Is long term capital gain tax applicable on sale of company owned industrialy converted land?

Our company bought land in 1990 for Rs.3 lakhs, the company is loss making, it is incurring loss for the last 5 years, its carried forward loss is about Rs.200 lakhs. Now the company wants to sell the industrial converted land along with building. If we are able to sell the land for Rs.60 Lakhs in 2012-13, Is long term capital gain tax applicable on sale of company owned industrial converted land? If is applicable what is long term capital gain tax.

asked Feb 27 '13 at 21:59 by secombond 111

There are different opinions regarding capital gain on sale of industrial land.

Keeping these opinions away, if we think from the income-tax authorities' views, the following remedy is available.

From the sale consideration of land and shed, first byfuricatte the value for land and shed respectively. Afterwards, the following steps to be followed for arriving capital gain/loss.

Agsint sale of land: Slae consideration Less: index cost of acquisition cost Less: Unabsorbed depreciation Less: current business loss If the remaining amount is positive, then long term capital gain tax @ 20% to be paid during year as if the advance tax paid.

Against sale of shed: Slae consideration Less: WDV of the shed If the remaining amount is positive/negative, the same will be transfered to P&L account. If P&L account shows profit, income-tax is to paid accordigly. If it shows loss, the same will be adjustable against Long Term Capital Gain from sale of land.

If industrial land is considered as business asset, the total carryforward losses can be adjusted against capital gains.

answered Apr 03 '14 at 09:27 by vsivakumar 312


As per our knowledge, income tax would be payable on such capital gains. However it can set off against capital losses, if any.

answered Feb 28 '13 at 01:24 by Pankaj Batra 5.2k320


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Asked: Feb 27 '13 at 21:59

Seen: 3,445 times

Last updated: Apr 03 '14 at 09:27