
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Originally Posted by roy_libran View Post
Hi CA's -

I require some advice on Long Term Capital Gains tax for ancestral house property sale. Some guidance would help.

Scenario:
- My father recently (last week) sold a residential house floor in Kolkata for 43 Lakhs
- The land was acquired in 1965-66 for a paltry amount of 2500 rupees as per the land registry deed
- The property was constructed and partitioned in 1995 without any monetary value ascribed on the said deed
- The entire sale consideration has been via bank draft
- The current government rate valuation of the property (floor + Proportion of land) is approximately 33 lakhs
- My father is retired and in his late 70's

Question:
- To calculate the LTCG tax implication, how would the indexed gain be computed in this case?
- If he does not want to buy another property (because of the hassle) and simply hold on to the money in deposits etc., then what are his options?
- Are there any legitimate means for him to avoid (not evade) the LTCG tax?

Thanks in advance.
I am answering from memory and could be wrong somewhere but I think you can divide the cost of acquisition into the number of floors and index the cost of acquisition and construction and reduce that from the sale consideration.

There are a couple of investment options to avoid LTCG which primarily include investment in NHAI or govt bonds or investment in a property (which you want to avoid). Again, you'll have to read up the sections.

There is no other way to avoid LTCG gain tax unless he has an LTCG loss that he can set it off against.
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Old 13th April 2018, 11:23   #258
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Originally Posted by Nonstop-driver View Post
I am answering from memory and could be wrong somewhere but I think you can divide the cost of acquisition into the number of floors and index the cost of acquisition and construction and reduce that from the sale consideration.
Thanks Sir, for taking the time to respond. I did reach out to a CA and it turned out that the gain is calculated in quite an arbitrary manner. The land was purchased in 1962, and for calculation purposes, we are supposed to suggest an approximate value of our share in 2001 (guesstimate!!!!). Based on this value, the indexation would be calculated and hence the gain and consequent tax. Now, the ITO of that circle can of course challenge the 2001 figure, if he wants to. Basically, this is a system that is designed to fool!

Anyway, waiting for bonds to be available. Last I checked there aren't any issues running yet.
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Old 13th April 2018, 11:41   #259
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Of course, they can. If the land was inherited, the RTC will contain the name of all inheritors if they had gotten the proper legal heir certificate. I had to do this after my father's demise. His name on the RTC was replaced by the name of my mother, my brother and myself. If somebody wants to buy this land, they have to buy it from all the joint owners.

In your case, if the RTC doesn't contain the names of all sisters, they can contest later and you get into a limbo. Do not go by verbal assurances.
The RTC is in the name of the seller. She's got the property from her Mom. They are saying that as per some Law that was passed in 2005, the married daughter who's inheriting property from her MOM, is not legally obligated to anyone. This is discussed in the below link, but am not able to comprehend it exaclty due to my lack of knowledge.
https://www.kaanoon.com/25097/can-a-...-s-inheritance


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Originally Posted by sunilch View Post
Yes they can. So what you need to do is this: Get the NOC form each sibling and have it as part of the registered agreement. Also attach the death certificate of the father if he is not around. If he is around then you need his NOC as well. Only then you will be a bit on the safer side.


Regards,
Sunil

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Originally Posted by Tjax View Post
Insist on a registered release deed / settlement deed from all the siblings. If possible get them to sign your sale deed as confirming parties. Reflect all details of the release / settlement between them in your sale deed.
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Originally Posted by Jaguar View Post
I am not a lawyer but I have seen a case where there was a nexus between the sibilings who waited for the sale before staking their claim to the property Better to get the NOC from the sisters before you go for the registration.
Jaguar, Sunil and Tjax,

The sisters are not in good terms with each other, hence they are not comfortable asking them to come to sign the registration docs. Which is where am stuck. The land is too good to let go and am totally confused.

Please share your knowledge based on the above provided link Guys!!


Thanks,
Rajesh
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Old 13th April 2018, 12:02   #260
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You'll have to consider how she (seller) alone inherited the land in-spite of having siblings. If it was willed, then it would be proper. Some lawyers may still insist on NOC from other legal heirs, and copy of will. If there was no will, there is a clear case for future dispute.
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Old 13th April 2018, 12:04   #261
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Originally Posted by roy_libran View Post
Thanks Sir, for taking the time to respond. I did reach out to a CA and it turned out that the gain is calculated in quite an arbitrary manner. The land was purchased in 1962, and for calculation purposes, we are supposed to suggest an approximate value of our share in 2001 (guesstimate!!!!). Based on this value, the indexation would be calculated and hence the gain and consequent tax. Now, the ITO of that circle can of course challenge the 2001 figure, if he wants to. Basically, this is a system that is designed to fool!

Anyway, waiting for bonds to be available. Last I checked there aren't any issues running yet.
You should just use the ready reckoner value in 2001, thats the safest and i think even the government officials use that for valuations,etc
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Old 13th April 2018, 12:17   #262
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Originally Posted by Samurai View Post
You'll have to consider how she (seller) alone inherited the land in-spite of having siblings. If it was willed, then it would be proper. Some lawyers may still insist on NOC from other legal heirs, and copy of will. If there was no will, there is a clear case for future dispute.
The seller is saying that they have done the monetary settlement with other siblings and hence no issues will arise from them.

Edit: The online records show the seller's name and also they have taken loan from SBM which I believe scrutinizes the docs well.

Last edited by 2500cc : 13th April 2018 at 12:36. Reason: Edit:Adding more
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Old 13th April 2018, 13:07   #263
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The seller is saying that they have done the monetary settlement with other siblings and hence no issues will arise from them.

Edit: The online records show the seller's name and also they have taken loan from SBM which I believe scrutinizes the docs well.
If the land is deemed to be ancestral ( passed on between 3 generations without ever being divided legally in records) then despite a proper will, the other sisters can contest as having a share in the land.

If the land is not ancestral according to the rules and the mother has gifted/sold this land to her daughter via proper legal paperwork, then the other sisters can't have a claim on the land.

So, just get it checked if the land was ancestral or not and if possible check the paperwork of the transference of the land from Mom to daughter.

In the several cases I have seen where some siblings relinquish their rights over a piece of property, they have to be present in front of the Tehsildar and sign the transference orders in the Patwari register. See if you can check the same with the local Patwari or Tehsildar office.
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Old 13th April 2018, 13:27   #264
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Originally Posted by 2500cc View Post
Jaguar, Sunil and Tjax,

The sisters are not in good terms with each other, hence they are not comfortable asking them to come to sign the registration docs. Which is where am stuck. The land is too good to let go and am totally confused.
If there was a will through which the land was passed to the seller, you need to attach the copy of the will in the agreement. Your money is hard earned (I believe) and so it is always better to be on the safer side. So NOC from the siblings is necessary regardless of the status of the relationship between them. If you are ok to take a risk with your investment, you can take the word of the seller as guarantee but that is not something that I would advocate.

Siblings not on taking terms is a kind of a larger RED flag for me when dealing with property (any kind of property).

I insisted for an NOC from the siblings are the widow spouse when I was buying a Car from someone. The moment they understood that I was firm on my demand, they vanished.

Our laws are complicated and there will, in all possibility, be another law that can allow the siblings (and the widow father, if he is still alive) to be able to claim their share.

Last but not the least important advice given to us by our ancestors: No investment opportunity is worth taking if you are not clear and comfortable with what is presented to you. When in doubt w.r.t. a land transaction, better be safe than sorry.
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Old 13th April 2018, 19:34   #265
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Originally Posted by roy_libran View Post
Basically, this is a system that is designed to fool!
Tax act is full of gray areas but this amount is quite small to get picked up under the radar, especially if your AO circle is in an urban area.
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Old 25th April 2018, 16:26   #266
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Any GST specialist CA / tax consultant here? Please drop a PM to me.
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Old 26th April 2018, 15:04   #267
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Originally Posted by roy_libran View Post
Thanks Sir, for taking the time to respond. I did reach out to a CA and it turned out that the gain is calculated in quite an arbitrary manner. The land was purchased in 1962, and for calculation purposes, we are supposed to suggest an approximate value of our share in 2001 (guesstimate!!!!). Based on this value, the indexation would be calculated and hence the gain and consequent tax. Now, the ITO of that circle can of course challenge the 2001 figure, if he wants to. Basically, this is a system that is designed to fool!

Anyway, waiting for bonds to be available. Last I checked there aren't any issues running yet.
Get the valuations done from a government approved valuer. He will charge some fees (some percentage) but is will save the hassle. Some CAs are also approved valuers.
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Old 21st June 2018, 14:51   #268
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Me and a friend registered a company around 6-7 years back and did some transaction for the next two years, returns and VAT were duly filed. However we stopped operating and due to relocation didn't bother filing any returns for the last 2-3 years. Things were kind of left midway in terms of completing the financial transactions.

Just received a notice from the registrar of companies saying that since the company is dormant for 2 years so they're going to close it. Talked to two CAs on this: one said great, your problem got taken care of so let them close. Another said revert and ask not to close, and complete all formalities and close your balance sheet, else expect legal troubles (being directors) down the road. A week odd is left to revert.

Any idea which advice I should heed? I don't mind the expenses related to the second option, but it will be nearly impossible to retrieve the documents and get things in order now. ANY sound advice on this would immensely help me, this is causing me a lot of anxiety.

Last edited by avisidhu : 21st June 2018 at 14:52.
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Old 21st June 2018, 15:32   #269
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Me and a friend registered a company around 6-7 years back and did some transaction for the next two years, returns and VAT were duly filed
I am not a qualified CA / Lawyer but i think you don't have anything to get anxious about if your company doesn't have any income tax dues or proceedings pending or it was used as a shell company to launder money. Action will only be taken against persons who are found be directors in companies which were used as shell companies to launder money.
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Old 21st June 2018, 15:54   #270
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I am not a qualified CA / Lawyer but i think you don't have anything to get anxious about if your company doesn't have any income tax dues or proceedings pending or it was used as a shell company to launder money. Action will only be taken against persons who are found be directors in companies which were used as shell companies to launder money.
Thanks for the reply Spookey, and yes nothing of that sort was done. To be specific, we imported goods and did all due financials for 60% of it, including returns. The remaining 40% was unsold for a long time and so doesn't show in any transactions. This 'might' have a FERA implication which I'm absolutely clueless. A notional loan shown to be taken from one of us as directors was also not cleared.

The CA told me that there is a lot of uncertainty on the Govt. part on this, and they can surprise by sending legal notices in future. That's the reason I wanted opinion of people who are experienced in this field, to guide me.
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