Mr. Avinash, a resident individual aged 45 years, booked an apartment in Pune in the financial year 2020-21 for 50,00,000. He took possession of…

CA Intermediate · Taxation · PYQS · May 2026
Mr. Avinash, a resident individual aged 45 years, booked an apartment in Pune in the financial year 2020-21 for 50,00,000. He took possession of this apartment on 01/04/2025. The stamp duty value of the apartment as per the municipal records was on 01/04/2025 was - 75,00,000 and on the date of booking was - 60,00,000. He had paid - 5,00,000 by demand draft as a down payment on the date of booking. Also, on 16/01/2026 his gold chain costing - 6,00,000 (which was purchased on 20/08/2025) was stolen during the marriage party (when the FMV of the chain was - 13,00,000). On 28/03/2026 he received insurance claim of 4,50,000 towards this loss. Discuss the taxability of these transactions in the hands of Avinash. Assume he did not opt out of the default tax regime for the AY 2026-27, and did not have any other income during the year.

Suggested Answer and Working Notes:

(i) Difference between the stamp duty value of 60,00,000 on the date of booking and the actual consideration of 50,00,000 paid would be taxable in the hands of Mr. Avinash under section 56 (2) (x) since the difference exceeds - 5,00,000, being the higher of 50,000 and 10% of consideration. Stamp duty value on the date of booking can be considered since Mr. Avinash has paid down payment by a demand draft on such date. (ii) Insurance receipt for loss of gold chain due to theft is not covered under section 45(1A) since such loss does not occur due to the circumstances specified thereunder. Hence, insurance claim of 4,50,000 is a capital receipt and not taxable.

Topics: Paper 3A: Income Tax Laws

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