Long term capital gains-sale of land

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2016 Dear All,

I have sold a land which is still under litigation since past 3 years. Mr. A has purchased the land and is going to fight for us in the court. Now, Mr.A has told us that we will get only 80% of the sale consideration on transfer and the balance 20% after the case is settled.
As per the total sale consideration is 53 lakhs, capital gains is 42 lakhs, 11 lakhs is indexed cost of acquisition and amount paid by Mr.A is 40 lakhs. Being a pensioner, I cannot pay 2 lakhs from my pocket to invest in under 54EC or for that matter pay 20% tax. Also, I don't even know when will I get money.
What should I do in such case? Can I take indexed cost of acquisition in proportion to amount received now i.e 11/53*40 ?

Please reply at earliest.

Amol S Joglekar

Amol S Joglekar (Expert)
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29 July 2016 Is the transfer complete? If yes, then you need to deal with full amount. Pro rata like 11/53*40 is NOT permitted

Querist : Anonymous

Querist : Anonymous (Querist)

29 July 2016 Transfer is complete. But where will I get the money from if I have only 40L ? The law seems illogical here.

Amol S Joglekar

Amol S Joglekar (Expert)
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29 July 2016 No, law is not illogical.....you acted ILLOGICALLY. The citizen of India is expected to know the law of the land.... You could have taken the consultation before entering into that agreement, you would not have faced this ANAMOLY. For saving FEW hundreds, many a times people land up in spending thousands...so please BLAME yourself and not the LAW....You should have consulted the EXPERT.....
More so, when you say that property is in litigation.... and the transaction was of 53 lakh....a sum which probably you dealt with on FEW occasions in your life time.....Ok?
Would like if you share your views on this

Querist : Anonymous

Querist : Anonymous (Querist)

29 July 2016 Sir, I am trying to say that in this case the law does not conform with the actual situation. I do not have right to receive the money since it is contingent on the decision of court. Hence, if there is no right that means it is not accrued. This explanation has been given by the Mumbai Highcourt in one of the similar case.

Thank you for your time.

Amol S Joglekar

Amol S Joglekar (Expert)
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29 July 2016 That is what I am trying to tell......had you taken the proper advice of CA + Lawyer, before entering into agreement...they could have told you the way to receive money at the same time PUSHING capital gain at the FINAL payment.....
Anyway, it is past now......Are you in a position to take loan and complete the capital gain investments?