We have sold ancestral urban agricultral land (being used for cultivation of Jowar/Maize for last 30 yrs) situated in corporation area in march 2014 for rs 1800000. Govt. Valuer made cost of aquisition Rs 140000 in F.Y 1981. CA told that complete sell amount Rs 1800000 needs to be invested in 54 EC bonds to save LTCG Tax. My job Salary is Rs 200000 yearly.we need money & not in position to buy another land/house.
In 2004 my uncle had sold N.A. plot & after computing, only "LONG TERM CAPITAL GAIN' was invested in 54EC bonds & not complete sell amount. CA told that rules have changed after 2004, Sec 54EC is not applicable to sale of agri. land.
My question is can we invest in 54EC bonds , if yes complete sell amount or only LTCG? & Sec 54 EC applicable or not & what about Sec 54, 54F?
26 July 2014
but my well experienced CA told that for exemption under sec 54EC, complete sell consideration amount Rs 1800000 needs to be invested in NHAI/REC bonds . Other CA (tax advisor) told that only "CAPITAL GAIN" (after computing LTCG using formula complete sell consideration-indexed cost of aquisition is LTCG) needs to be invested in NHAI/REC. These two things are contradictory.
27 July 2014
Thanks a lot but my CA is not agreeing . He has given 2 option First pay Tax @ 20% on LTCG,second invest complete sell amount Rs 1800000 in NHAI/REC bonds. I have asked same question on different web & reply is same. Either My CA doesnt know facts or he is forcing us to pay Tax. Is there any document to show to CA to proove 54 EC is applicable to me ?
27 July 2014
54F -The asset transferred should be a long- term capital asset, not being a residential house.
54B- Transfer should be of agricultural land. & it must have been used in the 2 years immediately preceding the date of transfer for agricultural purposes either by the assessee or his parent.
The section 54EC of the Income-tax Act, 1961 allows a deduction in respect of long term capital gains arising from sell/transfer of any long term capital asset (for example, any immovable property, jewellery or shares) which was held for a period exceeding three years.
will u please further clarify for sale of urban agri. land being used by my parents for cultivation of crops for last 30 yrs,LTCG tax exemption can be availed u/s 54EC if LTCG is invested in bonds within 6 months?
27 July 2014
I have taken the printout of Sec 54EC & shown to CA, The CA has confirmed sec 54EC by going through "INCOME TAX READY RECKONER" book & agreed that only LTCG needs to be reinvested.
Thanks a lot NIKHIL KAUSHIK & ASSOCIATES HATS OFF!!
CAclubindia
