Question Body Alternative 1 Alternative 2 Alternative 3 Alternative 4
A person purchased a vacant plot of land measuring 2500
sq. ft. in a developing residential area and constructed a
single storied RCC frame structure residential type building
having covered area 1500 sq. ft. in the year 2010.
Prevalent land price in the locality at present Rs. 1,000/-
per sq. ft. and plinth area rate of similar building including
utilities is at Rs. 1,500/- per sq. ft. Assume total economic
useful life of the building 60 years and salvage value 10%
Purpose of valuation is for bank finance, Year of Valuation
2020
Market Value of Land 24,50,000 25,00,000 25,50,000 26,00,000
Depreciation amount by Straight Line Method 3,37,500 2,70,000 2,92,500 2,47,500
D. R. C. Of Building 1980000 1957500 19,12,500 200500
Present Market Value of Property 44,80,000 44,12,500 44,57,000 45,02,500
A businessman purchase a plot 1500 Sqm. in a posh
locality of city in 1997 for a price 30,00,000. In the year
1998 he started construction of a Residential bungalow
having 400 Sqm built up floor area at ground level and 200
Sqm built up floor area at first floor level at the cost of
18,00,00. Prevalent replacement cost of similar bungalow as
on today Rs. 35,000 per Sqm. Prevalent land price in the
locality as present Rs. 70,000 per Sqm. Age of building now
22 years, Total Life of Building 60 Years
Depreciation Amount of Bungalow adopting Straight Line 6930000 6950000 6980000 6920000
Method (SLM) considering salvage value 10%
Depreciation Amount of Bungalow adopting Constant
Percentage Method 6475100 6570100 6470100 6930000
What will be the market value of the land at present 3000000 105000000 10500000 3070000
What will be the total market value of the bungalow 119075000 129070000 119529900 119070000
property with the depreciation adopting SLM
What is the balance economic life of the building 38 48 22 37
Which of the following is not be considered here for the Depreciation Economic Current Land use Current
estimation of present market value of above property Obsolescence Replacement
cost of the
building
A two storied building built on land area 2160 Sft Ground
Floor area 1400 Sft, Year of Construction 1999, Height
2.9 m, First floor area 1400 Sft, Year of Const. 2005, Height
2.9 m. Maximum Permissible height as per rules 6 m. Cost
of construction G.F. Rs. 1500 per sft, F. F. Rs. 1300 per sft,
Land rate Rs. 2000 per sft. Ground floor is rented, monthly
rent Rs. 5000, outgoings borne by the owner 20% of the
rent amount, YP 6% in perpetuity (16.66), Year of Valuation
2020
Net maintainable rent of Ground floor
48000 60000 45000 55000
Value of Ground floor by Income Approach Method 795650 799650 798680 799680
Value of First floor by Cost Approach Method 3545000 3525000 3425000 3445000
Total Value of the Property 4340650 4324650 4324680 424680
An assessee received a gift of flat 800 sqm in area from his
father in June 1988, Father had purchased flat in August
1982 at cost Rs. 70,000. Assessee improved the flat in Dec.
1989 at the cost of Rs. 50, 000. Flat was sold in Jan 1997
for Rs. 15, 50, 000, Society transfer charges Rs.10, 000 &
brokerage charges were Rs. 20, 000. Index cost for 1982 is
109, for 1997 is 305 & 1989 is 172, Capital gain Tax 20%
Cost of acquisition in 1997 195872 70000 120000 150662
Indexed cost of Improvement in 1997 50000 120000 245872 88662
Net Sale Price 1550000 1520000 1540000 1530000
Net Capital Gain 1235466 945466 284534 1430000
Amount of Capital Gain Tax 247093 310000 56906 304000
Tax paid by Seller Donor Purchaser Father
An assessee sold property 70 Lakhs in March 1996. land
was purchased in 1985 for Rs 4 lakh, Ground floor building
was constructed in 1988 for 6 Lakh, 1st floor was
constructed in 1991 for 8 Lakh. After sale the owner
purchased a bungalow at Delhi forr Rs. 21 Lakh, He also
purchased Bonds of 6 Lakh, Legal Charge Rs. 15,000 and
Brokerage Rs. 77,000.
CI index of 1985, 1988 1991 & 1996 were 133, 161, 182,
281 respectively
Total Indexed cost of Acquisition 3027480 3127480 3200500 2700000
Net sale Price 7000000 6508000 6908000 7203000
Amount of capital Gain 3780520 2700000 1080520 3127480
Amount of Taxable capital Gain 2700000 3127480 3780520 1080520
The assessee company purchased factory plot area 1500
Sqm. In 1970 at cost of Rs. 55,000. 750 Sqm. Factory
building was constructed on plot in 1974. factory was sold
in October 1994 for Rs. 50 Lakh, depreciation on building
was claimed by company from 1974 to 1994. W.D.V. is Rs.
1,35,000. Land value in 1981 was Rs. 70 per Sqm
Land value on 1981 55000 105000 5000000 1050000
Indexed Land value (CII 259) 271950 142450 12950000 585250
Net Capital Gain 778050 4593050 4728050 4893050
Capital gain tax for Company 918610 945610 1891220 1837220
An assessee purchased in 1971 land of 700 Sqm. Area with
300 Sqm. building constructed on plot. Purchase was in
1971 and for price of Rs. 2, 00, 000. Said property was sold
in February 1996 for a price of Rs. 18 lakh. Land rate in
1981 was Rs. 300 per Sqm. And building cost when new in
1981 was Rs. 900 per Sqm, CI index on 1996 = 281
Cost of Property on 1981 439500 200000 1800000 480000
Indexed cost on 1981 1345800 1234895 1348800 1234995
Net capital Gains 669500 565005 451200 56105
Capital gain tax 133900 90240 113001 113021
12 years ago an entrepreneur took a lease (occupational
lease) of a commercial space for 21 years at a rent of Rs.
5,000 per month and paid a premium of Rs. 1.2 lakh. 6
years later he added a garage at a cost of Rs. 3 lakh.
Assume rate of return at 7% and sinking fund 2 ½%
True Rental Value at the grant of the lease 70500 71074 71500 70074
True Rental Value at the present day 93500 93074 92074 92500
Virtual Rent at the grant of the lease 73815 74500 72500 72815
Virtual Rent at the present day 110546 112546 110500 112500
A big property which is used as a hotel situated in a first
class commercial cum residential area in a big city is held
on lease for 21 years commencing from 1st January 1999
on a rental Rs. 10,000 per month. The occupiers share
municipal taxes amounting Rs. 2250.71 per qtr paid by the
lesor. In the lease agreement there is no clause for option of
renewal and after expiry of lease, the land and building
revert to the lessor. The capital value of the property is Rs.
40, 82, 000 and is made up follows : Land = Rs. 25,00,000,
Building = Rs. 15, 82, 000, Year of Valuation 2003, Land
lords outgoings 22%, Full rental value of land 8%, Building
12%
Net yearly income of the property 84597 84590 84588 84598
Term Value of Lessor taken YP 12% 602300 603200 603230 602330
Reversion Value of Lessor taken YP 9.5% perpetuity
855140 877140 4103455 3225926
Value of Lessor Interest 1457440 1479440 1479470 4705785
Profit rent of Lessee 269840 305243 234437 235437
Value of Lessee’s interest taken YP 11% & 2.5% 1932188 1708087 1483986 1490316
